NewMed Energy - Limited Partnership ($NWMD)

Hello, everyone. Thank you for joining us today for the NewMed Energy Financial Results for 2025 webinar. [Operator Instructions]. As a reminder, this conference is being recorded. I'm pleased to introduce Yossi Abu, CEO at NewMed Energy. Yossi, you may begin.

Good afternoon, everybody, and thank you for joining us in this afternoon for the result of 2025. We basically will start. So as you can see, we finished the fourth quarter of 2025 a little bit short of 1.1 Bcf a day, 2.8 Bcm of gas sales into the market. And the average sales of 2025 was a little bit higher than 1.06 Bcf a day 10.9 Bcm a year. We will update on those results vis-a-vis the previous years and where we are heading. On top of that, as you know, because of the war situation in the region, we are currently closed. We are working together with the government very closely with them. And without getting into details, I assume that we'll be able to come back to operation soon. On top of that, we just finished the evening of the war, the third gathering line of Leviathan. We successfully completed the project and when we'll be able to produce will be at around 1.4, 1.45 BCF a day. So going up to 14, 15 Bcm a year capability of sales. We finished this project on time and basically with the reduced budget, we managed to finished the project with $480 million vis-a-vis $570 million of the budget. So $90 million of budget savings in this project. As you know, we take investment decision on the second phase of Leviathan, and we'll touch that in details later on. And one of the big, I would say, stories of the report is basically first time we are basically announcing that we are in negotiation with the Egyptian. So two things. One, it's post government agreement for Aphrodite activity and GSPA to sell to the Egyptian market or the recoverable reserves in Aphrodite, we'll touch and dive into details there. And on top of that, we are in the final stage of the OMV exploration well offshore Bulgaria, we are in the Black Sea and results are expected in the next few weeks. We are really in that process. We'll share more details down the road. And we announced a dividend of $70 million that gathered to $250 million overall dividend in 2025 similar to the 2024 dividend. As I mentioned many times, our target is to continue with a stable dividend stream to our investors in parallel to investment in our core asset, second phase of Leviathan development of Aphrodite and maintaining a very reasonable debt to asset value cover ration, will talk about that, Tzachi will share that later on in those slides. So let's go through the journey. As you can see the results. In Q4 2025, we sell around 2.8 Bcm vis-a-vis 2.7 in Q4 2024. And the average price was $5.4 vis-a-vis $5.8, mainly due to the fact that in 2024 Q4, we were -- we had around $73 Brent price. And in Q4 2025, we enjoyed $63 Brent price, that's really the gap in the price. And the same for the yearly results. In the result we had in 2025, $68 Brent price vis-a-vis $79 in 2024. That result price of $5.6 vis-a-vis $6.12, that's really the gap. On the sales side, we managed to sell 10.9 vis-a-vis 11.2. Mainly, we had some hiccups with the sales with respect to the previous round in the world in June 2025 when we were down for around 2 weeks. As you know, we enjoy a very, very stable flow price in all our sales to the markets that give us a very clear stream of revenue for many, many years, but we enjoy as well the upside. As you can see, once we will come back to flow, we will enjoy the current Brent prices, and that will allow us to incur a much higher sales pricing to the market. And when we are looking into the quarterly results, I think that the main thing is to understand the difference between Q4 2025 vis-a-vis 2024. What you basically can see here is that in 2024, we had net profit Q4 2024, we had net profit of around $120 million. The gap down is mainly because price per MMBtu the Brent price that I just explained. But the main reason that you see the drop is because we basically -- you see here, $76 million in the operating expenditure that as a result of the failure in Vinekh-1 in Bulgaria, the fact that it's not commercial, well, although we discovered natural gas. So that's caused us to eliminate $76 million from the books. And this take us to where we are. And in the early results, you will see the same mechanism. So First, price per the MMBtu, the difference between average of $68 Brent price in 2025 to $79 Brent price in 2024 reduced the revenue in $85 million. And with respect to the well of Bulgaria, I already understand. So that's mainly the results. As I mentioned, operating-wise, we finished the third gathering line of Leviathan that take us from around 1.2 Bcf day to more than 1.4 Bcf a day and currently, we'll be able to sell much more to the market. As I mentioned, we saved around $90 million from the budget of the project and we finished it with around $480 million. So saving of significant savings in this project. Yes, we are very conservative when we are building, I would say, a budget for a project. So like the third gathering line, we were conservative as well in the second phase of Leviathan. And as the project goes, we will update the budget from time to time, but we are taking a conservative approach. So we will not have any let's say, surprises in the market. Leviathan expansion going very, very well. We are engaging with all the main suppliers and we already have everything signed, the project going on as we target. As I mentioned, this project should take us on the 1.4 Bcf a day to 2.1 Bcf a day by 2029, the budget, it's 2.4, again, will update once everything is closed and get more certainty, I assume we'll be able to reduce some of the budget prices. And as you can see, this is the assumption for sales to the market. So immediately, will increase the sales once we come back, we'll increase the sales to around 1.4. And then by 2029, we'll be able to sell 2.1, to the market -- to the different markets, Israel, Egypt, Jordan, that we are selling to. In the regional connectivity, we have 3 projects that should bring us to around a 1.6, 1.7 Bcf capacity of Leviathan to export markets, and this is only Leviathan capacity. So the overall capacity will be more than 2.1 to 2.2 Bcf. So in Ashdod-Ashkelon looping what you can see number one here, we were supposed to finish the project around April. I think with respect to the current condition we probably have 1 or 2 months of delay, nothing significant, but this project will allow us to go up to 6.5 Bcm a year capacity of Leviathan in total capacity of 8.5 Bcm. On top of that, the FAJR activity is going very, very well, and we are due to finish this project mid this year in order to increase the flow to Jordan to around 7.25 Bcf a day to the Egyptian market to Jordan and the Nitzana Project, the connection onshore between Israel and Egypt is running very well, and this project is due to finish in Q4 2028. We don't see any, I would say, hiccups in this project due to the war and everything is going as expected. One thing I would say, what we did with respect to the, let's say, off time that we are experiencing right now, we basically managed to do a lot of maintenance activity that were due to come later this year. We managed to do that during this period. So it will eliminate some of the maintenance days that we took into consideration down the road. So actually, we use that period in order to eliminate some of the downtime down the road. And I hope that we'll see a better days down later this year. Aphrodite project, I think this is one of the main item in the report right now. We are running very well with the FEED for this project. As you can see, it's a floater with the 8 Bcf a day capacity to the market -- we're 0.8 Bcf a day, 800 million scf a day to the market. And this project will be connected with the pipeline directly to the Egyptian market. We are negotiating as a partnership Shell, Chevron and NewMed Energy. We are negotiating 2 LOIs with the Egyptian one is of a government agreement to cover all the activity with respect to the project. So pipeline laying, connection points, taxation, everything related to this activity. And in parallel, we are negotiating LOI to cover all the recoverable reserves from the reservoir that we will be able to flow to the market. So this will be an anchor to take investment decision down the road for the project and it's got extremely well. We are very happy with that. As I mentioned, in Bulgaria, we are running with the Krum-1 well. It's a very promising prospect from our perspective. We are talking about a potential of around 6 Tcf, while the main target is almost 4 Tcf potential. We are talking about the region that have a full connectivity. Actually, the markets are waiting and really hope to get good results there. We are expecting to see results this month. And we are running forward with the project. So that could be a significant game changer for NewMed Energy because that can bring us not only to a new area, but this is the potential discovery in an area that's paying double and triple the gas prices that we are experiencing, we also managed to bring in Bulgaria government and to set stability for the project for many years to come. And this is a very interesting project for us. We are expecting the results soon. Now we will move into -- we'll dive into more details of the P&L and the reports. Tzachi Habusha, our CFO, please.

