NewMed: Leviathan's Value Versus the Cash That Actually Reaches Unitholders

The Number the Main Article Left Open

The main article made a straightforward point: Leviathan is still strong, but NewMed is already moving into a new investment cycle in which unitholders can no longer look only at asset quality. This follow-up isolates the gap that is opening between two very different numbers: what Leviathan is worth, and how much cash is actually left for unitholders after royalties, distributions, bond buybacks, and new bank debt.

The paradox became sharper at the start of 2026. With FID in January, the 10% discounted cash flow of Leviathan's 2P reserves attributable to the partnership rose from $4.95 billion to $5.99 billion. Leviathan became a more valuable asset. But in almost the same window, the partnership estimated that the investment payback point would arrive in the first half of 2026, after which the effective participation rate of equity holders in Leviathan revenues falls from 37.63% to 35.37%.

That is the point the consolidated numbers blur. NewMed still owns 45.34% of Leviathan, and it still benefits from a strong regional asset. But every dollar of revenue that moves from the field to the participation unit also passes through state royalties, overriding royalties, debt management, distributions already made, and capex that is already rising. So the question here is not whether Leviathan works. The question is how much of it is still free after every layer in between takes its share.

Leviathan Became More Valuable, but the Effective Share for Unitholders Is Smaller

The first number the market tends to anchor on is 45.34%. That is the partnership's direct holding in Leviathan. But that holding rate is not the same as the revenue share that actually remains for unitholders. After the 12.5% state royalty, the equity holders' share of revenues at the field level falls to 39.67%. From there, another layer of overriding royalties and payments to related and third parties takes the number down to 37.63% before the investment payback point and 35.37% after it.

That reduction may look small at first glance, but it is not trivial. It amounts to a decline of 2.26 percentage points, or almost 6% relative to the effective participation rate before payback. In other words, even if Leviathan itself becomes a higher-value asset, unitholders are expected to keep a smaller share of every revenue dollar that flows from it once the project moves into the next royalty step.

The deeper meaning is bigger than the 2.26-point move itself. In January 2026, with FID, a large part of Leviathan's previously contingent resources was reclassified into reserves, which is why the discounted cash flow increased. But the same reporting package also assumes that the payback point arrives already in the first half of 2026. That estimate was calculated on the basis of cumulative sales of about 2,265 BCF of gas and 5.1 million barrels of condensate on a 100% basis since first production, and it is still subject to approval through the partnership auditors' payback calculation review. Put simply, Leviathan gets a value uplift at exactly the stage when the economics for unitholders become a bit less generous.

That is the heart of the difference between field value and unit economics. Anyone who stops at 45.34% or even at $5.99 billion is looking at Leviathan. Anyone trying to understand NewMed has to go through 35.37%.

The All-In Cash Flexibility View: 2025 Was Not a Surplus Year

To understand how much cash really remains, the right frame here is all-in cash flexibility, meaning the cash left after the period's real cash uses, not the field's theoretical earning power. On that measure, 2025 was far less comfortable than the year-end cash balance might suggest.

Cash flow from operating activities came in at $505.4 million. That is still a strong number. But even before touching debt service, it was not enough to cover the year's main cash uses: $223.9 million of investment in oil and gas assets, $89.1 million of investment in other long-term assets, and $240.3 million of profit distributions. Those three lines alone add up to $553.3 million. In other words, even before bond repayment and bond buybacks, the year did not leave a real cash cushion behind.

Then comes the liability-management layer. In 2025 NewMed spent $511.5 million on bond repayment and bond buybacks. That is financially rational: it shortened debt, improved the liability profile, and reduced part of the refinancing burden. But from a unitholder perspective, it is the same dollar that did not remain free for distribution or future flexibility.

That chart makes clear what the balance sheet alone hides. Cash and cash equivalents did rise to $107.7 million at year-end 2025 from $51.2 million a year earlier, but the increase did not come from free cash left over after all uses. It was built mainly from two sources: a $283.8 million release of short-term deposits, and $275 million of new long-term bank debt. At the same time, short-term deposits themselves fell from $333.3 million to $49.8 million, largely because they were used to repay the Leviathan Bond 2025 series in May and June.

