Ratio Yehash 2025: Leviathan Still Throws Off Cash, but the Expansion Bridge Is Tightening Flexibility

Company Overview

Ratio Yehash is not a broad energy platform. It is still, overwhelmingly, a concentrated public exposure to Leviathan. The partnership owns 15% of the Leviathan reservoir, alongside a 20% holding in Ratio Petroleum carried at a fair value of just $3.47 million at the end of 2025. Anyone reading the story as if this were already a diversified asset vehicle is missing the core point: the economics still sit on one field, one platform, one export system, and one financing structure.

What is working right now is also fairly clear. Leviathan remains a strong operating asset: 10.89 BCM of gas were sold from the field in 2025, close to the 2024 level, and the partnership still reported $335.0 million of revenue and $217.4 million of EBITDA. This was not an operating collapse. The year-on-year decline came mainly from a lower average realized price, down to $5.58 per MMBTU from $6.12, and from temporary outages, not from a severe demand setback.

But this is no longer a comfortable distribution story. The active bottleneck is now the bridge period between Leviathan as a cash-yielding asset and Leviathan as a capital-intensive expansion project. In January 2026, the partners approved the first expansion phase with a total budget of $2.36 billion on a 100% basis, or $354 million attributable to Ratio. At the same time, year-end cash and cash equivalents stood at only $88.5 million, while gross financial debt was shown in the presentation at $528 million, including $450 million of bank debt and $78 million of bonds.

That is exactly where a superficial read can go wrong. It is easy to see the enlarged Egypt export agreement, the completed third pipeline, and Leviathan's 552.9 BCM of 2P reserves on a 100% basis and jump to a simple conclusion: more capacity, more exports, more distributions. That is too simplistic. The move to 14 BCM is near-term. The move to 21 BCM is a 2029 story with heavy capex in between. In the years between those two points, Ratio will have to manage debt, expansion spending, export infrastructure, temporary downtime, and distribution discipline at the same time.

The economic map looks like this:

What Matters Now

1. 2025 looked weaker than the underlying operating picture. Volumes barely broke, while pricing and downtime did the damage.
2. Ratio is no longer distributing from a position of obvious surplus. $180.5 million of operating cash flow was not enough to fund both investment and $130 million of distributions without reducing cash.
3. The third pipeline and the expansion are not the same event. 14 BCM is a near-term uplift, while 21 BCM is a 2029 objective with heavy spending in between.
4. Ratio Petroleum is still small in the current economics, but it could become a real capital-allocation issue quickly. The April 2026 vote asks for up to another $50 million and more structural flexibility.

That chart highlights the core point. Leviathan did not lose the export market. Egypt remains the largest destination, Jordan is steady, and Israeli volumes even rose to 1.8 BCM in 2025 from 1.5 BCM in 2024. The 2025 problem was not a lack of customers. It was weaker pricing and a rougher operating year.

Events And Triggers

The Egypt deal moved from concept to commitment

On January 15, 2026, all conditions precedent were satisfied for the amended Egypt export agreement to take effect. The incremental contracted volume is about 130.9 BCM, and the presentation frames it as roughly $35 billion of expected project-level revenue through 2040. This is a real trigger, because it gives the expansion a demand anchor rather than just a capacity ambition.

But it still needs to be read carefully. The contract supports the investment decision, yet it does not replace the capex required to deliver the gas. The annual report also notes that starting in 2044, Leviathan exports would only be allowed on an interruptible basis, subject to domestic supply needs, and firm export beyond that point would require renewed review. In other words, the demand visibility is long, but not every part of the horizon carries the same regulatory quality.

The third pipeline is done, but the road to 21 BCM is still long

On March 1, 2026, the operator announced that the third pipeline project had been completed. That matters because it raises Leviathan's production capacity to about 14 BCM per year. Total project cost was about $480 million on a 100% basis, or about $72 million attributable to Ratio.

The important point is that this is a near-term operating relief valve, not the end of the investment story. The first expansion phase includes three additional wells, supplementary subsea systems, and platform treatment upgrades. The budget there jumps to $2.36 billion on a 100% basis, with first gas only expected in the second half of 2029.

Anyone collapsing 14 BCM and 21 BCM into one event is building in too much optimism for the 2026 to 2028 period.

2026 opened with an operational warning, not just a strategic promise

The annual report did not stop at celebrating the FID. As of the approval date, the partnership still could not estimate the cumulative net impact of the Leviathan shutdown that began on February 28, 2026, which had already lasted 23 days at that point, alongside the expected delay in the integrated segment project. That wording matters. Management is effectively saying: higher Brent may help, but right now it still cannot tell whether that offsets lost production days and infrastructure slippage.

