By Tova Cohen
TEL AVIV Dec 31 Israeli conglomerate Delek
Group is examining a spinoff of its oil and gas
activities, saying it could help maximise value for shareholders
by separately listing a bunch of assets which one analyst valued
at some $3.6 billion.
Delek, which is 63 percent held by billionaire Yitzhak
Tshuva, has major shares in a number of newly discovered gas
fields off Israel's coast including Tamar and Leviathan.
The Tamar field, which Delek developed together with
Texas-based Noble Energy, has estimated reserves of 10
trillion cubic feet (tcf) and began production in late March.
Nearby Leviathan, with an estimated 19 tcf of gas reserves,
is set to come online in 2016 or 2017. Israel's High Court has
upheld a government decision to allow exports of 40 percent of
UBS analyst Roni Biron estimates Delek's exploration and
production (E&P) activities account for 77 percent of group net
asset value (NAV), which he put at 16.39 billion shekels ($4.7
billion). The rest consists of downstream operations in Israel,
Europe and the United States, as well as insurance and water
Shares in Delek Group, which has a market value of $4.3
billion, were up 4 percent to 1333 shekels in afternoon trading
in Tel Aviv on Tuesday.
Biron said Delek is the only Israeli E&P vehicle not
structured as a limited partnership and its holding structure
had made it less popular among international investors.
"Consequently, Delek had already adopted a strategy of
streamlining its structure around E&P, a process which could now
be expedited," said Biron, who rates Delek shares "neutral". "We
therefore believe that this strategic move, if implemented,
could boost Delek's E&P profile."
A senior Israeli fund manager invested in Delek said the
split would not increase value as Delek does not trade at a
discount to its NAV. "What it will do is make it easier for
foreigners to invest in the company," he said.
The fund manager added this will not likely be the final
step in Delek's restructuring, as he believes the company would
eventually seek to merge all the energy units together.
PREFERENCE FOR LONDON
Shares in the new energy company, which would be
incorporated outside Israel, would be registered to trade on a
foreign bourse, either alongside or in addition to the Tel Aviv
Stock Exchange, Delek said in a statement.
Delek's management said the company's preference is to list
the new company in London.
Shares in the new company would be given to existing group
shareholders of Delek in proportion to their respective
holdings. Delek Group shares and bonds will continue to trade in
Delek would transfer to the new company its holdings in
Delek Energy Systems, Delek Drilling, Avner
Oil Exploration, Cohen Development & Industrial
Buildings and Navitas Petroleum, as well as its rights
in the Ashkelon and Noa leases and its right to receive
royalties from the energy sector.
The split will enable Delek and the new company "to act as
independent companies ... thus contributing to the exposure of
the respective assets of each company to a larger and more
targeted investor market," Delek said.
Avner and Delek Drilling each have a 22.67 percent stake in
Leviathan, the world's largest offshore gas find of the past
decade. Noble has a 39.66 percent stake and Israel's Ratio Oil
Exploration holds the remaining 15 percent.
Noble has a 36 percent stake in Tamar while Avner and Delek
Drilling together hold 31.25 percent and Isramco Negev
has a 28.75 percent stake.
Delek Drilling shares were up 0.8 percent while Avner rose