Delek Energy seeks bigger stake in Avner Oil partnership

Yitzhak Tshuva-controlled Delek Group Ltd. (TASE: DLEKG) subsidiary Delek Energy Systems Ltd. (TASE: DEOL) today published a shelf prospectus for an offering through an exchange offer to purchase of 517,300 Delek Energy shares for 347 million shares in Avner Oil and Gas LP (TASE: AVNR.L). Delek Energy will offer one share for each 670.65 partnership units in Avner.

The offer to purchase does not apply to Delek Energy’s sister company, Delek Investments and Properties Ltd., and subsidiary, Avner Oil Exploration Ltd., which currently own 47.27% of Avner altogether. Delek Energy is seeking to acquire 10.4% of Avner. Implementation of the offer to purchase depends on a favorable response by owners of 262.7 million partnership units in Avner, amounting to 75.73% of the units in the offer to purchase. Delek Energy has the right to make new offers to purchase in the future, regardless of the outcome of the current offer, at the same or different terms, at its sole discretion.

In the event of a full response to the offer to purchase, Delek Energy will increase its stake in Avner from its current 38.12% to 48.5%. If the offer is successful, it will boost Delek Energy’s chances of inclusion in the Tel Aviv 100 Index at the upcoming review. The company’s low liquidity currently keeps it out of the index.

Delek Energy’s share rose 14% by mid-afternoon today to NIS 816.10, giving a market cap of NIS 3.3 billion. Avner’s share rose 3.8% to NIS 1.20, giving a market cap of NIS 3.92 billion.

Published by Globes [online], Israel business news – www.globes-online.com – on November 8, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

Tamar partners to raise large sums for development

The partners in the Tamar and Dalit offshore natural gas fields are preparing to raise capital to develop Israel’s largest natural gas field. Delek Group Ltd. (TASE: DLEKG) subsidiary Delek Energy Systems Ltd. (TASE: DEOL) has published a shelf prospectus to raise hundreds of millions of shekels in the coming weeks and is currently working on the structure of the offering.

Delek Energy controls Delek Drilling LP (TASE: DEDR.L) and Avner Oil and Gas LP (TASE: AVNR.L), which each own 15.625% of the Tamar and Dalit prospects. Last week, both companies, authorized Noble Energy Inc. (NYSE: NBL), which owns 36% of the prospect, to buy $230 million worth of equipment and services by 2011 to develop the gas fields. Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), which owns 28.75% of the prospect approved purchases of up to $160 million.

The partners in the Tamar and Dalit offshore natural gas fields are preparing to raise capital to develop Israel’s largest natural gas field. Delek Group Ltd. (TASE: DLEKG) subsidiary Delek Energy Systems Ltd. (TASE: DEOL) has published a shelf prospectus to raise hundreds of millions of shekels in the coming weeks and is currently working on the structure of the offering.

Delek Energy controls Delek Drilling LP (TASE: DEDR.L) and Avner Oil and Gas LP (TASE: AVNR.L), which each own 15.625% of the Tamar and Dalit prospects. Last week, both companies, authorized Noble Energy Inc. (NYSE: NBL), which owns 36% of the prospect, to buy $230 million worth of equipment and services by 2011 to develop the gas fields. Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), which owns 28.75% of the prospect approved purchases of up to $160 million.

Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) unit Dor Gas Exploration LP, which owns 4% of Tamar and Dalit, is also getting ready to raise capital. Dor Alon plans to split its holding in the prospects from its gas stations and convenience stores business, and create a partnership that will hold the Tamar stake. Dor Alon is working with the Israel Tax Authority on this new structure, which will make it possible for the new partnership to raise capital directly to develop the gas fields.

Dor Alon is meeting with institutional investors to hold a bond issue of up to NIS 250 million for this purpose.

Published by Globes [online], Israel business news – www.globes-online.com – on September 1, 2009

Expect Stock Surge in US Oil and Gas Companies Exploring in Israel

Israeli energy stocks surged today (see http://www.oilinisrael.net/oil-in-israel-articles/israel-energy-stocks-surge-on-large-gas-find)based on Noble Energy’s announcement of a discovery off the Haifa Coast of over three trillion cubic feet of natural gas.

Noble Energy (NBL, NYSE) who announced the discovery and Zion Oil (ZN, AMEX), both public companies trading on American Markets, and both involved in Israeli energy exploration, should experience similar stock surges on Monday when US markets open.

Parks Authority okays drilling for oil in Judean reserve

The search for oil in Israel got a big push forward on Tuesday night after The Nature and Parks Authority general assembly approved plans for the drilling of an exploratory hole to search for oil in the Judean nature reserve. Two Israeli companies, Ginko Oil Exploration and Delek Energy Systems, believe there could be as much as 6.5 million barrels below the reserve.

The assembly approved Zuk Tamrur 4 on the condition that the Authority comes up with strict guidelines to reduce the environmental damage as much as possible. The assembly also demanded that the companies rehabilitate the area afterwards. In addition, if oil were to be found, the assembly ruled, the pumps to remove it would have to be placed outside the reserve.

Until now, the Authority’s administration had rejected all attempts at drilling, but they were overruled Tuesday by the general assembly, which comprises representatives of environmental organizations and the government.