That is the kind of detail the market can miss in energy reports. A higher oil price does not automatically repair a near-term production interruption. Timing matters, and the report itself refuses to give a neat number yet.

Ratio Petroleum is moving from side optionality to a capital-discipline question

At the end of 2025, Ratio held 44,964,832 participation units of Ratio Petroleum, equal to 20% of its capital, with a fair value of only $3.47 million. The current economics of Ratio Energies barely rely on that stake. Still, a special meeting scheduled for April 12, 2026 is set to consider allowing up to another $50 million of investment in Ratio Petroleum, guarantees for or on its behalf, and the removal of the 20% ownership cap.

At the same time, Ratio Petroleum reported on February 27, 2026 that once interpretation of the Philippines seismic survey is complete, it will examine whether to renew merger discussions with Ratio Energies. This is not yet the core thesis, but it is already central to the capital-allocation question.

Efficiency, Profitability, And Competitive Position

What really hurt 2025

Revenue from gas and condensate sales fell to $335.0 million from $375.9 million, and net income declined to $125.3 million from $139.4 million. At first glance, that looks like a weak year. At a deeper level, the picture is more precise:

• Gas volumes slipped only to 10.89 BCM from 11.20 BCM.
• The average price per MMBTU declined to $5.58 from $6.12.
• Export revenue fell to $279 million from $329 million.
• Domestic revenue rose to $56 million from $47 million.

So the main factor was price, not market loss. Volume pressure existed, but it was relatively contained and stemmed mainly from planned downtime related to the third pipeline works and the "With the Lion" shutdown. Mix even helped partially, because domestic sales and condensate softened some of the export pressure.

The second quarter was where the year really broke

One advantage of the annual report is that it shows what actually happened inside the year. In the first quarter of 2025, Ratio still recorded $95.1 million of revenue and $35.7 million of net income. In the second quarter, with the "With the Lion" shutdown and ongoing field work, revenue dropped to $63.4 million and net income to $23.2 million. The third and fourth quarters showed a relative recovery.

That matters for how 2025 should be used as a base for 2026. This was not a steady deterioration story. It was an asset that can normalize fairly quickly, but one that remains highly sensitive to operating and security-related interruptions.

In this case, "competition" is really about capacity, infrastructure, and availability

Ratio is not in a market where a domestic competitor can simply steal a customer tomorrow with a discount. The real competition is about capacity, infrastructure, and delivery reliability. Gas without enough transportation capacity or operating flexibility does not become fully monetizable value. That is why the rise in long-term other assets to $115.1 million from $86.0 million is not a footnote. It is a reminder that larger exports require another layer of spending in the integrated segment, the Nitzana line, and regional transportation upgrades before the growth fully reaches the income statement.

Cash Flow, Debt, And Capital Structure

Normalized cash generation is still strong, but the all-in cash picture is tighter

This is where the framing matters.

On a normalized basis, Leviathan remains a strong cash-generating asset. In 2025, operating activity produced $180.5 million of cash, up from $159.2 million in 2024. That is a good number, and it explains why Ratio can still look like a cash-yielding partnership.

On an all-in cash basis, the picture is tighter. Investing cash flow was negative $62.8 million, financing cash flow was negative $141.3 million, and that financing outflow included $130 million of distributions. As a result, cash and cash equivalents declined to $88.5 million from $111.4 million.

The implication is straightforward: Leviathan still throws off cash, but Ratio is already using it quickly. In 2025 that was still manageable. During the expansion years, with Leviathan capex and export infrastructure sitting on the same cash base, every distribution decision becomes less automatic.

The debt structure is reasonable, but operating freedom is more conditional now

According to the presentation, gross financial debt stood at $528 million as of December 31, 2025: $450 million of bank debt and $78 million of Series D bonds. Against that, cash, marketable securities, and short-term deposits totaled $109 million, leaving net financial debt of $415 million.

At this point, the capital structure does not look broken. The partnership remains in compliance with all covenants, including a maximum FLR of 65%, a minimum Backward DSCR of 1.05, and a minimum liquid-assets requirement of $20 million. The bank facility also runs to a final maturity in July 2031 and includes an optional, non-committed accordion of up to $50 million.

But the key change is qualitative. After the FID, surplus cash can only be upstreamed from the revenue account if the partnership also has sufficient funding sources for the next 12 months of expansion spending. This is no longer the debt framework of a vehicle that simply distributes whatever is left. It is the financing framework of an asset entering a more constrained project phase.

The investment burden is already spreading beyond the wells and the platform

The rise in long-term other assets to $115.1 million from $86.0 million shows where some of the money is already going before the main expansion wells even begin:

That is the core difference between value created on paper and value accessible to unit holders today. Ratio is spending to enlarge the export pathway and the production envelope, but until the new system is fully operating, unitholders live with more outflow and less immediate distribution flexibility.

