Delek Group Q3 revenue up 27%

Asi Bartfeld

Quarterly revenue was boosted by a rise in oil prices along with an improvement in North Sea oil production, and a further rise in demand for natural gas in Israel

A rise in oil prices along with an improvement in North Sea oil production, and a further rise in demand for natural gas in Israel, led to a jump in the revenue posted by Delek Group Ltd. (TASE: DLEKG) in the third quarter. Group revenue in the third quarter of 2018 totaled NIS 2.3 billion, which compares with NIS 1.8 billion in the third quarter of 2017, an increase of 27%. The group operates a chain of convenience stores and fuel stations in Israel as well as its oil and gas exploration and production activity in the country (the Tamar and Leviathan reservoirs) and overseas (Ithaca in the North Sea). In addition, the group controls Phoenix.

Delek Group posted a net profit of NIS 323 million in the third quarter of 2018. This compares with a profit of NIS 1,024 million in the third quarter of 2017, but that profit stemmed almost entirely from the sale of part of the group's rights in the Tamar gas reservoir through the flotation of Tamar Petroleum, a special vehicle company to which Delek transferred 9.25% of the rights in Tamar. Capital gains from the sale of shares in insurance company The Phoenix Holdings Ltd. (TASE: PHOE1 ; PHOE5 ) boosted profits in the third quarter of 2018.

Profit on gas production in Israel jumped 161% in comparison with the corresponding quarter to NIS 123 million. There was also a sharp rise in net profit from the Ithaca subsidiary, which doubled in comparison with the corresponding quarter to NIS 88 million. Production during the quarter was 16,500 barrels of oil equivalent (boed) per day, significantly higher than the 14,400 boed seen in the third quarter of 2017. Delek says that this increase represents better operational performance, as well as the new connection of the Stella floating production platform (FPF). In the fourth quarter, however, Ithaca's profit is expected to fall substantially because of lower oil prices.

Profit from sales of fuels in Israel was stable at NIS 34 million, while profit from discontinued activities was NIS 430 million, 10% more than in the corresponding quarter. This was mainly because of the sales of shares in Phoenix, mostly in swap transactions. Delek remains with a 30% stake in Phoenix, which it intends to sell. The company says that "the Group continues in its efforts to find a strategic investor to acquire this asset."

Delek Group president and CEO Asaf Bartfeld said, "We further advanced in delivering on Delek Group's strategy this quarter. We delisted our Delek Energy subsidiary, stabilized production at Ithaca, and progressed in the development of the Leviathan field, which should achieve first gas by the end of 2019."

The company's board has declared a dividend of NIS 150 million to be paid during December 2018. Including this announcement, Delek Group has disbursed NIS 490 million in dividends during calendar year 2018.

Published by Globes, Israel business news - en.globes.co.il - on November 29, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Asi Bartfeld
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