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Is there more upside in the Energean share price after H1 results?

The Energean share price has delivered strong investor returns over multiple timeframes. Helping the investment case are recent half-year results that show that the natural gas specialist has managed to grow revenues thanks to rising commodity prices.

The Energean [ENOG.L] share price surged after delivering revenues of $339m in the first half of 2022, up 65% compared with the same period last year. EBITDAX came to $198m, up 165% year-over-year, while group liquidity stood at $880m on 30 June. Underpinning the strong results were high commodity prices.

Net debt increased in the first half of the year to $2.17bn, up from $1.69bn. The company said it had been charged a one-off windfall tax of $29.3m from Italy.

Revenue guidance for the second half of the year was increased to $2.5bn, up from a previous $2bn, and driven by contractual gas sales in Israel and Egypt. EBITDAX guidance was upped to $1.75bn from $1.4bn.

“During H1 2022, Energean delivered strong operational and financial results. The ex-Edison assets have outperformed our expectations and our flagship Karish project is on track to start production within weeks and will enhance energy security in Israel and the region,” said Energean CEO Mathios Rigas.

Energean might not be profitable, but revenue growth is only going to aid the investment case. Last year, revenue came in at $497m, up 96% year-over-year. Analysts have pegged full-year revenues for 2022 to come in at £889.7m, up 123.9% year-over-year according to data from Yahoo Finance. In 2023 revenue is expected to reach £1.82bn, up 116.2%.

Energean’s share price gains in 2022

The Energean share price has gained 65.8% in the year to 9 September, easily outpacing the FTSE 100. Having been in spitting distance of the 1,400p level in May, the stock entered a downward spiral in June and the start of July where it was trading just above 930p.

However, since 6 July the Energean share price has gained 44.1% to close Friday 9 September at 1,418p. Over a two-year period, the stock has rewarded shareholders with a near 175% return and, putting this summer’s decline aside, has been on a steady upward trend since August last year.

 

More upside in Energean’s share price?

The Energean share price’s continued gains come against a background of increased focus on energy prices for much of 2022. Last week things reached a head when newly appointed UK Prime Minister Liz Truss outlined her support package for households and business struggling with rising costs.

The UK government has frozen household gas and electricity bills for two years. Energy bills will now be capped at £2,500 for a typical household. The huge support scheme could cost up to £150bn. The money will be government borrowing rather than a further windfall tax on energy firms — something that Energean and its investors will no doubt be relieved about.

Truss and the Chancellor of the Exchequer have argued that this package will not only support households, but also curb inflation and help the economy. In August, the Bank of England forecast that without government intervention inflation could hit 13% next year.

Despite the upside in Energean’s share price over the past couple of years, there could still be further upside. The day after the results, Berenburg upped its price target on the stock from 1,540p to 1,750p. Analysts at Berenburg said Energean was delivering on production and dividends. Among the seven analysts polled by the Financial Times, the median price target for Energean’s stock is 1,499.73p. Hitting this would mark a 6.3% upside on Friday’s close.

Disclaimer Past performance is not a reliable indicator of future results.

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