TEL AVIV, Israel, Aug. 29, 2019 /PRNewswire/ -- Delek Group
Ltd. (TASE: DLEKG) (US ADR: DGRLY), ("Delek Group" or "The Group")
this morning reported its results for the second quarter ending
June 30, 2019. The full financial
statements will be available in English on Delek Group's website
at: www.delek-group.com
2Q 2019 Highlights
- Net income for 2Q19 amounted to NIS 190 million, up 12% compared with NIS 170
million in 2Q18; the E&P sector contributed NIS 85 million
to net income
- The Leviathan project is 90% complete, and remains on
schedule for gas sales to begin during 4Q19; completion of
the EMG pipeline transaction is scheduled for the end of
September 2019
- The acquisition of Chevron's North Sea assets is
expected to close during 4Q19, marking a significant step in Delek
Group's strategy of becoming a pure-play international energy
firm
Group revenues in 2Q19 totaled NIS
2,103 million compared with NIS 2,074
million in the same period last year, an increase of 19%.
Revenues from Tamar were slightly lower year-on-year, while fuel
retail sales demonstrated greater strength.
Group operating profit in 2Q19 totaled NIS 246 million, compared with NIS 459 million in 2Q18, a decrease of 46%. A
number of one-off expenses related to Tamar and planned maintenance
at Ithaca contributed the drop in profits, which was in part offset
by a stronger performance in the downstream sector.
Net income for 2Q19 was NIS
190 million compared with NIS 170
million in the same period last year. The current cash
balance as of June 30,
2019 was NIS 1.4 billion,
including unutilized credit lines and marketable securities.
Management Comment
Mr. Asaf Bartfeld, President
and CEO of Delek Group, commented, "In the coming months,
Delek Group will achieve a number of significant and positive
milestones. This includes the completion of the sale of the Phoenix
Insurance Compay for approximately ILS 1.64 billion, the
commencement of gas production at the Leviathan field, and the
acquisition of Chevron's North Sea assets. These will strengthen
the Group's financial position and cash flow, and increase the
potential for returns to shareholders."
Main Business
Highlights
|
Contribution of Principal Operations to Net Income* (NIS
millions)
|
|
2Q
|
2Q
|
FY
|
|
2019
|
2018
|
2018
|
Oil and Gas E&P
Operations in Israel and its Surroundings
|
58
|
106
|
437
|
Oil and Gas E&P
Operations in the North Sea
|
27
|
(32)
|
283
|
Fuel Operations in
Israel
|
39
|
27
|
70
|
Contribution to
continuing operations before discontinued
|
124
|
101
|
790
|
operations and
capital and other gains
|
|
|
|
Finance Expenses,
Asset Sales, and Others
|
66
|
69
|
(273)
|
Net Income (Loss)
Attributed to Group's Shareholders
|
190
|
170
|
517
|
*The full report, including the full notes for the above items,
will be available on the Group's website at www.delek-group.com
Oil and Gas Exploration & Production
Delek Group's strategy is to focus on the development of its
core assets in the Eastern Mediterranean E&P and expand its
activities in global E&P markets, with the goal of becoming a
key international player in the energy industry with full
operational capabilities.
Tamar & Leviathan
Tamar's gas sales reached 2.4 BCM during 2Q19, slightly lower
than 2.6 BCM in the prior period. A number of one-off
expenses reduced Tamar's profits during the second quarter of 2019.
These include charges for planned maintenance, higher depreciation,
and the loss of an arbitration case with a customer.
The development of the Leviathan project is approximately 90%
complete, with the platform and all undersea infrastructure in
place. The project remains on schedule for first gas to be
delivered by the end of 2019. Inspections of the undersea EMG
pipeline connecting Israel and
Egypt have been completed
successfully, and the Israeli Competition Authority has authorized
gas exports to Egypt. Efforts are
still ongoing to complete the transfer of ownership in EMG shares
to the partnership taking control of the infrastructure, and the
acquisition is expected to complete by the end of September 2019. Once concluded, gas exports to
Egypt within the context of the
Dolphinus sales agreement are set to begin in tandem with the
commissioning of Leviathan, expected during 4Q19.
Ithaca Energy
Ithaca, a wholly-owned subsidiary of Delek Group, contributed
NIS 49 million to Delek Group's
operating income in 2Q19, compared with NIS
78 million in the similar period last year. Profits were
lower due to a four week period of planned maintenance during the
quarter. Production during 2Q19 was 15,200 barrels of oil
equivalent per day (boepd), 19% higher than the 12,800 boepd seen
during 1Q18; production for 1H19 was 18,100 boepd compared to
15,500 in 1H18. In total, Ithaca produced approximately
1.4m barrels of oil equivalent this
quarter, and 3.3m boe in 1H19.
