With the sale of part of the Tamar natural gas field by Delek Drilling, the Tel Aviv Stock Exchange, TASE, is about to see its largest IPO ever. An offering of about $1.2 billion in stocks and bonds to finance a deal will be offered by a new company, Tamar Petroleum, which plans to get into a deal to acquire part of Delek’s holding in the smaller Dalit field as well as to acquire 9.25 percent of the field.
Tamar is currently the main field from which Israel draws its natural gas and Delek’s divestment is part of antitrust measures under which the company is to sell its entire 31.3 per cent stake in Tamar. In that particular oil field, the share of its partner – Texas-based Noble Energy, will be reduced from 33 to 25 percent. In a move towards that ultimate goal, it sold 3 percent stake last year. A much larger Leviathan gas field is scheduled to go online in the coming years and this move would allow both the companies to maintain their share in that new venture field.
For the acquisition of its share, Delek is setting up Tamar Petroleum as a Special Purpose Vehicle, SPV. The sale of the remaining 22.5 percent in Tamar will follow later.
Roee Zass of TASC Strategic Consulting estimates that due to the fact that there are not that many interested parties in the market, the companies took the decision to go for an IPO rather than sell directly to other investors.
“We believe there is a small relevant number of entities that has the potential to purchase Tamar rights while Delek and Noble need to sell large stakes. That is the motivation behind going to the market and not sell directly to private or institutional investors.”
He said that another factor was pricing. Based on the field’s pre-tax valuation of $12.3 billion, Israel’s Harel Insurance Investments and Financial Services were sold a 3 percent stake last year for $369 million. “I’m guessing Delek do not want to go down from this level, and that is another reason to go to the IPO.”
Israel has a framework agreement between the government, regulators and the companies that was subject to prolonged political and legal wrangling for natural gas and the antitrust measures are part of Israel’s such a framework for natural gas. Development of the large Leviathan field for years have been delayed by disagreements over Delek and Noble’s dominant position.
Large enough to be listed on the TASE’s flagship TA-35 index is the new Tamar Petroleum. With eight so far, the most since 2011, the TASE has seen an increasing number of IPO’s this year. In what is the largest IPO so far this year on the TASE, drone company Aeronautics recently raised some $130 million.
(Adapted from CNBC)