Delek buys Chevron North Sea for $2b

Asi Bartfeld
Asi Bartfeld

Delek unit Ithaca subsidiary has acquired 10 North Sea fields with estimated reserves of 270 million barrels of oil.

Delek Group Ltd. (TASE: DLEKG) has announced that its Ithaca unit is to acquire Chevron North Sea Limited for $2 billion. The deal adds ten producing field interests to the existing Ithaca portfolio, four of which relate to assets operated by the company, bringing a 150% increase in the proven and probable reserves and a 300% increase in the forecast for 2019 production.

Ithaca's asset base is estimated to consist of 2P reserves of 225 million barrels of oil equivalent plus a further 45 million barrels of oil equivalent of proven and probable contingent resources associated primarily with additional near-field development and infill drilling opportunities.

The enlarged portfolio, encompassing 18 producing field interests is forecast to deliver 2019 production of 80,000 barrels of oil equivalent per day (60% liquids) at an operating cost of $17 per barrel of oil equivalent.

As part of the transaction 500 employees will transfer to Ithaca, of which around 200 work offshore on the operated assets.

Delek Group CEO Asi Bartfeld said, "The acquisition is a key part of the Delek Group's strategic focus on building a world class E&P business. Acquiring CNSL accelerates implementation of that strategy and further strengthens the Group's oil and gas business. We see exciting growth opportunities in the North Sea and are looking forward to working with Ithaca to deliver upon our value and growth targets."

The transaction provides a material step up in the scale and breadth of the Delek's producing asset base, establishes a wider portfolio of investment opportunities from which to grow the future cash flows of the business and enables accelerated monetization of Ithaca's existing $2.2 billion of UK tax allowances.

The transaction has an effective date of 1 January 2019 and is expected to complete by the end of third quarter of 2019 following approval of the acquisition by the UK Oil and Gas Authority.

The acquisition will be funded through an upsized $1.65 billion Reserve Based Lending senior debt facility, a $700 million acquisition debt financing facility, an equity investment by Delek and existing cash resources of the Company. Ithaca's existing $300 million term loan and associated Delek guarantees will be retired as part of this refinancing.

JP Morgan is acting as financial adviser to the Company in relation to this transaction. The RBL facility has been fully underwritten by BNP Paribas and the acquisition debt financing has been jointly underwritten by JP Morgan and BNP Paribas.

Published by Globes, Israel business news - en.globes.co.il - on May 30, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Asi Bartfeld
Asi Bartfeld
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