Following the consolidation of 100% of assets in the Greater
Stella Area (GSA) purchased during 4Q18, Ithaca's fixed costs
increased, escalating the financial impact of the shutdown for
planned maintenance. Per barrel production costs this quarter were
USD 27 due to lower output; costs
were USD 23 per barrel in 2Q18.
Delek Group and Ithaca continue to secure financing for the
acquisition Chevron's North Sea assets. The transaction has an
effective date of January 1, 2019 and
is expected to close during 4Q19. Accounting for cashflows
generated over this period, a net price of approximately
USD 1.65 billion is anticipated,
along with a payment of USD150m for
working capital in place. In addition to this amount, Ithaca will
be refinancing its existing debt of approximately USD 550 million. RBLs and bonds with a total
value of USD 1.55 billion have
already been arranged. Delek Group is negotiating an additional
equity inflow of approximately USD 300
million through the issuance of preferred Ithaca shares, and
is also seeking a USD150 million
advance payment from commodity traders as part of a long-term
offtake agreement for Ithaca's oil production. Taking into account
a USD200 million deposit already paid
to Chevron on the date of signing, Delek Group and Ithaca expect to
allocate an additional USD200 million
of their own funds to complete the transaction.
Gulf of Mexico
Drilling at the Tau prospect concluded during 1Q19. No discovery
of hydrocarbons was made, though the presence of exploitable
hydrocarbons was detected. Due to the complex geology of the
prospect and the need for specialized drilling equipment, the Group
is assessing the conditions for proceeding further at this
location.
Downstream Energy Sector
Delek – the Israel Fuel Company Ltd. (fully held by Delek
Group): Operating profit in 2Q19 amounted to NIS 67 million compared with NIS 42 million in the same period last year. The
improvement was due to the implementation of efficiency measures,
as well as a positive revaluation of inventory made during the
quarter.
Other Assets
Delek Group's transformation into a global energy firm shifts
into high gear. During 2019, Delek Group has made
significant strides in disposing non-core operations. During 1Q19,
the Group sold 30% of its share in IDE for NIS 530 million. In addition, Delek Group reached
an agreement during 2Q19 for the sale of a 32.5% stake in the
Phoenix Insurance Company for NIS 1.64
billion, with good progress being made on completion of this
transaction. With the acquisition of Chevron's North Sea assets,
the Group is delivering on its strategy of becoming a pure-play
energy firm in the global E&P sector.
Net Financial Debt*
As at 30 June,
2019
|
NIS
Millions
|
Liabilities
|
|
Debentures
|
7,242
|
Bank and other
loans
|
948
|
Other
liabilities
|
181
|
Total
liabilities
|
8,371
|
|
|
Assets
|
|
Cash and
deposits
|
370
|
Pledged deposits from
swap transactions
|
168
|
Financial
investments
|
328
|
Loans
|
1,023
|
Deposit for
acquisition of Chevron North Sea
|
535
|
Other
assets
|
104
|
Treasury
shares
|
155
|
Total
Assets
|
2,683
|
|
|
Net Financial
Debt
|
5,688
|
*This table, including full notes, is contained in financial
reports that will be available on the Group's website at
www.delek-group.com
Conference Call Details
The Company will be hosting a conference call in English
today on Thursday, August 29, 2019 at
3:30pm (Israel Time), 8:30am (ET), 1:30pm
(UK). To participate in the conference call, please dial:
Israel:
03-918-0601
The USA:
1-888-668-9141
The UK:
0-800-917-5108
International: +972-3-918-0601
A day following the conference calls, a recording of both the
calls will be hosted on the Company's website at:
http://ir.delek-group.com.
About The Delek Group
Delek Group is an independent E&P and the pioneering
visionary behind the development of the East Med. With eight
consecutive finds in the Levant Basin, Delek is leading the
region's development into a major natural gas export hub. In
addition, Delek has embarked on an international expansion with a
focus on high-potential opportunities in the North Sea and
North America. Delek Group is one
of Israel's largest and most
prominent companies with a consistent track record of growth. Its
shares are traded on the Tel Aviv Stock Exchange (TASE:DLEKG) and
are part of the TA 35 Index.
For more information, please visit www.delek-group.com or
email: investor@delek-group.com
Contact Information
Yonah
Weisz
Head of Investor
Relations
Delek Group
Ltd.
Tel: +972 9 863
8443
Email:
investor@delek-group.com
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SOURCE Delek Group Ltd