The financing for the transaction will be carried out mainly through RBLs from a consortium of international banks that will be granted to the special purpose company that will purchase the property, in the amount of $ 440 million.
Half or more of the balance ($ 525 million) will be secured by a debt that will be taken by the purchaser (a wholly-owned subsidiary of the Delek Group) against a lien on the rights in the database only, based on the expected cash flow of $ 230 million per annum. This is under the assumption of a daily production rate of about 16,000 barrels (the part purchased by Delek in the reservoir) and the price of an average barrel of oil of $ 60. The rest of the sum is planned to be financed by the inclusion of partners in the deal or from the group’s own resources.
Delek notes that all the debt that will be taken by the special purpose company will be under non-recourse conditions for the Delek Group.
In order to secure the revenues from the reservoir, the group began hedging transactions on the price of oil relative to the expected output over the next three years at a price of $ 57 per barrel. Today, the price of a WTI oil barrel is about $ 64, following a 44% rise from last December.
It is important to note that in the last four years the price of WTI oil has fluctuated from a low of $ 30 per barrel in early 2015 to a peak of $ 74 a barrel in September last year. For most of the period, the price remained well below $ 60 and was $ 45-50 per barrel.
Term agreement with a subsidiary of Shell
Delek Group also notes that on the closing date of the transaction, the Group will sign a long-term agreement with a subsidiary of Shell whereby the Shell Trading Company will purchase the Group’s share of the oil that will be produced from the market price at the relevant date or compare the conditions that the Purchaser will receive from a factor Other.
The Delek Group share responded to the report by 1%. In the past year, the share rose 34% and the group’s value reached NIS 8 billion.
Assi Bartfeld, CEO of the Delek Group, said today, “This is a strategic and business opportunity – a synergistic investment in the company’s operations that will enable the Group to operate in a productive oil asset with significant proven reserves, strong flow and partnership with leading players in the global energy market.”