Tamar Petroleum in Talks to Buy Part of Noble Stake in Gas Field

A deal for the U.S. company’s 7.5% stake in Tamar field could be worth $900 million

Tamar natural gas production rig in 2016.
Tamar natural gas production rig in 2016. Tomer Appelbaum

Tamar Petroleum, the company spun out of the Delek Group to buy part of the Tamar natural gas field, is in talks to buy more rights in the field, this time from Noble Energy, in a deal that could be worth as much as $900 million, TheMarker has learned.

Tamar Petroleum would buy the 7.5% stake in the Tamar field that Noble needs to divest by 2021 under the terms of the Israeli government’s gas framework. Noble originally had a 36% holding in the offshore field, but it sold a 3% stake to financial investors last year and still has to reduce its holding to 25%.

Tamar Petroleum, which holds a 9.25% stake in the field that it acquired from Delek Group, is reportedly weighing a debt-and-equity offering to finance the purchase of the Noble stake. Shares of the company, which has a 1 billion shekel ($290 million) market capitalization on the Tel Aviv Stock Exchange, ended 2% high at 20.54 shekels on Sunday.

In the capital market, there has been considerable speculation that Alon Gas would buy Noble’s 7.5% stake. With just a 4% holding in Tamar, the company isn’t a big enough player to be part of the gas cartel subject to the gas framework rules. It’s also publicly traded, which will make it easier for it to raise capital to buy the Nobel rights. But Alon on Sunday denied that it was interested in a deal.

Doing a deal with Tamar Petroleum presents problems for both sides, mainly because Delek Group, through its Delek Drilling unit, still holds 40% of Tamar Petroleum. That means a sale of the 7.5% stake wouldn’t mark a clean exit for Noble.

Noble is reportedly weighing the option of forming a new company, a special purpose vehicle, as Delek did with Tamar Petroleum, for the purpose of buying the stake. The problem is that it will take time to form the new company, issue a prospectus and recruit investors.

A third of option is selling the bloc to institutional investors, as it did with the 3% stake it sold in 2016, but Israeli institutions already have considerable exposure to Tamar and may not have an appetite for any more.