Mubadala signs MOU to buy Tamar field stake from Delek Drilling

Israel’s Delek Drilling has signed a non-binding memorandum of understanding (MoU) with UAE’s Mubadala Petroleum for the sale of its 22 per cent non-operated stake in the Tamar gas field offshore Israel.

Tamar platform; Source: Delek Drilling

Delek Drilling said on Monday that, if finalized, the transaction would be the largest commercial agreement following the ‘The Abraham Accords Peace Agreement: Treaty of Peace, Diplomatic Relations and Full Normalization Between the United Arab Emirates and the State of Israel‘ signed in August 2020.

This is the first official MoU following news from several media outlets earlier this month that Delek Drilling was in talks to sell its stake in Tamar for up to $1.1 billion.

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At the time, Israeli financial newspaper Globes quoted a source knowledgeable on the matter who speculated that the information circulating over the past few days on the possible acquisition has been put out “to renew interest in the market on the deal and there is no indication that there are any advanced talks“.

Another Israeli news website – Haaretz – claimed that the company aiming to buy the Tamar stake was Cairn Energy.

The sale of Delek Drilling’s stake in Tamar was necessary as the company signed a natural gas sector agreement with the Israeli government several years ago, which obliges it to sell all of its holdings in the Tamar gas field by December 2021 because it also holds a 45.34 per cent stake in the Leviathan gas field.

This agreement enables opening the sector to competition. The company has already sold a part of its holdings to Tamar Petroleum and Everest.

Delek Drilling holds a 22 per cent stake in the Tamar gas field. The other partners in the Tamar field are Isramco with a 28.75 per cent stake, Chevron – which gained its 25 per cent stake through the acquisition of Noble Energy, Tamar Petroleum with 16.75 per cent, Alon Natural Gas Exploration with 4 per cent, and Everest with 3.5 per cent.

Delek Drilling
Yossi Abu; Source: Delek Drilling

Delek Group is a majority owner of Delek Drilling with a 54 per cent stake, which has a market cap of NIS 5.85 billion ($1.8 billion).

Post-sale of the Tamar stake to Mubadala, Delek Drilling will still own its Leviathan stake as well as a 30 per cent stake in the Aphrodite field offshore Cyprus with 2C resources of 3.5tcf.

Yossi Abu, CEO of Delek Drilling, said: “This transaction has the potential to be another major development in our ongoing vision for natural gas commercial strategic alignment in the Middle East, whereby natural gas becomes a source of collaboration in the region.

We are proud to have signed this MoU following the Abraham Accords Peace Agreement between Israel and the UAE. The development is not only a significant endorsement of the quality of the Tamar reservoir and the Levant basin but also a major support for the East Mediterranean Natural Gas sector.

I would like to thank my counterparty at Mubadala Petroleum and our clients in Israel, Egypt and Jordan“.