Delek makes splash with US$965m deepwater Gulf of Mexico deal
Delek Group has stepped out of the Gulf of Mexico shelf and into the deepwater, signing an agreement to acquire Shell's 22.45% non-operated interest in the Caesar-Tonga field in the Green Canyon protraction area for US$965 million.
Commenting on the deal, Michael Murphy, research analyst with Wood Mackenzie's Gulf of Mexico team, said: "The deal will substantially increase Delek Group's net production by over 25%, from around 48,000 barrels of oil equivalent per day (boe/d) to over 60,000 boe/d.
"This allows Delek to not only materially increase its presence in the region, but to further its objective of evolving into a pure play international E&P company.
"The transaction also lets Shell divest a non-core asset, and further focus on its extensive exploration and development programs in the region."
He added: "With a deal point-forward breakeven in the mid-US$30s (NPV10, Brent), Delek will have plenty of cushion to absorb price volatility.
"This deal supports our theory that tight oil is not the only game in town, and the investment pendulum is beginning to swing back toward the deepwater."