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Delek Group, Ratio Drop as Woodside Scraps Israel Gas Field

May 21 (Bloomberg) -- Delek Group Ltd. sank to the lowest level in almost two weeks as Australia’s Woodside Petroleum Ltd. scrapped an agreement to buy a quarter of Israel’s largest natural-gas field for as much as $2.6 billion.

Delek, which owns stakes in the offshore Leviathan field via its Delek Drilling-LP and Avner Oil Exploration-LP units, declined as much as 1.4 percent, before closing 0.7 percent lower at 1,469 shekels, the lowest level since May 8. Ratio Oil Exploration 1992 LP, a partner in the field, slid 4.3 percent, Delek Drilling dropped 1.5 percent and Avner lost 1.1 percent. Israel’s benchmark TA-25 Index rose less than 0.1 percent.

Woodside signed an accord with the stakeholders, which also include Noble Energy Inc., to acquire a share in the field 17 months ago. Talks collapsed amid concern over possible changes to Israeli tax policy and regulation, and as the focus of Leviathan shifted from production of liquefied natural gas, Woodside’s specialty, to regional pipeline delivery of gas.

“Investors are reacting to the news on concerns about a delay in the development and financing of the field,” Noam Pincu, an analyst at Psagot Investment House Ltd., said today by phone from Tel Aviv.

Today’s decline trimmed Delek Group’s gains for the past 12 months to 50 percent, data compiled by Bloomberg show. The shares climbed to a record high May 13 after the company struck deals with Union Fenosa Gas SA and with the Palestinian Authority and Jordan.

Development Continues

“Leviathan is like a ship that has started to sail and will reach its destination even if there are storms along the way,” Pincu said.

Noble Energy’s Chief Executive Officer Charles Davidson said in a statement yesterday that the Houston-based company is “continuing to move forward with plans” for Leviathan, with a goal to begin the initial phase of development by the end of the year and production by 2017.

Development of the Leviathan field continues as planned, Issac Tshuva, the controlling shareholder in Delek Group, said in an e-mail today.

The shekel weakened 0.3 percent to 3.4897 versus the dollar at 5:28 p.m. in Tel Aviv. The deal was supposed to bring in a cash flow of dollars, Tal Zohar Avda, the chief executive officer of the Tel Aviv branch of FXCM Inc. U.S. said today by phone.

Noble owns a 39.66 percent stake in the field, Delek Drilling and Avner hold 22.67 percent each, and Ratio Oil Exploration has 15 percent, according to Noble’s statement.

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

To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net James Doran, Claudia Maedler

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