Profits of New-Med Energy soared in Q3 and amounted to NIS 123 million

The profits of New-Med Energy (formerly Delek Drilling), Yitzhak Tshuva's gas company that owns about 45% of the Leviathan reservoir, soared in the third quarter of the year. The partnership also reported record profits in the third quarter of the year thanks to record production of gas from the reservoir, and the increase in natural gas prices over the past year following the war waged by Russia in Ukraine. It recorded record profits in the third quarter of NIS 123 million. The company will distribute a dividend of NIS 50 million.
According to the company's reports, gas exports to Egypt in the first three quarters of this year reached 3.6 billion cubic meters (BCM), compared to 2.5 BCM in the months of January-September 2021. At the same time, the sale of gas to consumers in Israel decreased in the first three quarters of the year to 2.9 BCM, compared to 3.7 BCM in the corresponding period last year. In addition, the gas export to Jordan in the first three quarters this year was 2 BCM. So that in fact the export from the Leviathan reservoir since the beginning of the year to other countries was about 66% of the reservoir's output.
In the third quarter, which includes the summer season when the demand for electricity in Israel is high, the sales to customers in Israel were higher than the gas exports to Egypt. However, the total export to Egypt and Jordan was 60% of the output of the reservoir. In the summer, Energian's Harish-Tanin reservoir had not yet started operating, and there was a real fear of a spot shortage of natural gas in Israel due to the growing demand for gas for electricity generation.
The data reflect the feasibility of New-Med Energy exporting the gas from Leviathan instead of selling it to local companies, although the export policy of exporting gas from Israel has been criticized, given the fear that in about a decade and a half there will not be enough gas left in the Israeli reservoirs to meet the needs of the market's demand the local According to New-Med reports (-1.96% 809.6), its net profit reached 123 million dollars - and it was its best quarter since its establishment in 1993. In the corresponding quarter last year, the partnership recorded a loss of about 50 million dollars, Due to the recognition of deferred tax liabilities.
The revenues excluding royalties from the sale of natural gas in the third quarter jumped by about 28% and reached about 265 million dollars, compared to about 207 million dollars in the corresponding quarter last year. In the first nine months of the year, the revenues minus royalties reached 725 million dollars - a 25% increase compared to the corresponding period last year. Most of all, the increase in revenues indicates the increase in export profitability, since the increase in gas production was relatively small: from 8.3 BCM in the first three quarters of 2021 to 8.5 BCM in the first three quarters of this year.
The reports also show that the profit before tax in the third quarter was about 170 million dollars, compared to about 108 million dollars in the corresponding quarter last year - an increase of 57%. New-Med Energy raised the total sales forecast from the reservoir from 10.65 BCM to 11.2 BCM. Yossi Abu, CEO of New-Med, also said in a statement on behalf of the company that in 2023 the partners in the reservoir will expand their efforts to expand it. The partnership also announced an additional profit distribution of 50 million dollars, in addition to the distribution of dividends and balance payments of 186 million dollars from the beginning of the year.
The royalties and taxes paid to the state by New Med for levying oil and gas profits reached NIS 980 million. The amount also includes a capital gain on the sale of 22% of the Tamar reservoir to the Mubadala company from Abu Dhabi. The Leviathan reservoir does not yet pay excess profits tax (Shashinsky tax; JP), since the companies that own it have not yet returned 150% of the investment in it.