Israel’s Delek Group is proposing a US$155 million deal to acquire 19.9% stake in Block 12, offshore Cyprus, from Houston-based Noble Energy.
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Map from Noble. |
Block 12 covers approximately 2684sq km in the Eastern Mediterranean Sea. The license offshore Cyprus covers approximately 636,000 gross undeveloped acres adjacent to Noble Energy’s Israel acreage, which Delek also has stake in.
Delek said in a statement that negotiations are in the initial stages, and there is no certainty that they will mature into any binding agreement. The transaction, as it progresses, is subject to various approvals, including the approval of Delek, Noble’s subsidiary Noble Cyprus, the approval of the Republic of Cyprus, as well as other approvals as required.
As it stands, Noble Energy is the operator of Block 12 with 70% interest. Partners Delek Drilling and Avner Oil Exploration, both Delek Group subsidiaries, each hold 15%.
At the beginning of this year, Noble was in talks with officials in Cyprus over how to develop the 4.54 Tcf gas reservoir Aprhodite, according to a Reuters report.
According to Noble’s 2014 Annual Report, the company received approval for a two-year renewal for its Cyprus project in May 2014, setting the expiration date for May 2016. The Cyprus discovery, announced in 2011, has estimated gross mean resources of 5 Tcf.
Noble said in the report that they are evaluating development scenarios for Block 12 and plan to submit a plan of development to the Cypriot government this year.
There is also potential for a farm-out arrangement of the company’s working interest. Failure to execute successful development scenarios for Leviathan and Cyprus Block 12 could reduce Noble’s future growth and have negative effects on its operating results, the report said.
The company was able to sign multiple letters of intent for regional export in 2014, with the most recent being with an Egyptian customer to supply interruptible volumes from Tamar. The terms of the LOI include up to 250 MMcft/d, with pricing equivalent to other export LOIs that the company has signed.
Noble’s issues with Israel
In February 2015, Noble suspended further investments in the expansion of Tamar, and initial development of Leviathan until regulatory issues were resolved.
However, in a stroke of luck, Director General of the Israeli Antitrust Authority David Gilo announced his resignation on 25 May and is set to end his reign in August 2015. Gilo served as Noble’s main opposition for its Leviathan plans. He even said in his departure announcement that he decided to resign because he believes the government, and its offices (Ministry of Finances, Ministry of Energy) are pursuing a plan for the natural gas sector that will not lead to competition, and does so at the expense of the Antitrust Authority’s independence as an organization.
Leviathan is Noble’s largest exploration discovery in its history with an estimated 19 Tcf of gross natural gas resources, representing the largest deepwater natural gas discovery in the world in over a decade. Noble had anticipated that the first phase of development at Leviathan to be approved in 2014.
As of 2013 when Tamar went into production, it was estimated to contain gross mean resources of 10 Tcf of natural gas. It was first discovered in 2009.
Noble operates Leviathan with 39.66% interest. Partners include Delek Drilling (22.67%), Avner (22.67%), and Ratio Oil Exploration (15%).
Noble also operates Tamar with 36%. Its partners include Isramco Negev 2 LP (28.75%), Delek Drilling (15.625%), Avner (15.625%) and Dor Gas Exploration (4%).
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