Delek Drilling and Ratio, two of the partners in the Leviathan natural gas reservoir, have published a new reserves report prepared by Netherland Sewell and Associates, Inc. (NSAI).
In 2021, 10.7 BCM of natural gas was sold from the Leviathan reservoir. In money terms, sales last year were $1.95 billion. Delek Drilling's share was $883 million, and Ratio's was $290 million.
The current report raises the sales forecast from Leviathan for the coming years, among other things on the basis of quantities actually exported to Egypt and Jordan and expected further export sales, forecasts of demand for natural gas in the local market (in accordance with research by BDO), and expected new gas supply agreements. According to the revised forecast, the quantity of gas supplied from Leviathan in 2022 will be similar to the figure for 2021, and 0.35 BCM higher than forecast in the previous reserves report published by Delek Drilling in June last year.
In the reserves and discounted cash flow report that it published, Ratio raises its revenue forecast for 2022 to $320 million, 14% more than in its previous forecast for this year, which was $275-285 million. Among the reasons for the higher forecast are high demand for natural gas and the rise in the price of oil.
The best resources estimate for the reservoir is currently 631 BCM, which is in addition to 18 BCM produced since gas started to flow from Leviathan.
According to the discounted cash flow report as at the end of 2021, Delek Drilling's share of the Leviathan reservoir's proved and probable and contingent resources (2P and 2C) rose 3% to $4.52 billion at a capitalization rate of 10% and $5.54 billion at a capitalization rate of 7.5%, while 2P reserves rose 4% to $4.30 billion at a capitalization rate of 10% and $5.16 billion at a capitalization rate of 7.5%, in comparison with the previous discounted cash flow report. As mentioned, the rise takes into a account gas sales of 8 BCM between April and December 2021.
The report shows the value of Ratio's share of the Leviathan reservoir, to stage 1A only, 2P and 2C reserves, as $1.5 billion at a capitalization rate of 10% and $1.85 billion at a capitalization rate of 7.5%.
Ratio reported late last week that it was working together with its partners in Leviathan to complete the signing of agreements that would allow an additional transport route for the export of gas to Egypt via Jordan and would immediately maximize the capacity for exports to Egypt. Demand for natural gas in Egypt is high, both for local consumption and for the liquefaction plants that export liquefied natural gas ((LNG) to international markets.
Last week, a deal was signed in Cairo between Chevron, which operates the Leviathan project, and the gas transport company in Jordan that will enable the volume of natural gas exported to Egypt via Jordan to be raised, via the transport infrastructure currently used for exports from the Leviathan reservoir to the National Electric Power Company in Jordan.
Delek Drilling CEO Yossi Abu said, "The touching reception by President Al-Sisi of Egypt for Minister of Energy Karine Elharrar at the energy conference in Cairo is testimony to the fact that the regional cooperation agreements on natural gas exports represent a significant anchor in the strengthening of relations between Israel and its neighbors and in deepening stability in the Middle East, in the light of the growing global demand, the dizzying success of the export agreements from Leviathan, and the impressive performance of the reservoir.
"We intend to advance the expansion of the Leviathan project and to promote additional agreements for the export of gas, including exposure to the global LNG market. The strong cash flow will enable us to continue to develop the partnership's business while providing an attractive return for investors."
Published by Globes, Israel business news - en.globes.co.il - on February 20, 2022.
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