Delek Group, the largest player in Israel’s emerging energy industry, reported positive earnings today reflecting progress for the overall energy sector in Israel. Israeli Energy stocks comprise roughly 4% of the BueStar Israel Global Index, tracked by the NYSE-listed ISRA ETF as well as funds offered by Psagot and IBI in Israel. Energy stocks comprise roughly 13% of the Solactive-BlueStar Israel Domestic Exposure Index – currently there are no investment vehicles tracking that index available for trading.
Delek Group’s Q4 2016 earnings rose nearly 600% to $104 million on a year over year basis. That number however, includes sales of assets that totaled $70 million. Nonetheless, profit from continuing exploration and production activities grew by 105% in Q4 2016 on a year over year basis. This growth in profit should be viewed in conjunction with its current price to earnings ratio of 15.64.
In February 2017, Delek Group invested in shares of Ithaca Energy, a North Sea oil producer, which is expected to hold an IPO on the London Stock Exchange later this year. Delek Group’s CEO, Asaf Bartfield, emphasized to investors that the company plans to further its international expansion this year while continuing to progress with its Israeli natural gas assets.
All this positive news comes ahead of the launch of production from Israel’s largest natural gas field. The Leviathan field is expected to allow participants to export natural gas from Israel which would make Delek Group, when combining its Israel operations with its strategic financial acquisition of non-Israeli oil and gas assets, a major global energy player. These developments could also open investors’ eyes to the possibility that Delek and other Israeli Energy companies could expand internationally both horizontally (buy acquiring international oil and gas fields) and perhaps vertically through entering partnerships or acquiring outright international distribution channels.
Finally, in addition to current capital expenditures and budgeting for future capital expenditures, Delek Group was able to pay a dividend to shareholders of $4.61 per share. Delek’s annual dividend yield is 7.67%.
This news bodes well for all of Israel’s Energy sector which includes Delek Group subsidiaries Ratio Oil, Delek Gas, Delek Energy, and companies like Naptha Petroleum.