iDeals Corporate News

Delek Drilling merges its energy business with Avner Oil

ocean-oil-platform

Leading Israel’s providers of crude and natural gas gathering, natural gas processing and related midstream solutions have finalized a long-awaited association and will continue operations as a single company.

Delek Drilling has entered into an agreement with Avner Oil to complete the process of their much-discussed merger. This strategic move has been in discussions for a long time.

Under the terms of the agreement, the companies will join forces in international consortium Delek Group. Financial terms of the transaction were not disclosed. The new group will operate under brand Delek Drilling as the group pursues its growth strategy.

Based on the latest estimates, the value on the market of the new corporate entity may exceed 16 bln shekels (USD $4.4 bln), however, transaction’s financial terms were not disclosed.

As the companies look ahead, they will continue to maintain a diligent focus on innovating their oil and gas portfolio of strategic assets in one of the most active basins in the region.

In Israel’s economy, both companies are known to be leaders, along with Noble Energy, to be among the pioneers leading the explosive growth of Israel’s exploration of the country’s natural resources. After many years of large-scale yet often unproductive investment in gas and oil sector, Israel’s authorities agreed to no longer get involved in energy-related investments in the country. This strategic business shift to the private sector brought about many significant oil and gas fields off the coast of Israel.

Delek Groups will maintain the majority of ownership of the Israel’s most productive offshore natural gas fields in Tamar and Leviathan.

Tamar Gas Field Progress

Natural gas production in the reservoir in Tamar (estimated at 306 bln cubic meters) to Israeli energy market began in March 2013. Today the total gas production from Tamar covers up to 50 percent of Israel’s needs in electrical energy. This makes Delek Group a strategically located provider of crude and natural gas gathering, natural gas processing and related midstream solutions in offshore Israel.

Among the most important energy customers for Tamar field are Israel’s national Electric Corporation, large power plants OPC, Dorad, and Dalia, as well as numerous industrial establishments.

Israeli energy transportation system will connect a lot more clients across all industries in the country. This process will naturally lead to the increase in the natural gas consumption in Israel as well as bring about great reductions in energy costs.

Leviathan used to be the largest deepwater oil discovery in the world at that time of its discovery (621 BCM).

Derek Drilling started exports from Tamar to Arab Potash Company in Jordan, as well as Jordan Bromine plants in January 2017, according to the information in its statement.

Chief Executive Yossi Abu noted that according to the company’s production at Tamar in 2017 will exceed 10 bln cubic meters.

The profit of Delek Drilling and Avner Oil reached $78.9 million, the increase of more than 23% compared to the 2016 results.

Start Your Free Trial
30-day unlimited usage and demo with an expert