Delek Group profit narrows as natgas production drops

Thu Nov 29, 2012 4:21am EST

* Q3 net profit 93 mln shekels vs 140 mln in Q3 2011

* Gas production at Mari B well declined significantly

JERUSALEM Nov 29 (Reuters) - Israeli conglomerate Delek Group reported on Thursday a drop in quarterly profit, hurt by a continued decline in natural gas production.

Delek's net profit fell to 93 million shekels ($24 million) in the third quarter from 140 million a year earlier. Revenue in the quarter rose 24 percent to 18.9 billion shekels.

"A significant decline in natural gas production due to the depletion of the Mari B reservoir continued," Delek said.

Oil and gas production contributed a 31 million shekel loss to Delek in the July-September period compared with a 68 million shekel gain a year ago.

Egyptian state-owned companies earlier this year stopped gas sales to Israel, part of a 20-year deal, following a year of sabotage and pipeline attacks that had already disrupted supplies. Egypt had supplied 40 percent of Israel's gas needs.

As a result Israel had to rely solely on Israeli gas from the Mari B well. But that well is rapidly depleting so production has been limited until the large Tamar prospect comes online next year.

In late June, gas began flowing from two smaller wells, Noa and Pinnacles, reducing the impact of the decline in gas supply from Mari B.

Tamar, with an estimated 9.7 trillion cubic feet of reserves, is owned mainly by U.S.-based Noble Energy and Delek units Delek Drilling and Avner Oil Exploration . Delek said Tamar remains on track for production in the first half of 2013.

Delek's bottom line was helped by higher profit from its U.S. fuel operations. In September, Delek sold a 5.05 percent stake in Delek US Holdings. Last week it sold another 3.7 percent for $57 million and still holds 53 percent.

Delek also posted a gain from its insurance and finance operations versus a year-earlier loss.

Delek said it would pay a third-quarter dividend of 5.71 shekels a share, or a total of 65 million shekels, down from 7.03 shekels for the second quarter.

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