Woodside to buy into Leviathan LNG off Israel

A joint venture of Noble Energy Mediterranean, Delek Drilling LP, Avner Oil & Gas Exploration LP, and Ratio Oil Exploration LP has reached agreement with Australian company Woodside Petroleum Ltd. on terms under which Woodside can buy into the 349/Rachel and 30/Amit licences offshore Israel that contain the Leviathan gas field. Woodside is the preferred partner in a competitive bidding process.

Woodside would acquire a 30% interest in the field which is estimated to contain reserves of 17 tcf of gas. Woodside also would be included in other exploration opportunities in the permits.

The agreement involves an initial up-front payment of $696 million. Woodside has also offered $200 million once laws permitting LNG export from Israel are in place. This would be followed by a payment of $30 million on final investment decision for a Leviathan LNG development.

In addition there would be potential annual revenue sharing payments equal to 11.5% of Woodside’s incremental revenue above an agreed escalating price threshold over the life of the project capped at $1 billion.

Under the agreement, Woodside would be operator of any LNG development in the Leviathan permits. Noble said there would be an initial production from the field into the Israeli domestic market in 2016, however a pre-FEED assessment for an LNG project is also under way.

The deal is subject to a number of conditions, including execution of a fully termed agreement.

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