Delek Gains as Woodside to Buy $2.6 Billion Leviathan Stake

Delek Group Ltd. (DLEKG), a partner in Israel’s biggest natural gas field, advanced after Australia’s Woodside Petroleum Ltd. said it plans to buy a quarter of the site for as much as $2.6 billion.

Delek shares gained as much as 2.1 percent, and were trading 1.3 percent higher at 12:04 p.m. in Tel Aviv. The stock advanced 3.7 percent in the past week, after the company said on Feb. 2 talks with Woodside were continuing. The benchmark TA-25 Index gained 0.3 percent.

Woodside agreed to pay Noble Energy Inc. and its partners in the Leviathan off-shore field an initial $850 million when the deal is completed, probably by the end of next month, the Perth-based company said on Feb. 7. The stake is smaller than the 30 percent negotiated in December 2012 and valued then at as much as $2.3 billion. The revised agreement reflects rising gas demand in the Middle East.

The deal is positive because it would bring international experience, fresh capital and diversification of ownership, Michael Leigh, senior adviser to the German Marshall Fund of the U.S., a Washington-based public policy institute, said by phone from Brussels on Feb. 7.

The Leviathan partners, including Delek Drilling LP, Avner Oil Exploration LLP (AVNRL) and Ratio Oil Exploration LP, intend to supply the domestic market in Israel and neighboring countries while also exporting gas using Woodside’s expertise. Israel has discovered enough of the fuel under the Mediterranean to allow both. Leviathan will probably start production in 2017, according to a Noble Energy 2013 presentation.

‘Major Achievement’

“The biggest company in Australia decided to invest in Israel after extended negotiations,” billionaire Isaac Tshuva, who controls a majority stake in Delek, said today on Army Radio. “For Israel, this is a major, major achievement.”

Delek shares have advanced 41 percent in the past 12 months as Tamar, the country’s second-biggest offshore field, came online in March and as the company has been selling assets to focus on its energy business. Delek last year sold stakes in Delek Automotive Systems Ltd. and Delek U.S. Holdings Inc. as well as in insurer Phoenix Holdings Ltd. (PHOE1) The conglomerate said in December it’s planning to set up a company to hold its $3.5 billion oil and gas-exploration interests that it will seek to list in London.

To contact the reporter on this story: Shoshanna Solomon in Tel Aviv at ssolomon22@bloomberg.net

To contact the editor responsible for this story: Samuel Potter at spotter33@bloomberg.net

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