Thank you, Yossi. Thank you all for being with us today. Let's run through the numbers and try to understand the result of 2025. So as Yossi mentioned we are summarizing the 2025 full year results with revenues of approximately $1 million and production of about 11 Bcm. The net profit declined to approximately $343 million compared with $524 million. The net income in the fourth quarter amounted to approximately $17 million compared with $120 million in the corresponding quarter last year. Let's try to understand what drove this decline. So the change in the net profit was mainly driven by lower net revenues from the sale of natural gas reflecting both reduced production volumes in total amount of $85 million and lower average price per MMBtu in 2025, which impacted us in a total amount of $24 million. From a production perspective, the yearly reduction that was concentrated in the second quarter resulted from two main factors. One, a 12-day shutdown following the war with Iran and approximately 11 days of shutdown of routine and planned maintenance mainly related to the third pipeline project. I'd like to highlight that the third pipeline project, as Yossi mentioned, has been completed below the budget. And in a full year basis, together with Ashdod-Ashkelon project, this is expected to increase production capacity by approximately 2 Bcm. Part of this uplift is expected in 2026, as mentioned. An additional factor impacting the revenues was the decline in the average price per MMBtu. While we are all aware of the current Brent price volatility, it is important to note and to understand that the downside exposure is mitigated by a flow price under the long-term contracts with take-or-pay and mechanism. In addition, there was a slight increase in revenues from condensate of $3.3 million. Regarding the expenses, the increase was mainly due to the full impairment of the first exploration well drilled in Vinekh prospect in Bulgaria. The partnership has fully recognized an impairment of $76 million in the fourth quarter. We are all hope that this impairment is a onetime event regarding the future drilling activities. Regarding the balance sheet, so following the repayment of the $600 million related to Leviathan bond series June '25. The partnership entered into a new credit facilities with Bank Leumi totaling $500 million. And as of today, total available credit facilities amount $600 million. In addition, I would like to remind us that we have a bond buyback program of $100 million for Leviathan bonds from 2027 and 2030 series.

