Loss Widens at Israel's Delek in Q4

Israel's largest energy firm Delek Group reported a widened loss for the fourth quarter on May 3, with auditors attaching a "going concern" warning to the company.

The company, which is developing several large gas fields in the east Mediterranean's Levant basin, booked a net loss of shekels 311mn ($89mn) in the final three months of 2019, compared to a shekels 219mn loss a year earlier. The widened loss was chiefly the result of an increase in financial expenses to $633mm, from $478mn a year earlier.

Delek acquired Chevron's North Sea business last year for $2bn through its UK subsidiary Ithaca Energy. The Israeli firm's net debt sits at $5.82bn. It has already sold a number of assets to raise cash and said on May 3 it was intending to sell its shares in its Delek Israel division and was awaiting royalties from the Karish and Tanin gas fields off Israel.

The company's "auditors have added to the financial statements a note drawing attention to the issue of 'going concern," it said in a statement. It expects "to reach an agreed plan concerning an update of the financial covenants and credit terms, strengthening of the collateral and reinforcing its capital."

"In recent months, the global energy sector has experienced unparalleled and extreme volatility," CEO Idan Wallace said. "Delek Group is a strong company with quality assets and a clear positive net asset value. Delek Group's excellent assets, the determination with which we work day and night, and the business measures that we promote, will allow us to get through the crisis and come out of it stronger."

Delek's upstream earnings were stable, with the company reporting a slight growth in fourth-quarter net profit from production in Israel to $110mn, from $108mn. The company and its partner Noble Energy brought the flagship Leviathan gas field off Israel on stream at the start of this year. Delek's North Sea income rose to $199mn, from $174mn a year earlier, but depending on its hedging strategy, major losses are likely with the global collapse in gas and crude prices that began in March.