Delek Drilling to split into two

Yossi Abu  photo: Shlomi Yosef

The rights to the Leviathan natural gas reservoir will be transferred to a foreign company to be listed on the London Stock Exchange.

The Delek Drilling oil and gas exploration partnership today announced that it is being split. Its rights in the Israeli Leviathan and Cypriot Aphrodite natural gas reservoirs will be transferred to a foreign subsidiary that will be listed on the London Stock Exchange. The limited partnership will retain the rights to the Tamar reservoir. Shares in the new company will be distributed proportionately to holdings of Delek Drilling partnership units. Under the plan led by Delek Drilling CEO Yossi Abu, shares in the company will also be dual listed on the TASE.

The partnership believes that exposing its main gas assets to overseas markets will increase investment in them and generate value for investors. Transferring rights in Leviathan to a foreign company is designed to provide owners of the rights with greater flexibility in cooperating on gas exports with countries in the region. Under the gas plan agreed with the Israeli government, the general partner in Delek Drilling, Yitzhak Tshuva, has to sell the controlling interest in the reservoir, so that in the long term, the split will enable the owners of other units to continue holding the Tamar reservoir.

Under the gas plan, Delek Group undertook to sell its 31.25% rights in the Tamar reservoir by 2021. Delek Group has so far sold 9.25% of the rights in Tamar through Tamar Petroleum, and must therefore sell an additional 22% in the next two years.

Delek Drilling holds 45.34% of the rights in Leviathan and 30% of the rights in the Aphrodite reservoir, which was discovered in 2011, but has yet to be developed. Completion of the first development stage in Leviathan for supplying gas to customers in Jordan, Israel, and Egypt is imminent. The new company will assume all of Delek Drilling's future exploration activity and hold additional exploration licenses.

Capital market sources said that Delek Drilling's measure follows the success of a similar measure taken by Greek company Energean, which held an offering in March 2018. Energean's share price has since risen 80%. The offering came at a time of growing competition in the eastern Mediterranean Sea and indications of another important gas discovery named Nour in Egyptian waters. The measure also increases Tshuva's options for selling his holdings in the reservoirs.

Published by Globes, Israel business news - en.globes.co.il - on March 18, 2019

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

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Yossi Abu  photo: Shlomi Yosef
Yossi Abu photo: Shlomi Yosef
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