Delek Group: How much of Leviathan's next phase can actually reach the parent?

The main article argued that Delek's real test is no longer whether Leviathan creates value, but how much of that value can actually climb to the parent. This follow-up isolates that chain only, because this is exactly where it is easy to confuse three different things: value created at the field, cash retained at NewMed, and cash that truly reaches Delek.

The short answer is that Leviathan's next phase can reach the parent, but not at the same speed at which the value is being created on paper. The move to 14 BCM is mainly a near-term restart and cash-flow story. The move to 21 BCM is a different layer entirely: a major strategic expansion with a larger Egypt export contract and real long-term upside, but also a 2.36 billion dollar budget, new financing at NewMed, and first gas only in the second half of 2029.

What is working now should not be understated. Even in 2025, despite the June shutdown, the Leviathan partners sold about 10.9 BCM of gas and 886 thousand barrels of condensate for roughly 2.23 billion dollars of gross proceeds, with NewMed's share at about 1.01 billion dollars. NewMed also distributed 240 million dollars in 2025, of which Delek's share was about 131 million dollars, and after the balance sheet date it declared another 70 million dollars, of which about 38 million dollars is attributable to Delek. In other words, Leviathan is already a real cash engine.

But the bottleneck has not gone away. Leviathan was shut again on February 28, 2026, and as of the annual report approval date there was still no update on the restart date. In the investor call, management tried to frame the event as one that should not have a material cumulative cash-flow effect at NewMed, and stressed that the third pipeline is already complete, so once production resumes the field can move to 14 BCM. That framing is reasonable. Still, the hard documents show that the dividend bridge first runs through renewed production, and only then through NewMed's financing and capital-allocation layer.

What actually changed at Leviathan

The most important number to anchor on is 12, not 21. Leviathan's current stage was built for about 12 BCM per year. That is the real baseline. The third pipeline project, which took FID in June 2023 and was completed on March 1, 2026, increases production capacity to about 14 BCM. The final project cost stood at about 480 million dollars as of the report approval date, with NewMed's share at about 217 million dollars.

That is the near-term part of the story. It does not require the market to imagine 2029. It only requires the market to understand that if the shutdown ends, Leviathan comes back with better infrastructure. Put differently, the 14 BCM step is first and foremost a near-term cash bridge, not a distant strategic dream.

The second move belongs to a very different layer. On January 15, 2026, the partners took FID on the first stage of the expansion project, which is meant to bring Leviathan's total production capacity to about 21 BCM per year and allow first gas in the second half of 2029. The total budget is about 2.36 billion dollars, including about 504 million dollars already approved in 2024 for FEED work and long-lead procurement. The project includes three additional production wells, supplementary subsea systems, and expanded treatment capacity on the platform.

This is where it matters not to confuse 21 BCM with the field's more distant ceiling. The documents make clear that the first stage takes total production to 21 BCM, while moving to 23 BCM would require a later stage, additional regulatory approvals, a fourth pipeline, and more investment. So even within the Leviathan expansion story, there are still steps, and not every future capacity number is already a fully approved project.

Another material change is that the expansion now sits on a broader marketing base. Alongside the FID, all conditions precedent for the Egypt export amendment were met, and the total contracted quantity was increased by about 130 BCM. That materially strengthens the economic logic of the expansion. But a large export contract does not change the basic order of operations: the cash generated in 2026 through 2029 still has to help fund the road there first.

The cash runs through NewMed, not directly to Delek

The easy mistake is to look at Leviathan and ask how much of the 2.36 billion dollar expansion budget "belongs" to Delek. That is the wrong question, because Delek does not own Leviathan directly. It owns about 54.18% of NewMed, and NewMed owns 45.34% of Leviathan. In look-through terms, Delek is exposed to only about 24.6% of the field.

That has two implications. First, every additional dollar of value at Leviathan reaches Delek only after a double ownership haircut. Second, every new dollar of investment does not sit directly at Delek either. It first sits at NewMed.

That chart is the heart of this continuation. Delek received about 131 million dollars from NewMed's 2025 distribution and another 38 million dollars from the dividend declared in March 2026, or about 169 million dollars combined. That is real cash already climbing. But against it stands about 1.07 billion dollars of budgeted capex for NewMed's share of the 21 BCM project, plus about 217 million dollars for NewMed's share of the third pipeline's final cost. On a look-through economic basis, Delek's share of the expansion budget alone is roughly 580 million dollars.

That does not mean Delek will write a 580 million dollar check. That is not the point. The point is that Leviathan's next phase first absorbs capital at NewMed, and only later creates a larger parent-level distribution base. Any reading that turns the 21 BCM FID directly into fast dividends for Delek is skipping the most important station in the middle.