So thank you, Tzachi. So as I mentioned, we declared a dividend of $70 million based on the fourth quarter results, and we are planning forward with, in addition to what we already distributed in 2025. So total $250 million in 2025, similar to 2024. And as I mentioned, our target is to continue with a stable dividend stream in a investment in our core asset. Now we'll open up for questions. So please feel free to ask any questions.

So the first question is regard to the budget CapEx budget of 2026. Maybe before I hand over to Tzachi, I should mention that we have published a complete discounted cash flow for '26 and awards. And in this cash flow, we highlight the exact number of CapEx and all other cash flow items for '26 and the following year. So we do not specify each -- in this cash flow specified the exact CapEx for each project, but the sum number for '26 is available to all in this forecast.

So as Guil mentioned, you have the full information in the DCF about Leviathan relating to Leviathan and also a full disclosure in the financial situation about the other project. The main items to 2026 is, of course, Leviathan is Aphrodite, the Nitzana project for the midstream the drilling in Bulgaria and, of course, Aphrodite planning.

The second quarter -- the second question by Dimitri, with regards to the contract, the structure of contracts that we have in place, mainly with regards to the export contract that are linked to Brent price and how those Brent price indexation affect the realized price for NewMed Energy energy. You want to address this question?

Yes. So basically, most of our export contracts, they are working at the current price is the average of 3 months before the month. So basically, we will enjoy the current prices in the market in the next months. And I should say that although we have up until in now around 2 weeks of shutdown. When we are looking on the market, we took -- we assumed a $62 average Brent price for 2026 in our budget. And obviously, what we are seeing right now is massively higher. So that will eliminate the impact of the shutdown up until now and this is our assumption. So no impact for however, we don't see any impact of the shutdown up until now for our yearly results. And this is very clear due to the Brent prices.

Additional question is with regards to the undrawn credit facilities that we have in place. Tzachi please.

So as of today, the undrawn available credit facilities amounted to $600 million.

There's a question about Aphrodite and FID of Aphrodite. We are working in order to finish the FEED process this year. And in parallel to have in place GSPs and all government agreement in order to take investment decision by the end of the year. This is really what we are targeting, and we are working very truly in order to be there.

I think this sums up the questions. So far, please do remember that we are available for you if you have any additional questions. In a later stage do feel free to contact me or us directly. We will be more than happy to address any questions. I think lastly, we would like to say a big thank you to our Chairman of the Board that is retiring.

So Gabriel Last is with NewMed previously Delek Drilling for the last 25 years, was the Director and then the Chairman and Gabriel is stepping down from his position as the Chairman of NewMed Energy, and I want to say thank you, Gaby, for all your efforts and contribution over the year. Gaby will stay with us as a Director and continue and bring from his experience and know-how in that into the Board. So Gaby, thank you very much and looking forward to continuing our journey.

This concludes our webinar for the fourth quarter '25 results. Thank you very much, everyone.