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Investing.com -- S&P Global Ratings has changed its outlook on Energean PLC to negative from developing while affirming its ’B+’ ratings.
The revision comes after the Israeli government asked Energean to suspend production in Israel in June following escalating regional hostilities. Though the suspension has been lifted, S&P warns that further disruptions or damage to assets could harm expected cash generation.
The outlook change also follows Energean’s announcement earlier this year that it had cancelled the planned sale of its assets in Egypt, Italy, and Croatia to investment firm Carlyle. This cancelled transaction would have reduced decommissioning liabilities and cash flow volatility by concentrating production in Israel, where the company benefits from long-term contracts with predictable cash flows when operations run normally.
S&P affirmed its long-term issuer credit rating on Energean and its rating on the company’s $450 million senior secured notes at ’B+’.
The ratings agency maintains that Energean’s liquidity remains adequate, noting that Material Adverse Effect clauses under the group’s lending agreements have not been activated. However, S&P cautions that pressure could emerge if Energean faces challenges refinancing its $450 million notes due in 2027.
S&P indicated it might lower Energean’s ratings if regional conflict causes material cash flow reduction through damage to company assets or local infrastructure, or if security and geopolitical risks in Israel worsen further.
Conversely, S&P could raise the rating if Israel’s geopolitical situation improves substantially, operational risks decline, and production in Israel continues to increase as planned.
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