EnQuest Says Talks End to Sell 20% of North Sea Field to Delek

(Bloomberg) -- EnQuest Plc has ended talks to sell a 20 percent stake in the Kraken field in the North Sea to Delek Group.

“EnQuest and Delek have ultimately been unable to reach an agreement and those discussions have now terminated,” U.K. explorer EnQuest said in a statement on Thursday. EnQuest shares fell.

When the talks were disclosed on July 18, Delek said the prospective deal would have involved the Israeli company paying about $162 million as its share of the project’s capital expenditure until the field started producing in the first half of next year. The deal would have cut EnQuest’s net debt, which stood at $1.68 billion at the end of June.

The announcement is “slightly negative” as the deal would have “boosted the balance sheet” of EnQuest by reducing its net capital expenditure, Stephane Foucaud, an analyst at FirstEnergy Capital LLP, said in an e-mail.

EnQuest dropped 4.5 percent to 26.75 pence as of 8:09 a.m. in London trading, cutting the company’s market value to 214.7 million pounds ($284 million).

EnQuest owns 70.5 percent of Kraken, with Cairn Energy Plc holding the rest.

Buying the stake would have fitted with Delek’s strategy of acquiring industry know-how and developing into an international brand. The company, owned by billionaire Yitzchak Teshuva, is Israel’s largest energy group.

To contact the reporter on this story: Angelina Rascouet in London at arascouet1@bloomberg.net. To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Dylan Griffiths, Bruce Stanley