TEL AVIV, Israel, Oct. 9 (UPI) -- Israeli energy company Delek Group said it was wading deeper into the international market by taking on stake on Ithaca Energy, which operates in the North Sea.
"This is an important strategic step for Delek Group through expanding its operations and strengthening its position on the international market," Chief Executive Officer Asi Bartfeld said in a statement. "We intend to continue to take advantage of opportunities in the markets and to examine further strategic investments in international companies in the energy field."
For a total consideration of $66 million, Delek said it was taking on a 20 percent stake in Ithaca in a deal that includes a potential for two seats on Ithaca's board of directors. Ithaca's combined net production at the end of 2014 was 70.5 million barrels of oil equivalent.
Ithaca Energy started the year with an announcement its budget for capital spending would be down about 60 percent from last year. Production was expected to decline by about 4 percent.
Oil production from the North Sea has been in decline since the late 1990s. Government data show a decline of 7 percent from 2013, though the rate is slowing.
Despite the North Sea downturn, Ithaca Chief Executive Officer Les Thomas said Delek's investment represented a vote of confidence in his company's long-term value. Given the oil price volatility, and its impact on investors, Ithaca said it was taking a proactive step with the Delek agreement.
"Ithaca's strategy is centered on generating sustainable long-term shareholder value by building a highly profitable 25,000 barrel of oil equivalent per day North Sea oil and gas company," the company said.
Delek said operating profit for the second quarter increased 69 percent to $69 million. Net income swung from a $152 million loss in the second quarter of 2014 to a $5.5 million gain, driven in large part from sales from natural gas fields off the Israeli coast.