Shlomo Nehama's oil venture headed to TASE
Ellomay Oil and Gas LP hopes to raise NIS 75m.
Ellomay Oil and Gas LP has filed a prospectus to raise NIS 75 million in units and options on the Tel Aviv Stock Exchange.
Ellomay Oil and Gas LP's general partner is Ellomay Oil and Gas Explorations, an Israeli company wholly-owned by the company. Ellomay Oil and Gas LP holds 20% of the participating interests in the Yitzchak oil and gas exploration and drilling license, off the coast of central Israel, together with Adira Energy Israel (60% ) and Canada's Brownstone Energy (15% ). The site contains an estimated 79 million barrels of oil.
Part of the proceeds will be earmarked to replace an $11 million no-interest owners' loan from parent Ellomay Capital, controlled by Shlomo Nehama and listed for trading on AMEX in New York. The sum serves as a compulsory cash reserve for participating in exploratory licenses, in accordance with Energy and Water Resources Ministry regulations.
As general partner in Ellomay Oil and Gas LP, Ellomay Capital is required to soak up at least 20%, up to NIS 12 million, of the IPO. Beyond that, besides offloading venture risks onto investors Nehama can expect to start raking it in - with Ellomay Capital possibly reaping an estimated NIS 6 million by the end of the year.
Most Israeli exploratory companies are limited partnerships. Shemen Oil and Gas Resources, Israel Land Development Energy, Gulliver Energy and IPC Oil and Gas Holdings are the exceptions. There are several ways their "parents," the general partners, can draw payments. Investors, through their participation shares, are considered partners in every sense.
General partners are entitled to management fees and other benefits regardless of their stake, but certain decisions are subject to majority approval at the general meetings. In Ellomay's case payments include $35,000 in monthly fees, "super royalties" of 10% off the top for gross revenues on any oil or gas found - considered high by industry standards - and 7.5% of all exploratory expenses. Drilling in the Yitzchak license area is expected to start within a year at a cost of $80 million, which would provide Ellomay Capital with $1.2 million in income. It is also entitled to a $40,000 payment on any share offering exceeding $500,000.
Ellomay Capital has holdings in the energy and infrastructure sectors, mainly in Israel and Italy. Its investments include several solar energy farms and a stake in Dorad Energy's power station at Ashkelon.