Delek Group Ltd. (TASE: DLEKG), controlled by Yitzhak Tshuva, reported first quarter results this morning. The group's revenue rose 15% to NIS 1.78 billion from NIS 1.54 billion in the corresponding quarter of 2017. Net profit was NIS 243 million, which compares with NIS 220 million in the corresponding quarter.
Delek Group reports that at the end of the first quarter it had completed half of the development work on the Leviathan gas reservoir, which means that it is making satisfactory progress and will probably finish development and start supplying gas from the reservoir on time in 2019.
Delek Group's fuels business yielded a quarterly profit of NIS 32 million, which compares with NIS 20 million in the corresponding quarter. The company says that the increased profit stems from the sale of an associated company and from a rise in Delek Israel's operating profit.
North Sea oil production contributed NIS 53 million to Delek Group's first quarter profit. This compares with NIS 8 million in the corresponding quarter. Delek Group's North Sea activity is through Ithaca Energy. Ithaca's output in the first quarter of this year was almost double that of the first quarter of 2017, thanks to accelerated production from the Stella reservoir.
At the same time, the cost of production per barrel fell by an average of $3 to $18, while Ithaca benefitted from a rise in the price of oil from $40 in the first quarter of 2017 to $70 in the first quarter of 2018.
Delek Group plans to expand its international activity in the coming years, alongside the sale of its holding in the Tamar gas reservoir and continued development of the Leviathan reservoir, which it holds together with Noble Energy and Ratio Oil Exploration (1992) LP (TASE:RATI.L). In the current quarter, Ithaca Energy obtained three new drilling licenses, two of them in the Greater Stella Area in the North Sea. In one of the licenses there is a discovery amounting to some 10 million barrels, while in the other, which is still being explored, Ithaca Energy is in partnership with BP, which will operate the well if it is decided to produce from it. The third license is in a more remote area of the North Sea, with a further discovery estimated at 10 million barrels.
Delek Group's profit on gas production in Israel (Tamar) shrank by 35% to NIS 79 million, because of the reduction of the group's holding in Tamar and development of the Leviathan reservoir. Delek Group also posted gains totaling NIS 132 million on revaluation of its gas assets.
Delek Group's share price has fallen 30% in the past year, because of, among other things, fears of a fall in the price of natural gas produced from the Tamar reservoir in the next few years. The company's market cap has fallen to NIS 6.6 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on May 31, 2018
© Copyright of Globes Publisher Itonut (1983) Ltd. 2018