Revenues, profits up in Tamar in H1 2017

The Tamar gas field partners' revenues totalled $924mn in the first half of this year, up 11.3% compared with the first half of 2016. The increase was due to the combination of higher gas prices and more output. After royalties of $100mn and third party payments, NGW estimates the total to be $796mn, or a margin of 74.2%, an improvement of 1.9 percentage points.

The average gas sale price was $5.325/mn Btu, up 3.5% from a year ago and production was up 8.9% to 4.9bn m³. The high price of natural gas in the Israeli market derives from the monopoly status of the Tamar project and a directive from the energy ministry to increase the use of gas in power generating and reduce the use of oil.

During the first six months of the year Tamar Project was held by five partners: Noble Energy (operator, 32.5%), Delek Drilling (31.25%), Alon (4%), Isramco (28.75%) and Everest (3.5%). All bar Noble are Israeli. On July 1, Delek Drilling sold 9.25% of the project to Tamar Petroleum as a spinoff.

Noble Energy and Delek Drilling are looking for ways to sell off more of their holdings, sales that they are committed completing by the end of 2021, according to the Regulatory Natural Gas Framework. However, there seems to be little hunger for the mature project despite its impressive profitability. Tamar Petroleum raised $1.2bn in July in equity and debt but mainly from local investors despite attempts to lure foreign investors. All in all only $50mn were raised from foreign investors.

Dividends go up

All three Israeli partners for the Tamar project completed the first half of the year with a bold black underline marking handsome profits that also enabled them to distribute generous dividends. Delek Drilling reported operating profit of $161.5mn, Isramco Negev reported $177.8mn, Alon Gas Exploration reported $25.2mn and Everest's was probably over $20mn. Noble Energy's operating profit jumped 33.5% to $207mn.

However, unlike its Israeli counterparts, Noble Energy ended the first half of the year with an operating loss of $2.3bn after writing off $2.3bn in respect of the sale of oil production operations in US Marcellus shale. Israel remains a bright spot for Noble which continues to record losses in the US.

Pre-tax profit of $ 207mn in Israel represents 78.1% margin on Noble's $265mn in revenues in Israel. In west Africa, where the company's revenues were $248mn, the pre-tax profit was $138mn and a smaller margin of 55.4%. In the US, excluding the write-off, the company would have recorded a pre-tax profit of $831mn and a margin of 53.1%.

Ya'acov Zalel