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    Israel’s Delek Buys Into Gulf of Mexico Field

Summary

The deal will see Delek pay $965mn and agree a 30-year offtake contract.

by: Tim Gosling

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Natural Gas & LNG News, Americas, Corporate, Mergers & Acquisitions, News By Country, United States

Israel’s Delek Buys Into Gulf of Mexico Field

Delek Group has signed an agreement to acquire 22.45% of the Caesar Tonga oil and gas field in the Gulf of Mexico from Royal Dutch Shell, the Israeli company announced April 11.

The deal will grant Delek 22.45% of the exploration, development and production rights for oil and gas in Caesar Tonga for a purchase price of $965mn. Delek will also sign a 30-year off-take agreement with Shell Trading (US) Company to purchase oil produced from the field.

One of the ten largest deepwater resources in the US Gulf of Mexico, with a production horizon spanning tens of years, Caesar Tonga currently produces approximately 71,000 boe/day. Delek’s interest will include proven reserves of 78mn boe and should generate annual EBITDA of approximately $230mn, the company said in a statement.

Once it completes the purchase from Shell Offshore Inc., Delek will join field operator Anadarko Petroleum (33.75%), Equinor (23.5%), and Chevron (20.25%) in ownership.

“Completion of the transaction is subject to, among other things, the right of first refusal possessed by the field's other co-owners,” the statement reads. Delek said it expects to close the deal by the end of the third quarter of 2019.

The acquisition will be financed by non-recourse loans from international banks against the asset, along with Delek Group funds.

Delek CEO Asaf Bartfeld called the deal “a further important stage in implementing Delek Group’s strategy to expand and establish our operations on the international stage. 

“This is an important opportunity for Delek Group, which provides access to a producing oil asset with stable output since 2012, significant proven reserves, strong cash flow, and partnership with leading players in the global energy market,” he added.

Located in the Gulf of Mexico 300 km south of Louisiana at a depth of 1,500 meters, Caesar Tonga contains eight wells connected by an undersea pipeline network to a production platform owned by Anadarko, which transports the oil and gas through an existing pipeline to the coasts of Louisiana and Texas. Production launched in 2012.