Delek's Q1 earnings soar on higher Leviathan sales, prices
Israeli oil and gas producer Delek swung to a net profit of 279mn Israeli shekel ($86mn) in the first quarter, from a loss of 2.8bn shekels a year earlier, thanks to increased production from the Leviathan field off Israel and higher oil and gas prices.
Delek posted an operating profit of 871mn shekels compared with a 2.7bn loss in the first quarter of 2020, on the back of a growth in revenues to 1.91bn shekels from 1.88bn. The company brought on stream the Leviathan field in January last year and its production reached 2.7bn m3 in Q1 2021, up 65% year on year. This means it is producing at a rate of 10.8bn m3/year, surpassing Delek's forecast for 2021 of 10.2bn m3.
Most of the field's gas is sold to Jordan and Egypt.
Revenues and cash flow from operations at Delek's UK North Sea subsidiary Ithaca Energy were stable yr/yr at $345mn and $221mn respectively in Q1 2021. Higher oil and gas prices were offset by reduced output and the impact of hedging deals. Ithaca turned a net profit of $43mn in the three-month period, up from a $655mn loss caused by one-off charges a year earlier.
Delek also managed to shave 140mn shekels off its net debt over the three months, bringing it to 4.2bn shekels as of March 31, which was down over 2bn shekels yr/yr.
CEO Idan Wallace noted Delek was also taking steps to strengthen its liquidity and equity. Bondholders have approved an amendment to the company's updated deed of trust, meaning the date of review of the rating covenant can be postponed by a number of instalments, the company said. In exchange for this approval, Delek will undertake extra measures to improve its finances, it said.
"We are continuing to promote additional significant moves while taking advantage of the financial flexibility we have been able to obtain following the steps we have taken over the last year, such that our assets ... will enable us to generate the cash flows required by the group," Wallace said.