Mineral Rights & Royalties

Delek Group Sells Rights to Karish and Tanin Gas Field Royalties to Israeli Fund

By Deepak Sharma
May 27, 2020
a minute read
Gas Flare

Israeli E&P company Delek Group Ltd. and its wholly-owned subsidiary Delek Energy Systems Ltd. have entered into an agreement to jointly sell certain royalties regarding 26.4705% (out of 100%) of the rights in the Karish and Tanin offshore gas fields, for a total cash consideration of ILS318.0 million (approximately US$90.5 million). According to media reports, the purchaser in the Noy Fund, an Israeli infrastructure investment fund backed by the Poalim Group and the Clal Group, two of Israel’s leading investment groups.

Under the terms of the agreement, Delek Group would receive 25% of the sales proceeds (around US$22.5 million), with Delek Energy Systems pocketing the remaining 75% (US$67.5 million). Close to the signing of the agreement, the purchaser of the royalties will deposit US$14 million (ISL50 million) with a joint trustee. The remaining consideration will be paid in cash upon completion of the deal, which is subject to approval from the Petroleum Commissioner at the Ministry of Energy.

The Karish and Tanin gas fields are located in deep waters to the north of Israel’s Exclusive Economic Zone (EEZ), approximately 120 km from the coast. The fields are operated by a subsidiary of Energean Oil & Gas Plc, which acquired the leases from various Delek Group entities in August 2016.

Karish was discovered in 2013, and has contingent resources of approximately 36.3 billion cubic meters (Bcm) of gas and additional prospective resources of 14.0 Bcm. Tanin was discovered in 2011, and holds contingent and prospective resources of approximately 22.4 Bcm and 12.7 Bcm, respectively. The fields are currently under development, with first gas from the project expected in 2021.

Delek Group has been selling assets to raise funds to appease its bondholders, who having been pressuring the company in the wake of reduced earnings following the recent sharp drop in energy prices.

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