Delek Group Ltd. (TASE: DLEKG), controlled by Yitzhak Tshuva, is taking another step towards divestment from the Tamar natural gas field. The group notified the Tel Aviv Stock Exchange (TASE) today that it is negotiating with the advanced training fund of the schoolteachers and kindergarten teachers for the sale of its rights to super royalties from the reservoir. These rights stem from Delek Group's holding in the Delek Drilling partnership, through which Delek Group holds 22% of the reservoir and 9% of Tamar Petroleum.
If the deal, which is subject to various contingencies, is completed, the advanced training funds, headed by chairman Eyal Gabay, will pay Delek Group $53 million, and the rights to super royalties from the reservoir will be transferred to the funds starting on April 1. The parties agreed that a final examination and accounting would take place at the beginning of 2023, which could either add $2 million to or subtract $2 million from the price.
Delek Group's super royalties from Tamar stood at 1.5% of the revenue from the reservoir as of the end of 2017, and jumped to 6.5% at the beginning of 2018, after Delek Group made back its investment in the reservoir.
In June 2018, Delek Group completed the sale of its Delek Energy subsidiary's super royalties to a special purpose vehicle, Delek Royalties, which raised money through an offering of shares and bonds. Delek Royalties raised NIS 530 million: NIS 404 million in bonds and the rest through an offering of shares. Demand for the offering was light, leaving Delek Group with a direct 40% holding in Delek Royalties' shares. Since trading in Delek Royalties' shares began on the TASE, the share price has fallen 13%.
The natural gas plan requires Delek Group to sell all of its holdings in Tamar by the end of 2021, because through Delek Drilling, Delek Group also holds 45% of the Leviathan natural gas reservoir, which is larger than Tamar. Production of gas from Leviathan is slated to begin late this year.
Delek Group's share price was down slightly today, and has fallen 6% in the past month. The share price climbed 19% last year, pushing the company's market cap up to NIS 6.9 billion.
Published by Globes, Israel business news - en.globes.co.il - on July 10, 2019
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