Tamar Partners Benefit from Prices, Output

Tamar Project, the gas field off shore Israel that meets nearly all Israel's demand, generating 60% of Israel's electricity, last year brought the owners $1.86bn, according to report from the trustee of Tamar bonds and calculations made by NGW. Production was 9.7 bn m³, up 0.4bn m³ on 2016, operating profit was $1.1bn. Operational cash flow in the project level was $1.33bn.

The shareholders are American E&P Noble Energy (32.5%) and four Israeli entities, three of them publicly traded. Only Everest, a privately owned limited partnership with 3.5% shareholding, does not disclose results.

In the course of 2017, one large transaction was executed in Tamar shares when Delek Drilling sold 9.25% to Tamar Petroleum for $650mn. That transaction changed the revenues distribution without affecting the overall performance of the project, which was good as ever owing to the high gas price, which on average was $5.37/mn Btu, up $0.16/mn Btu from the year before. 

Noble Energy reported revenues from its Israeli operations of $533mn (-0.5%) despite a decline of 3.5% of the gas sold as it sold a 3.5% stake to Everest the year before. Profit before tax was $409mn (up 38.2%) and "Results of Operations", after tax, were $311mn (up 40.1%).

Delek Drilling started 2017 with shareholding of 31.25% in Tamar and from 1 July 2017 reduced its holdings to 22.0% following the sale of 9.25% to Delek Petroleum for $650mn. For 2017, Delek Drilling reported operating profit of $850mn (up 119%) owing to the sale of 9.5% stake in Tamar. However its revenues from gas sales declined to $502mn (down 7.4%) and operating profit, without the sale proceeds, was $283mn (down 27.1%).

Isramco with 28.75% shareholding became the second largest shareholder in Tamar during 2017 and became the biggest earlier this year when Noble Energy sold a further 7.5% to Tamar Petroleum. Last year Isramco reported on revenues of $540mn (up 4.8%) and operational profit of $355mn (up 4.3%).

Tamar Petroleum, a special-purpose vehicle, was founded last year in order to raise money to buy shares from Delek Drilling. Demand for the equity in the IPO was poor and Delek Group remained with 40%. Tamar Petroleum, with 9.25% shareholding, reported revenues of $172mn and operational profit of $114mn.

Alon Natural Gas, with 4%, reported revenues of $75mn and operating profit of $38mn.

All in all, it was a great 2017 to all of Tamar Project shareholders. And this year, without any force majeure intervention, is not going to be any different, just a bit better, since prices continue to creep up.