Delek’s Leviathan Endgame: Chevron Entry, Debt Mountain Make Sale All But Inevitable
31 Jul 2020Issue: 63 / 31By:James Cockayne
Key Leviathan shareholder Delek Drilling will remain severely cash constrained even if a $2.25bn bond placement succeeds. Incoming operator Chevron has ambitious expansion plans for the giant Israeli field. With Delek unable to fund its share, the sale of all or part of its 45% stake to a deep-pocketed international player looks inevitable.
Israel’s Delek Drilling on 27 July announced plans to raise $2.25bn (and potentially up to $2.5bn) in a bond backed by its share of future revenue from Israel’s 22.8tcf Leviathan gas field. This comes only two weeks after the firm tried, and seemingly failed, to drum up interest in a $2.5bn Leviathan-backed reserves based lending (RBL) facility (MEES, 17 July).

The three key ratings agencies all promptly afforded ‘Leviathan Bond Ltd’ junk ratings. Moody’s assigned a Ba3 rating, three notches below investment grade, S&P gave an equivalent BB- rating, whilst Fitch opted for BB, one notch higher. They all expressed skepticism about whether the issue will actually go ahead. (CONTINUED – 2051 WORDS)