That distinction matters. Leviathan is still producing cash. But in 2025 that cash did not translate into "free cash." It was pushed simultaneously into three competing directions: investment, distributions, and liability management. So the cash left on the balance sheet at year end is the result of a reshuffled sources-and-uses picture, not of an especially easy year.

Distributions and Bond Buybacks Pull Cash in Two Different Directions

This tension is especially visible in capital allocation. On one side, NewMed made four distributions of $60 million each during 2025, and in March 2026 approved another $70 million distribution. On the other side, by the date the financial statements were approved, the partnership had repurchased Leviathan Bond series 2025 notes with principal of $153.8 million for $153.6 million, series 2027 notes with principal of $25.4 million for $26.1 million, and series 2030 notes with principal of $10.7 million for $11.1 million. In January 2026 it also approved another buyback program of up to $100 million in aggregate.

Those facts do not contradict each other. They mean management is distributing cash while behaving as if cash is expensive. It is not treating every dollar that comes out of Leviathan as a dollar that can simply be passed through. Part of it has to support debt reduction, part of it has to support the expansion cycle, and only part of it actually reaches the unitholder.

The key point is not only the absolute distribution amount. It is the competition over each dollar. A partnership that distributes $240.3 million while also spending $511.5 million on debt repayment and bond buybacks is effectively saying that the debate is not whether Leviathan generates cash. The debate is which pocket gets that cash first.

Debt Management Bought Time, but It Also Added a New Layer Between Leviathan and the Unitholder

NewMed's response to that tension is not a sharp cut in distributions. It is the construction of a new funding layer. As of December 31, 2025, the balance sheet already carried $275 million of long-term bank debt. On February 10, 2026, the partnership also drew the remaining $75 million B tranche from the June 2025 facility, with the annual interest updated to a fixed 5.55%. So even before the new Leumi facility, the partnership was already sitting on $350 million of bank debt meant to bridge the transition phase.

The next step was larger. On February 16, 2026, NewMed signed a new two-tranche credit package with Bank Leumi totaling $500 million, explicitly intended to support ongoing operations, including the Leviathan expansion project. The $100 million A tranche was fully drawn on February 26, 2026 and carries a fixed annual rate of 5.65%. The $400 million B tranche can be drawn for one year from signing and carries six-month Term SOFR plus a 2.3% to 2.4% margin. The repayment schedule is back-ended enough to look comfortable in the near term: 5% of principal at the end of 2028, 10% in each of 2029 through 2031, and 65% only on June 30, 2032.

That has a double meaning. On the one hand, this is not an immediate stress picture. In the year-end presentation, the partnership said it still had $600 million of undrawn bank facilities available as of the publication date of the financial statements. The financial covenants are not tight either: the partnership asset value to net financial debt ratio stood at about 5.02 at year-end 2025, and solo liquidity stood at about $382.7 million against a $20 million minimum. This is not a partnership being pushed into a corner.

On the other hand, it is a partnership building another claim on Leviathan's future cash. The Leumi documentation also contains warning signals that show where the real sensitivity sits: additional debt maturing too close to the final maturity is constrained, cumulative early principal amounts are capped at $1.9 billion, and a prolonged Leviathan shutdown due to war or terror for 180 days or more can become a default-type trigger if it has a material adverse effect. This is not a distress story, but it is clearly a story in which Leviathan now has to serve the banks as well, not only the unitholders.

The Bottom Line for the Unit Holder

The right way to read NewMed after the 2025 cycle runs through three checkpoints:

1. Leviathan became a more valuable asset, but the effective share of revenues attributable to unitholders is expected to fall from 37.63% to 35.37% once the investment payback point is reached.
2. 2025 did not produce a real free-cash cushion. Operating cash flow was strong, but it did not cover the combination of investments, distributions, and liability management without deposit releases and higher bank debt.
3. The new credit layer solves a timing problem. It does not solve the question of who gets Leviathan's cash first.

That is the real gap between Leviathan's value and NewMed's unitholder economics. A stronger field does not automatically mean more free cash. In NewMed's case, at least for now, it comes together with a lower effective participation rate and with greater reliance on outside funding to get through the years before first gas from the expansion arrives in 2029.