Enquest plans stake sale in North Sea project to Israeli billionaire's Delek

 
Jessica Morris
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(FILES) File Photo taken in the North Se
Kraken is one of the biggest projects in the North Sea (Source: Getty)

Enquest is considering selling a slice in one of the biggest North Sea development projects to an Israeli billionaire.

The London-listed oil explorer said today that it had signed a non-binding deal to sell a 20 per cent stake in the Kraken development to Delek, which is majority owned by Israeli entrepreneur and business man Yitzhak Tshuva.

Read more: Moody's issues another warning over UK oil firms' credit ratings

Tshuva made his fortune in energy and real estate, and has discovered major offshore natural gas reserves in Israel and Cyprus. He's also chairman of El-Ad Group which sold New York's landmark Plaza Hotel for $570m in 2012.

Delek would backdate its share of the Kraken's capital expenditure to the beginning of 2016.

It would also loan Enquest $20m (£15m) for up to five years at an annual interest rate of three per cent, which would be recoverable if its costs haven't been covered by revenue at the of this period.

It comes as Enquest seeks to shore up its balance sheet, which has been battered by lower for longer oil prices. It said today that there was no guarantee a final agreement would be reached, and it would also need to be approved by its lenders.

Read more: UK North Sea explorer First Oil Expro goes into administration due to decline in brent crude price

Enquest's gross profit fell 51.3 per cent to $173.2m last year, as its net debt swelled 17.8 per cent to $1.5bn. It's since announced a number of cost-saving initiatives, including asset sales and farm outs.

The firm’s shares rose as much as 2.5 per cent to 30.5 p per share, before closing down 0.84 per cent to 29.5p.

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