The 2025 numbers reinforce the same distinction. Leviathan was strong enough to remain a cash-distributing asset even in a year that included a June shutdown, but it was not so strong that the investment burden disappeared. Quite the opposite. It is already clear that the next stage of the project sits on years in which part of the cash flow will be redirected to development, wells, export infrastructure, and financing buffers.

In other words, there are two different kinds of value here. One is operating and asset value: bigger reserves, a larger export framework, and real progress toward 21 BCM. The second is value that is accessible to the parent. NewMed sits between those two layers.

NewMed can finance the buildout, but that is not the same thing as distributing the surplus

One could argue that the concern is overstated because NewMed has already arranged financing. In February 2026 it signed two new credit facilities with Bank Leumi totaling 500 million dollars, intended for ongoing operations and the Leviathan expansion project. One 100 million dollar facility had to be fully drawn by March 2, 2026. The second facility, for up to 400 million dollars, is available for drawings for up to one year from signing. Final maturity is June 30, 2032.

That is an important signal, but not for the intuitive reason. The message is not "there is financing, so distributions can continue as if nothing changed." The message is that NewMed is building a financing bridge between Leviathan's current cash generation and the next expansion step. And a bridge like that always consumes part of the surplus on the way.

The most interesting detail is the repayment profile. The loans amortize by 5% at the end of 2028, by 10% in each of 2029 through 2031, and by another 65% at final maturity. That means the first principal payment arrives before first gas from the 21 BCM project, which is targeted only for the second half of 2029. This may look like a small detail, but it says everything: the expansion financing is not being supported only by the future incremental volumes. It is also being supported by Leviathan's existing cash engine.

At the same time, NewMed is not sitting close to the wall. As of September 30, 2025, the ratio of partnership asset value to net financial debt stood at about 4.71, well above the 1.5 floor relevant to the debt stack. Solo liquidity stood at about 469.6 million dollars versus a 20 million dollar minimum, and total financial debt stood at about 1.4 billion dollars versus a 3 billion dollar cap. In other words, NewMed currently looks like a platform that can carry the expansion.

But that still does not mean every dollar is free for distribution. Quite the opposite. The same financing documents include a meaningful trigger: a prolonged interruption or suspension of Leviathan production due to war, terrorism, or a regulatory order for 180 days or more, if it has or is reasonably expected to have a material adverse effect, can give the lender the right to accelerate the loans. This is not the base case, but it is a reminder that the financing bridge depends on a reasonably normal restart path, not on complete indifference to security risk.

There is another detail that sharpens the pass-through argument. On January 6, 2026, after already buying back about 87.7 million dollars of Leviathan Bond par value for roughly 89.3 million dollars including accrued interest, NewMed approved an additional buyback program of up to 100 million dollars, funded from its own resources. That is entirely logical from a balance-sheet-management perspective. But it also says something simple: even when the cash arrives, it has more than one destination. It can go to capex, it can go to bond buybacks, and it can go to dividends. From Delek's perspective, those are competing uses of the same pool.

So how much can really reach the parent

The right way to answer that is to separate the near term from the longer arc.

In the near term, what can realistically reach Delek is mainly the preservation, and possibly a moderate improvement, of the dividend stream from the existing asset, if Leviathan returns to stable production and uses the third pipeline to settle around 14 BCM. That is not trivial at all. Even in 2025, despite the June shutdown, Delek received about 131 million dollars from NewMed, and after the balance sheet date another 38 million dollars. So even before 21 BCM, Leviathan already knows how to send cash upward.

Over the medium term, what will probably stay lower in the chain is a large part of the value created by the 21 BCM FID. The business logic of the expansion is strong: the export contract is larger, some contingent resources were reclassified into reserves, and there is now an approved development plan for the next step. But from the parent's perspective, most of that value still does not look like accessible cash. It looks like investment that is supposed to generate more cash later.

The filings also do not provide a formula that allows a precise answer to the question "how much reaches Delek." There is no rigid distribution policy that predetermines what share of NewMed's future excess cash must be upstreamed. There is no formal schedule of future distributions from NewMed throughout the buildout years. And there is no full breakdown of all future cash uses around the expansion. So any attempt to give a precise number would go beyond the evidence. What the evidence does allow is the order of priorities: first restart production, then use the 14 BCM step, then fund and execute the buildout, and only after that see what is left for distribution.

So the bottom line is fairly sharp. Leviathan's next phase can reach Delek, but over the next 2-4 quarters it will mostly show up as the ability to preserve the dividend stream from the existing asset, not as an immediate jump at the parent. The bigger 21 BCM story is, for now, mainly a story of value creation at the field and at NewMed. Only later, if execution remains clean and the financing layer does not absorb too much of the surplus, can a larger share of that value truly climb higher.

Put simply, the key question is not whether Leviathan is worth more after January 2026. It probably is. The key question is who gets to enjoy that increase, when, and at which layer. Right now the answer is: first the field, then NewMed, and only then Delek.