Energean to buy Karish and Tanin for $148.5mn

Greek Energean has agreed to buy stakes in the Karish and Tanin gas fields from Delek Drilling and Avner, the Israeli sellers announced in an August 16 filing to the Tel Aviv Stock Exchange. It beat US Coleridge and French-owned Edison.

Energean will pay $148.5mn to cover the expenses of the assets' exploration and the sellers' purchase last year of Noble Energy's interests, the filing says.

$40mn will be paid when the deal is approved and signed, and the rest in 10 annual instalments plus a fixed rate of interest. The annual instalments will come into effect either when final investment decision for Karish and Tanin is approved or when the new owners have spent $150mn on the development of the fields. In addition the sellers will be entitled to 7.5% royalties or 8.25% royalties including gas and oil surcharge, from the fields' gas sales.

As preconditions to the contract signing, the oil commissioner in the Israeli energy ministry will have to approve the deal and so will the sellers' shareholders. Delek Drilling said in an exchange filing that the oil commissioner has already given Energean a pre-ruling over its suitability to act as the fields' operator, probably a positive one.

Israel's offshore. Karish and Tanin are top centre (Credit: government)

Edison said that the price was too high. In addition, a company executive said that in order to develop the fields the Israeli government would have to offer Energean substantial incentives.

The deal is a disappointment to politicians and officials in the energy ministry who had preferred to see a bigger, more experienced operator enter the Israeli market. However, the deal, which was stipulated in the Regulatory Natural Gas Framework, is expected to be approved. Politicians must show that the framework is working.

Ya'acov Zalel