Delek expands North Sea operations

Delek-controlled Ithaca is acquiring rights from its partners in licenses and facilities in and around the Stella oil field.

Ithaca Energy, controlled by Delek Group Ltd. (TASE: DLEKG) is acquiring the 50% rights of its partners in the licenses and facilities in the vicinity of the expanded Stella oil reservoir in the North Sea. The rights and facilities involved include the Stella and Harrier fields and the Hurricane fields, development of which is scheduled to begin in the coming years.

As part of the $190 million deal signed late last week, Ithaca became the sole owners of the floating production facility (FPF) being used for production and drilling work in the reservoirs. Ithaca will pay for its acquisition with its own resources.

Following the deal, Ithaca reported that it would probably revise its production forecast for the Stella reservoirs by 50%, bringing the production capacity of the company from the Stella reservoirs to 22,000 barrels a day.

Delek, controlled by Yitzhak Tshuva, acquired Canadian company Ithaca in several stages, achieving full ownership of that company in May 2017 and bringing its total investment in the acquisition of Ithaca to $590 million.

Production of North Sea oil contributed NIS 53 million to Delek Group’s net profit in the first quarter of the year, compared with NIS 8 million in the first quarter of 2017.

Ithaca’s production totaled 900,000 barrels in the quarter, almost double the average daily production in the corresponding quarter last year, as a result of accelerated production from the Stella reservoir. Increased production was accompanied by a $3 reduction in production costs to $18 per barrel. Ithaca also benefited from a rise in oil prices from $40 in the first quarter of 2017 to $70 in the first quarter of 2018.

Ithaca won three new drilling licenses in the second quarter, two of which were in the North Sea. 10 million barrels of oil has been discovered in one of the existing licenses; in the second, which is in the exploratory stages, Ithaca is in partnership with BP.

Ithaca also has a third license in a more remote part of the North Sea with another discovered estimated at 10 million barrels. Delek Group plans to expand its international exploration business in the coming years, while selling its holdings in the Tamar natural gas reservoir in Israel and continuing its investment in the Leviathan natural gas reservoir, which Delek Group owns jointly with Nobel Energy and Ratio Oil Exploration (1992) LP (TASE:RATI.L).

Delek Group’s share price is up today, boosting the company’s market cap to NIS 6.5 billion. The share price has fallen 9% over the past year.

Source: www.worldoil.com