Cash and stock deal with Israeli player valued at $800 mln for 7.5% working interest
Noble Energy, the American company that owns a large stake in Israel’s natural gas fields and was the first to explore and develop the Aphrodite offshore gasfield in adjacent Cyprus waters, is trimming its holdings in the only currently operational field in order to adhere to a government anti-monopoly measure.
The Texas-based company plans to sell a 7.5% stake in the Tamar field — its current total share is 32.5% — to Tamar Petroleum Ltd., bringing its total holdings to just 25%, Reuters reported, citing a statement from Noble Energy on Monday.
The stake will sell for $800 mln, of which $560 mln will be paid in cash and the remainder in 38.5 million shares of Tamar Petroleum, a yield company that allows for direct investment in the income produced by the field, according to the Times of Israel.
Noble already sold a previous 3.5% stake in 2016.
In February last year, Noble Energy announced it was pushing ahead with the development of the Leviathan gas field, Israel’s largest, securing financing for the nearly $4 bln project and planning on bringing it online by 2019.
Leviathan, discovered in 2010, is estimated to hold 18.9 trillion cubic feet (535 billion cubic meters) of natural gas, along with 34.1 million barrels of condensate. Development of its own energy resources is seen as a major strategic asset for Israel, which has no oil and little water.
Nobel, which is partnered with the Israeli firms Delek Drilling and Avner Oil Exploration on Leviathan, set out a timeline that would see the first extraction by 2019. The three are also partners in Aphrodite, with estimated reserves at a fifth of the Israeli fields.
Israel hopes the development of Leviathan will allow it to export gas, which it says could help grease the wheels of regional diplomacy.
Regulators have charged that the government’s original deal with Nobel and Delek violated antitrust laws. In March 2016, Israel’s High Court of Justice shot down the deal’s “stability clause,” in which the government could not impose regulatory changes, such as breakups of suspected monopolies, on the consortium for a full ten years.
Cabinet ministers in May 2016 approved a new version of the deal that included a clause enabling future governments to alter the terms agreed with drilling companies.
Combined proceeds from both deals amount to nearly $1.25 billion, of which almost $1 billion will be in cash, Noble said.
“This transaction supports our commitment to sell down our Tamar interest in accordance with the government of Israel’s Natural Gas Regulatory Framework,” said David L. Stover, Noble Energy’s Chairman, President and CEO.
“It highlights the strong value of our world-class Levant Basin assets, while providing additional upside exposure from our equity interest in Tamar Petroleum. These assets are some of the world’s most attractive energy investment opportunities, with margins competitive to the best U.S. onshore oil plays and a stable, long-term cash flow profile. Our team is doing an excellent job operating Tamar reliably at capacity while developing Leviathan which is on track to deliver first gas sales by the end of 2019.”
Noble said the cash proceeds from the transaction will be utilised to support the capital investment in the company’s Leviathan development. It expects to incur capital gains tax of approximately 23%, paid upon the receipt of cash consideration at closing and as shares are divested. The company intends to divest shares held in Tamar Petroleum over the next several years. As a shareholder of Tamar Petroleum, Noble Energy anticipates receiving dividend income.
Following closing of the transaction, the Company will retain a 25% working interest and will remain the operator.
Noble Energy was the first operator to discover natural gas resources offshore the Republic of Cyprus, in the Levant Basin, and is working with the Government of Cyprus to finalise a field development plan for the Aphrodite discovery.
