Israel's Navitas Petroleum plans Tel Aviv share sale

HERZLIYA, Israel (Reuters) - Israel’s Navitas Petroleum plans to raise $130 million in bonds and then carry out an initial public offering (IPO) on the Tel Aviv Stock Exchange as it expands operations in the Gulf of Mexico and Canada.

The logo of Israel's Navitas Petroleum is seen at their offices in Herzliya, Israel June 12, 2017. Picture taken June 12, 2017. REUTERS/Amir Cohen

The exploration and production company will use the money raised in the bond offering to fund development and secure a 5 percent stake in the deep-water project Buckskin in the Gulf of Mexico, which holds an estimated 490 million barrels of recoverable oil, Navitas Chairman Gideon Tadmor said on Tuesday.

Upon completion of the bond issuance -- which is aimed at institutional investors and has been graded “A-” by Standard & Poor’s Israeli unit Maalot -- Navitas will go public in Tel Aviv, Tadmor said.

Navitas’ valuation in the IPO will be approximately $100 million, according to a prospectus.

“After two and a half years of downturn in the upstream sector, there are very interesting investment opportunities in the sector in the U.S,” Tadmor told Reuters.

Tadmor, 53, has been a public face for Israel’s energy industry over the past decade as the country emerged as a regional player.

He bought Navitas from Israeli conglomerate Delek Group DLEKG.TA, where he had previously held senior roles, which discovered the massive natural gas fields Tamar and Leviathan.

These discoveries turned Israel into an energy exporter. Drill bits from both wells are displayed in his new offices.

Despite the local boom, Navitas, with stakes in 11 oil and gas projects in the Gulf of Mexico and another in Newfoundland, Canada, will be one of the first public Israeli companies to operate abroad.

“One of our advantages is our ability to source both equity and financing from the Israeli capital market to cherry pick exciting projects,” Tadmor said.

Delek is also looking overseas, acquiring North Sea oil producer Ithaca Energy earlier this month.

Israel in the meantime is seeking new firms to explore 24 offshore blocks in the vicinity of Tamar and Leviathan, saying huge reserves have yet to be discovered.

Although he championed eastern Mediterranean exploration while at Delek, Tadmor said he did not see opportunities in this round of tenders.

“My heart is in Israel, my investors are in Israel, but the opportunities right now in my mind exist outside of Israel,” he said, referring to what he sees as a combination of problematic regulation, the potential for relatively small discoveries, and a limited market to sell the gas.

Reporting by Ari Rabinovitch; Editing by Tova Cohen and Louise Heavens