Delek Group Ltd's (TASE: DLEKG) oil and gas exploration units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) reported progress in bringing in a new strategic partner to the Leviathan field, which they jointly own with Noble Energy Inc. (NYSE: NBL) and Ratio Oil Exploration (1992) LP (TASE:RATI.L).
The Leviathan partners want a strategic partner to finance the continued development of the field. They want a partner experienced in liquefied natural gas (LNG), as a large proportion of the Leviathan gas field is slated for export. Russia's Gazprom and France's Total are reportedly among the serious contenders for investing in Leviathan.
The aggregate net profits of Avner and Delek Drilling fell 64% to $4 million for the second quarter of 2012 from an aggregate $11.1 million for the corresponding quarter of 2011. The two companies' net profits fell to $8.7 million in the first half from $25.2 million in the first half of last year.
The two companies' aggregate natural gas sales, net of royalties, fell 55% to $16.3 million for the second quarter from $36 million for the corresponding quarter. Gas sales, net of royalties, fell 39% to $37.4 million in the first half from $61 million in the corresponding half. The reduction in revenue and profits was due to lower gas deliveries to customers from the Yam Tethys project, due to sharply lower production capacity by the Mari B well.
Avner and Delek Drilling said that the reduction in Mari B's production capacity was due to force majeure, as defined in their gas supply contracts with their customers.
Avner CEO and Delek Drilling chairman Gideon Tadmor said, "We're on schedule for the development of the Tamar project, which is almost completed, on time and on budget. The financing we recently secured increases certainty and allows the partnerships to realize our strategic plans, both in terms of support for development of the domestic gas market, and review of export options."
Delek Drilling CEO Yossi Abu, "Closing the financial package for the Tamar project and completion of the terms for withdrawing the balance of money for the financing on the basis of the Leviathan project brings us to a new era that is full of opportunities. Alongside the continuing rapid development of Tamar and the drawing up the development plan for the Leviathan project, we intend to expand our exploration activity."
Avner and Delek Drilling reported that gas output from the Mari B and Noa wells fell to 3.39 million cubic feet of gas in the second quarter from 6.09 million cubic feet of gas in the corresponding quarter. The average price of gas per output unit rose to $5,460 during the second quarter from $4,520 during the preceding quarter, and the net receipts were $4,200 per million cubic foot.
Published by Globes [online], Israel business news - www.globes-online.com - on August 19, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012