Natural Gas Deals

Greece's Energean Sells Stake in Israeli Gas Fields as Noble Seeks Buyer

Energean sells 50% stake in Karish and Tanin fields to London-based private equity fund Kerogene Capital; Noble looking to sell 7.5% of Tamar.

Tamar
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Greece’s Energean said Wednesday it had agreed to sell a 50% stake in its Karish and Tanin gas fields to a London investment fund, while Bloomberg News reported that Noble Energy was seeking to sell a 7.5% stake in the Tamar field.

Energean said Kerogene Capital would pay an up-front fee of $50 million to cover initial development costs and that they would participate on an equal basis in bringing the fields into production by 2020 - at a cost the Greek company earlier estimated would reach about $1.3 billion.

The sale, which requires Israeli government approval, comes six months after Energean acquired Karish and Tannin from Delek Group for $148.5, as part of a government-ordered drive to increase competition in the domestic gas market.

“We believe Israel is an attractive destination for energy investment offering exciting growth opportunities through the development of Karish and Tanin, as well as through the additional exploration potential in offshore Israel,” Energean CEO Mathios Rigas said in a statement.

Earlier this week TheMarker reported that Energean offered Israel Electric Corporation – the biggest user of gas in Israel -- gas at a substantial discount to what it is buying from the Tamar field. The company needs to secure contracts for 3 billion cubic meters of gas annually to win financing for the field.

Meanwhile, Bloomberg said Texas-based Noble had retained Barclays and an unidentified adviser to approach institutional investors about buying the Tamar stake, which may be worth between $1 billion and $1.1 billion.

At that level, the entire Tamar field is valued as much as $14.7 billion – nearly 20% more than the valuation for which it sold a 3.5% stake to Harel Insurance last year.

Shares of the three Israeli Tamar partners ended higher yesterday. Avner gained 1.2% to 2.42 shekels (65 cents), Delek Drilling 0.4% to 68.37 and Isramco 0.6% to 64 agorot.

Noble is also reportedly seeking to convert the stake into a special-purpose company and raise debt equal to as much as 60% of its value, enabling it to pay a dividend to shareholders.

Under an agreement with the government, Noble must reduce its stake to 25% from the current 32.5% to promote competition.