Avraham Poraz, former internal affairs minister and now consultant to the oil companies, told The Jerusalem Post Tuesday night how he explained the issue to the assembly a month ago in the run-up to the decision.

“I put it to them very simply. One third of Israel is nature reserves. It cannot be that we can’t search for oil in one third of the country.

“Moreover, I told them that according to our ecological estimations, the damage would be minimal because we are talking about 1.25 acres without fences, or dogs or anything like that,” he told the Post.

The Society for the Protection of Nature in Israel (SPNI) decried the decision.

“We are distressed that the assembly gave in to the pressures of the initiators, did not heed its own science committee’s recommendation against the plan and so will cause unnecessary damage to the reserve,” the organization said in a statement.

The Authority had suggested drilling a hole diagonally from outside the reserve to search for oil, but a geological consultant said that would create too many problems, an Authority spokesman said.

Ginko director Rami Karmin told the Post earlier this week that Zuk Tamrur 4 represented Israel’s best bet to find oil. He said they only needed 1.25 acres for two months to drill a hole 2,000 meters deep and see if they struck oil. 6.5 million barrels would be worth about $800 million, he added.

The area where the companies want to sink their hole represents a bridge for animal populations between the Judean and Negev reserves, the Authority’s science committee had written, and putting in a hole would block that narrow passageway. It had also said that any sort of drilling was bound to cause severe environmental damage and therefore recommended rejecting the request.

Searching for oil in the Judean Desert

Two Israeli energy companies are convinced the best chance for finding oil in Israel lies at a site in the Judean Desert nature reserve and have stirred up a storm of controversy with their persistent requests to drill an exploratory hole.

The companies, Ginko Oil Exploration and Delek Energy System, want to drill in an empty corner of the desert. However, the Nature and Parks Authority Science Committee and the Society for the Protection of Nature in Israel (SPNI) contend that even exploratory drilling will destroy the fragile ecosystems in the reserve. The two sides will go head to head on Tuesday in front of the Nature and Parks Authority general assembly, the Authority’s highest body, which will decide whether to grant the companies’ request.

The situation, from an environmental perspective, has also been complicated by the fact that Environmental Protection Minister Gideon Ezra has recommended the drilling plan, although on the condition the ecological damage was reversible.

Ginko made headlines two years ago when it discovered a small amount of oil near the Dead Sea through Zuk Tamrur 3. This time around, Ginko director Rami Karmin believes Zuk Tamrur 4 in the reserve has the best chance to produce as much as 6.5 million barrels.

But even he admits that drilling for oil is “a tricky business” and there are no guarantees.

“We are talking about drilling in a spot that the Authority had already approved drilling there 10 years ago, and we requested that spot because we thought they’d approve it again. The district committee approved it two weeks ago and now we need the Authority’s approval,” he said.

“We need [approximately] 1.25 acres out of 150,000 for two months so that we can drill an exploratory hole 2,000 meters down. We had an ecological company evaluate the area. There have also been other exploratory holes in the Dead Sea area and you can’t even see them anymore,” Karmin argued.

According to Karmin, Zuk Tamrur 4 is the likeliest place in Israel to find oil because of its unique geological properties.

“There is oil around the Dead Sea but the constant little earthquakes that occur because the Sea is on a fault line release the pressure before the oil can be driven to the surface. At this spot, there is a four-way closure and there is a good chance there is oil there,” he said.

However, SPNI argued Sunday in a position paper ahead of Tuesday’s meeting that the relatively small predicted reservoir did not justify the massive ecological damage. Israel uses about 80 million barrels of oil per year, or 270,000 per day. 6.5 million barrels would meet Israel’s needs for less than a month.

Karmin contended that the amount of oil wasn’t the point, its cost was.

“Six-and-a-half million barrels is worth about $800 million. The government would be receiving about $400m. in fees and taxes – can we really afford to turn down that much money?” he demanded.

The Authority’s Science Committee, nevertheless, has submitted its assessment report to the general assembly and has counseled the body to prohibit the companies from drilling. The committee consists of, among others, two professors and two doctors, including the Environmental Protection Ministry’s chief scientist Dr. Yishayahu Baror – who apparently disagrees with his minister.

Rather than a deserted corner of the desert, the site actually sits in the middle of a very narrow corridor which serves as a natural transit area between the Judean Desert Reserve and the Negev reserve, the committee said. Disturbing the area would have a massive impact on plant and animal life in the whole area, they argued. Animal populations would be cut off from their main groups with no way to get back to the Negev, they said.

The committee addressed both the potential damage from the initial drilling, but also the greater potential impact of striking oil.

While an exploratory hole would inevitably cause some damage, if oil was found, much more damage would result, the committee wrote. A constant stream of tanker trucks and the new roads they would require would doubtless result in severe damage. Even putting up lights, as is usual for drilling sites, would adversely affect the delicate ecosystems. The inevitable accidents if oil were found would pollute the ground in the area as well, according to the report.

The committee concluded by reminding the general assembly that it was precisely their job to protect nature in the face of such threats.

Meanwhile, even if the committee voted against granting them permission on Tuesday, Karmin vowed to employ additional legal measures to get the permits.