Israel's Harel to buy Tamar gas field stake from Noble

Jul 05, 2016 12:00 AM

Harel Insurance Investments and Financial Services and the Israel Infrastructure Fund (IIF) are to buy 3 percent of the Tamar natural gas field from Texas-based Noble Energy for $369 million.

Noble owns 36 percent of the Tamar field, which was discovered in the eastern Mediterranean in 2009 with reserves of 10 trillion cubic feet. It began production in 2013 and now fuels more than half of Israel's electricity generation.

Under a deal reached with the Israeli government to boost competition in the sector, Noble agreed to trim its stake in Tamar to 25 percent. The company said on Tuesday it expects to sell 7 to 8 percent over the next three years.

Noble and its Israeli partner Delek Group control a number of natural gas fields off Israel's coast, including the much larger Leviathan field. Delek has agreed to sell its entire 31.3 percent stake in Tamar.

Harel and IIF have an option to buy another 1 percent of Tamar for $123 million, Harel, which is the largest investor in IIF, said in a statement.

The deal is based upon a pre-tax Tamar valuation of $12 billion and is subject to purchase price adjustments between Jan. 1 and the closing date, which is expected in the third quarter, Noble said.

After-tax proceeds are expected to be $275 million.

Gary Willingham, Noble's executive vice president of operations, said the deal highlighted the potential of its other undeveloped Levant Basin discoveries, which share similar characteristics.

Noble will be entitled to royalties if the Tamar partners sign an export deal with Egypt by the end of 2016. The deal is conditional on regulatory approval.

Noble and its partners are planning to drill an additional development well at the Tamar field in response to increased demand for natural gas in Israel as the country replaces coal. Drilling is expected to begin in the fourth quarter.

"These proceeds further bolster our balance sheet in the near term and will contribute to our upcoming capital investments in Israel, including our initial investment in the Leviathan project," Willingham said.

The Tamar field sold 252 million cubic feet per day of natural gas and generated pre-tax income of $318 million for Noble in 2015.

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