Apr 29, 2014
Israeli Gas Field Owners Eye $2 Bln in Bonds to Finance Leviathan Project
According to a press release late Monday, Leviathan partners Delek Drilling and Avner Oil and GasAVOGF 0.00% — which partnered with Houston-based Noble Energy Ltd.NBL +0.08% in the gas find — have started a road show to sell dollar-denominated bonds to investors in Israel, the U.S., and Europe over the coming weeks.
The two companies have formed a separate firm “Delek and Avner Ltd.” under which the bonds will be sold.
“Once completed, this will be the biggest capital raise [sic] held by an Israeli company,” the statement said.
The stock exchange notice cautioned, however, there is no certainty that the offering will be a success.
Still, the sum reflects bullish expectations for the export potential of the Leviathan reserves. Noble Chief Executive Charles Davidson said after the company reported first-quarter results on April 24 that the consortium was close to a regional export agreement, but didn’t say with whom, the Israeli business daily Globes reported.
A 127-page report on the natural gas market included with the Monday bourse statement said the prospects that Israeli off-shore gas will reach overseas markets are “significantly’’ more than 50 percent, or “highly likely.’’
In the dossier, prepared by Israeli consultancy Economic Models’ Ltd., on top of the 875 billion cubic meters of expected demand for natural gas from the Israeli, Palestinian and Jordanian markets over the next 26 years there’s potential to export an additional 370 billion cubic meters over the same period
Leviathan, discovered in 2010, has 19 trillion cubic feet, or 538 billion cubic meters, of proven reserves and is the largest off shore natural gas find in the Mediterranean. The discovery left Israel with a surplus of domestic gas reserves and spurred export talks.
The partners already signed deals to supply the Palestinian territories and Jordan, but export potential via Egypt, Cyprus or Turkey is much larger. The Economic Models report said that underutilized liquefied gas facilities in Egypt hold an “economically attractive immediate outlet for Israel’s gas export.’’
Gideon Tadmor, chairman of Delek Drilling and chief executive of Avner, said at a natural gas conference in March that Israeli natural gas exports to neighboring countries have the potential to stabilize the region.
The announcement of the bond sale comes a month after negotiations to sell a stake valued at some $2.6 billion to Australia’s Woodside Petroleum Ltd.WPL.AU -0.49% hit a snag hours before a signing ceremony in Jerusalem over a tax dispute with the Israeli government.
Noble Chief Executive Charles Davidson told investors, that even though he wants Woodside to join, “we and our existing partners are moving forward and we are starting to take steps to make sure we can deliver on this project,’’ according to the Sydney Morning Herald.
The bond roadshow will be led by investment banks JP Morgan, Citi and HSBC., and accompanied by the Israeli underwriter Leader Capital Markets.
Link to source: http://blogs.wsj.com/middleeast/2014/04/29/israeli-gas-field-owners-eye-2-bln-in-bonds-to-finance-leviathan-project/
