Q2 2026 Newmed Energy LP Earnings Call
Speaker #1: Deputy CEO and CFO, and Gail Bashan. My name is Nick Sarnak, CEO of Newmed Energy. I have joined the partnership about a few months ago as the head chairman and beginning of this month's started the role of CEO.
Speaker #1: Before we jump into the results and main activities of the month, I would like to take the opportunity and thank the previous CEO, Yoshi Abu, Yoshi has taken this role for more than 15 years, and has led Newmed to high new peaks and new heights.
Speaker #1: You all know him because of his achievements, but we also know him on a personal basis, and he'll be missed to all of us.
Speaker #1: So from here, from us, from everybody, we're wishing you all the best, and your legacy will stay with us forever. And now, I'm happy to start with our financial results and, as you have seen, in our first segment, yes, we'll bring up the presentation in a second.
Speaker #1: We had a very strong Q3 performance started with high production of about 2.7 BCM, high gas prices, resulted from a high oil prices. Which leads to a bottom line of about $118 million net profit for the quarter.
Speaker #1: In addition, we have completing playing the third pipeline from the field to the platform, which has increased our production and also have completed or IMGL, more correctly, have completed the looping between Azdod and Ashkelon as well.
Speaker #1: We are progressing with Leviathan expansion phase 1B, as we call it, and have seen good progress and momentum on the offer data field as well.
Speaker #1: We will also update on two seismic surveys that we are being going to conduct in the next few weeks, and of course we'll wrap up with the dividend.
Speaker #1: So on the production level, we have produced 2.7 BCM for this quarter, compared to 2 BCM on previous quarter 2025. What mostly important is to mention increase in all of our three markets: Israel, Egypt, and Jordan.
Speaker #1: With the highest increase of almost 0.5 BCM to the Egyptian market. On the pricing side, the average price for the quarter was 6.5, compared to 5.6 on the Q2 2025.
Speaker #1: What is important to notice from this chart is the strong price which is obviously on the export contracts linked to the brand price and, as we're seeing, high brand price we're going to see high gas prices.
Speaker #1: There is some lag between the gas and the brand price as we are calculating the average of the previous three months, and therefore we're regardless of where the brand will go, in the next few months we'll still see a high price of gas in the next few months.
Speaker #1: We have successfully completed the third pipeline from the field to the platform, and following the completion we have been able to produce at a peak rate of 15.8 BCM on an annually basis.
Speaker #1: Just to compare that to our initial program, which stood at around 14.5 BCM, which means that we'll have an extra 1 BCM of capacity to sell to our markets and we hopefully with the completions of the midstream infrastructure we'll be able to meet this high peak rate.
Speaker #1: Furthermore, we are continuing and progressing on the expansion of the Leviathan project. We are on track on time, which is expected somewhere in the second half of 2029, and on the total cost of project, which is around 0.
Speaker #1: around 2.4 billion dollars, current project is at the level of 23%, and most importantly, the drilling rigs is expected to reach our region in towards the end of the year and conduct three new production wells for us.
Speaker #1: After a long delay, I'm very happy to inform that INGL has completed the looping or the offshore pipe between Azdod and Ashkelon, which opened a debottle of the midstream to the Egyptian market.
Speaker #1: This will increase our delivery capability of about 2 BCM on an annually basis, but important to mention that all that 2 BCM will be allocated to the Leviathan partners.
Speaker #1: This is not reflected in the Q2 results, this completion was done in month of July, and we will see the results in the upcoming quarterly report.
Speaker #1: In addition, the two other projects, Fager compression and the Mitana pipeline, are progressing as planned. We're expecting to complete the Fager compressions project towards the end of the year, and the Mitana pipeline ahead of the Leviathan phase 2 expansion.
Speaker #1: Afrodita, as you have seen in the recent weeks, we have spent out several announcements. We are progressing with all the main contracts that are needed for us to reach financial investment decision somewhere in the first quarter, first half of 2027, there is a good momentum and we're hoping to make progress over the next few months.
Speaker #1: In a related note, one of our partners Shell has announced last week their intention to sell their share in the field to mold the Iranian energy company for value of $770 million.
Speaker #1: Which on a very simple calculation, gives a value of about $2 billion for the asset. Just kind of like in our books, we have a value of about $190 million so there is, from our perspective, a hidden value in the value that's reported on our books.
Speaker #1: Related to Sahi, to take us through the financial results.
Speaker #2: Yeah.
Speaker #1: So thank you, Mia, and thank you all for joining us today. First, I would like to thank Yossi Abu. Personally, it has been a real pleasure working with Yossi.
