Delek Drilling and Avner, Delek Group’s two subsidiaries which are involved in the energy sector, announced to the Tel Aviv Stock Exchange that they are negotiating with a few possible prospective buyers the sale of Tanin and Karish gas fields. The various negotiations are in various stages and the price Delek said it would seek to recover the investments in the two assets. The investments were estimated at $120-$150 million.
Karihs and Tanin are two small gas fields off shore Israel on the border to Lebanon and their combined gas capacity is estimated at 70 bcm. The sale was imposed upon Delek and Noble Energy as part of the natural gas regulatory framework in Isarel, which was approved last month. In order to facilitate easier negotiations for the sale of both gas fields, Delek Group which holds 53% of the gas fields’ lease, bought the remaining 47% from Noble Energy for $67 million, and evaluation of $137million (Noble valued the deal at $73 million). The transaction, which has yet to be approved took place in order to facilitate an easier sale of the two gas fields following the framework’s approval.
According to the framework, the price for the two gas fields should be no lower than $40 million. In addition, Delek would be entitled for royalties from the two assets. If the sale would be completed within 8 months from the frameworks’ approval the royalties would be 9% (paid by the lease’s new owners), if the lease would be sold within 9-14 months the royalties would be 7%. In case the lease wouldn’t be sold within 14 months it would be transferred to a trustee who then will be able to sell it to the highest bidder.
Since it became known that Tanin and Karish are up for sale a few potential bidders were rumored to be interested in bidding. Energean, a Greek upstream operator, the latest one, was reported today by Calcalist Business daily as interested in a deal. Other companies that cropped up before that are the Chinese conglomerates Fosun and Hutchison Whampoa, both of them own energy companies and both of them are in involved in various business initiatives with Delek Group. Two other potential bidders are Edison, of Italy owned by EDF of France and BSGR owned by Israeli Billionaire Beny Steinmetz, who missed on Tamar gas field discovery when he withdrew from the exploration just weeks before it was discovered in 2009.