Energean is a gas producer that is not exposed to the North Sea or holding assets with declining output, but after two years of rising profits it too has been knocked by lower prices and investor uncertainty surrounding energy companies. The company is trading 20 per cent off its 12-month high, a position that is admittedly better than the 50 per cent falls suffered by competitors like Serica Energy and Harbour Energy.
Its investment case is quite different to UK-listed energy peers. Its key project, Karish, only began production last year, and there are expansion options that could mean output at the field lasts for decades.
That would rely on Lebanon continuing to play ball, though. Starting the project required a landmark agreement between Lebanon and Israel to define a maritime border last year, a deal reached even though the countries technically remain at war.
Overall, the short-term outlook is strong. The company has guided for average production of 131,000-158,000 barrels of oil equivalent per day (boepd) for this year — triple that of 2022 — before hitting 200,000 boepd the year after.
Co-founder and non-executive director Efstathios Topouzoglou took the opportunity to sell £6.6mn of shares last week. The company said Topouzoglou was an “active entrepreneur and is managing his own liquidity”. He still holds a 9 per cent stake.
This month could see further movement on the corporate actions front. Last year, there was a significant vote (19.7 per cent) against the remuneration report. The 2022 payments included long-term bonuses that took chief executive Mathios Rigas’s total pay packet to almost £6mn and chief financial officer Panos Benos’s to £4mn.
The board’s remuneration committee chair Kimberley Wood said last year’s vote was partly driven by “non-remuneration” matters. A note in the 2022 annual report said her committee had sought shareholder feedback over long-term bonus structures, which are based on part on a base share price taken from March 2020 — a time when the initial impact of the pandemic knocked share prices to artificially low levels. The committee ultimately made no change to the arrangements.
How Wise is share sale?
Wise has been one of the UK’s most successful start-ups in recent years. Its mission to bring down the cost of cross-border payments has brought strong top-line growth and lots of customers.
The company’s revenue rose 45 per cent year on year in the final three months of 2023, and it now has 6.1mn customers, 33 per cent more than this time last year. Management believes this is only a tiny share of the market and says the rising number of economic migrants will increase its potential customer pool.
Political instability, war and climate change are displacing people from their homes. When they leave to a new country, they still need a way to send money back to their families. Wise will be hoping that they will do this through the company’s platform.
In the short-term, however, the economic downturn in wealthy countries is causing people to transfer smaller amounts of money on average.
Although fourth-quarter revenue was up on the prior year, it was down 1 per cent on the prior quarter. The average volume per customer also fell by 4 per cent over the same period, and by 7 per cent year on year.
Wise said this was due to a fall in activity by customers who typically transfer higher volumes, of over £10,000.
“We believe payments among these cohorts, such as for property purchases and investments, to be more discretionary in nature and influenced by macroeconomic conditions to a greater extent,” the company said.
Last week, chair David Wells sold £1.35mn worth of shares. He exercised 100,000 share options at a strike price of 61p and then sold the same quantity of shares for £5.65 each. He then sold an additional £780,000 worth of ordinary shares. The company did not comment on the reason for the sale.
Wise is trading on a forward price/earnings ratio of 35. To justify this, it needs to keep growing at around 40 per cent a year. Flat growth in the last quarter can’t become a habit. If it does, then Wells’ decision will look well-timed.