Outlook

Four Things To Understand Before Looking At 2026

1. 2026 to 2028 are bridge years, not harvest years.
2. Demand looks better than pricing. The contracts and Egypt expansion help, but revenue still depends heavily on Brent and on operating availability.
3. The partnership is not underfunded, but the cash is more ring-fenced now.
4. The Ratio Petroleum story could stay peripheral, or it could become a real capital and management distraction.

The right frame for the coming year is a bridge year. It is not a breakout year, because first gas from the expansion is only expected in the second half of 2029. It is not a reset year either, because the core asset continues to generate meaningful cash flow. It is a year in which Ratio has to prove that it can move from a distribution logic to a growth-funding logic without losing the market's confidence.

The presentation gives management a supportive narrative: projected net cash flow before debt service, attributable to the partnership's Leviathan interest, runs from $139 million in 2026 to $263 million in 2035, with an average annual figure of $205 million for debt service. But that cash-flow framing does not include debt service, so it is not the same thing as free cash available to unitholders.

So the real 2026 question is not whether Leviathan has value. Clearly it does. The question is whether Ratio can show that this value remains accessible, even while part of it is being mobilized for expansion, transportation infrastructure, and financing requirements.

What needs to happen over the next 2 to 4 quarters for the thesis to strengthen:

• A stable return to full production after the early 2026 shutdowns.
• Evidence that the third pipeline translates into real operating improvement, not just a project-completion headline.
• Comfortable liquidity and clean covenant compliance even as expansion and infrastructure spending ramps.
• Greater clarity on the boundaries of the Ratio Petroleum strategy, so that capital does not appear to drift outside the Leviathan core before Leviathan itself is fully funded.

Risks

Operating concentration is not a footnote

Ratio depends on one field and one platform. That is not theoretical. In 2025, the field lost about $12 million of gross revenue because of the "With the Lion" shutdown, and in February 2026 another stoppage began, with management still unable to estimate the net impact at the annual-report approval date. This is a core risk, not background noise.

Distribution freedom may tighten before the market fully prices it in

Ratio distributed $130 million in 2025 and declared another $40 million in March 2026. That works well for unitholders as long as Leviathan is in harvest mode. But under an FID, credit facilities, export infrastructure, and a $354 million attributable expansion bill, distribution becomes less a matter of willingness and more a matter of capital prioritization.

Ratio Petroleum is a capital-discipline risk, not a current earnings engine

Right now it is a small holding. If another $50 million of investment is approved, or if merger talks are renewed, the story changes. Not necessarily for the worse, but it certainly widens the execution perimeter and the capital call precisely when Leviathan itself is entering a heavier investment cycle.

Regulation and transportation still set the pace

The Egypt expansion has a stronger foundation now that the conditions precedent were met and export approval was granted, but the regional pathway still depends on transportation infrastructure and regulatory frameworks. That applies to Nitzana, the transportation upgrades, and the interruptible-export framework from 2044 onward. Anyone focusing only on contract volumes is missing the monetization constraint.

Conclusions

Ratio comes out of 2025 with a very high-quality core asset, but also with a new profile. Leviathan still operates well, still sells gas, and still generates cash. The main bottleneck is no longer "is there demand," but how to get through the expansion years without losing financial flexibility and without opening too many capital fronts at once. In the short to medium term, the market will focus first on the return to production, the real contribution of the third pipeline, and discipline around distributions and funding.

Current thesis: Ratio remains an efficient way to access Leviathan, but from 2026 onward it should be read less as a distribution vehicle and more as a partnership funding a long bridge period.

What changed: Until now it was relatively easy to think of Ratio as a cash machine. The FID, the growing export-infrastructure buildout, and the Ratio Petroleum debate are pushing it into a tighter capital regime.

Counter-thesis: If Brent stays high, the third pipeline delivers a quick uplift, and Leviathan cash flow stays close to the presentation path, the concern over tightening financial flexibility may prove overstated.

What may change the market reading in the near to medium term: clarity on the size of the early 2026 shutdown impact, the pace of normalization after the third pipeline completion, and the message coming out of the Ratio Petroleum vote.

Why this matters: the move from a great reservoir to accessible value for unitholders now runs through financing, timing, and capital discipline, not just through more contracted BCM.

Over the next 2 to 4 quarters, the thesis strengthens if Ratio shows sustained production normalization, real operating benefit from 14 BCM capacity, and clean funding execution under the expansion. It weakens if outages persist, export infrastructure slips, or capital starts leaking outward too quickly through Ratio Petroleum before Leviathan itself is on a stable expansion track.