Speaker #1: I learned a lot from him and from his leadership, his vision, and the way Yossi sees the bigger picture. I wish him all the best on behalf of Newmed and myself.
Speaker #1: I wish him good life and all the best, of course. And to Eunice, a welcome warm to Newmed family. In the second quarter of 2026, we had revenues of about $293 million.
Speaker #1: Production of about 2.7 BCM. A net profit of about $117 million. This compares with Q2 2025 when revenues were $191 million, net profit was $81 million, and production was around 2 BCM.
Speaker #1: The increase in the net profit in Q2 was mainly driven by the following factors. Please go ahead with the presentation. Thank you. Net revenues increased by 86 million dollars compared with the same quarter last year.
Speaker #1: A 59 million dollars of that came from higher natural gas production, another 25 million dollars came from a higher average gas price per MBBQ, and 2.1 million dollars came from an increase in condensate sales.
Speaker #1: This was partially offset by higher cost and expenses of 21 million dollars, mainly due to a higher operation cost and depreciation. We also had an increase in net financial expenses of 26 million dollars, mostly due to the re-evaluation of carriage and tannin royalties.
Speaker #1: We also recorded a 6.8 million dollars in other revenues as a result of a settlement related to our economic rights in Iran license. The final factor was income from a discontinued operation of a 7.7 million dollars, related to Newmed former holdings in Tamar project.
Speaker #1: Tamar was sold in 2021. This income mainly reflects an adjustment to the sale consideration following Tamar levy expenses. Regarding the net financial debt, moving in regarding the liquidity of Newmed.
Speaker #1: Following the repayment of Leviathan bonds service June 2025 and ahead of the repayment of the next series in June 2027, the total net debt is approximately $1.4 billion.
Speaker #1: We have $550 million available credit facilities for Israeli banks. As of today, in this context, maybe it's important to mention and to remind that the partnership has a buyback program.
Speaker #1: Under that buyback program, which cover the 2027 and the 2030 bonds, to date we have bought back about 95 billion dollars. I think, Eunice, that concludes the main points of the Q2 financial statement.
Speaker #1: So thank you for listening.
Speaker #2: Thank you, Sahi. And as we are demonstrated in previous quarters, we happily announcing that we will also pay this quarter dividend of an amount of $60 million.
Speaker #2: Based on our strong performance and high net income. Before we wrap up and go to questions, I do have one last update on two seismic surveys that we will be conducting over the next several months, which will commence in the upcoming weeks.
Speaker #2: The first one is Zone I, it is conducted in the new area on the northern part of the economic waters of Israel. What is interesting in our perspective, we have bought two new international energy players SOCAR and BP into this license, and we see that as a good indication or a positive as the potential that could be in this zone.
Speaker #2: And also a very importantly, we will be conducting a unique and first-time survey OBM, Ocean Bottom Knot, for the Leviathan. We will be placing about 5,000 knots of the yellow one that you see in this picture on the bottom of the ocean to conduct a 3D survey of both the gas field, the Leviathan, since we have started producing 2019.
Speaker #2: We have not yet conducted a seismic survey, and that will allow us better to analyze the field and see how it is performing. And also continue our exploration of deeper oil prospect beneath the gas field.
Speaker #2: With that, we will open it for questions.
Speaker #1: Thank you, Eunice. So we've got a little question. Second. Okay, so just a couple of questions. The first one with regards to Aphrodite, what are the milestones that are missing in order to achieve an FID in Aphrodite?
Speaker #2: So good question. In order for us to reach an FID, on the Aphrodite field, I think there is on one part is all the commercial agreements that we need to put in place: the GSPA, the hosting government agreements, and the midstream infrastructure pipes.
Speaker #2: We have signed a letter of of intents on the GSPAs, and are working out to conclude them as a full agreement. And I think those will happen in the next few months.
Speaker #2: In parallel, Chevron is the operator, is continuing its work on the front-end engineering design, and hopefully that will be completed as well. So at that point, we'll be able to take final investment decision.
Speaker #1: And the second question with regards to Leviathan, if we can give some color on the progress of the expansion. And if the situation in the area affected timetable of the.
Speaker #2: So again, good question. Regardless of the international tension that we have seen in the region, Chevron is the operator, is able to move forward and progress with the projects with no any hurdles of delays.
Speaker #2: To date, everything is on time. We have ordered already the long lead items and the critical ones on the critical path. So that is also behind us.
Speaker #2: And I think the next step is bringing in the two to the area drilling rig and as we are aware, it will be on time and even come a little bit earlier.
Speaker #1: Okay, this concludes the question and the call for this quarter. We'll take the opportunity to thank Eunice and to express our appreciation and welcoming you to my event.
Speaker #1: And this is only the first one, so many comments.
