Nefta: The U.S. Activity Is No Longer Just Background Noise
The main article treated the U.S. layer as noise and optionality around Tamar. In 2025 it produced a visible operating drag, impairment, a legal provision, doubtful debts, and a service shutdown, while the new Texas project is still only an option that depends on customers.
What This Follow-up Isolates
The main article framed Isramco Inc. as a layer of noise and optionality around the real value engine, Tamar. In 2025 that stopped being a background detail. The U.S. arm is still not large enough to overturn the Nefta thesis, but it is already large enough to subtract from it. After G&A and excluding depreciation and amortization, the U.S. activity moved from operating profit of about NIS 27 million in 2024 to an operating loss of about NIS 10 million in 2025.
The key point is not only the swing from profit to loss. It is the quality of the deterioration. This was not just a year in which oil prices moved around and the numbers followed. It was a year in which the U.S. layer produced an impairment charge, a legal provision, doubtful debts, and the deliberate shutdown of one service activity. At the same time, a new Texas option appeared. That makes 2025 look less like ordinary volatility and more like an attempt to clean up an old tail while opening a new one.
What can mislead a first read is the size of the top line. The U.S. activity ended 2025 with NIS 618.2 million of revenue, almost flat against NIS 626.0 million in 2024. But that line leaned more heavily on oil marketing, while the two lines closer to core economics, net oil and gas sales and ancillary service fees, actually weakened.
That is why the headline revenue line is not enough. Net oil and gas sales fell to NIS 61.2 million from NIS 77.8 million, and ancillary services fell to NIS 133.4 million from NIS 146.4 million. Oil marketing rose to NIS 423.5 million from NIS 401.9 million, which is why total revenue still looked large. That is not the same thing as a stronger core.
The Cleanup Is Already In The Numbers
The shift from operating profit to operating loss did not come from one item. It came from a cluster of signs showing that the U.S. arm is no longer reporting only ongoing operations. It is also reporting a visible cleanup process.
| Item | 2025 figure | Why it matters |
|---|---|---|
| Oil and gas asset impairment | NIS 15.1 million | The U.S. asset base was marked down, not just hit operationally |
| U.S. legal provision | About NIS 18 million in other expenses | Legal friction moved from a footnote into earnings |
| Doubtful debts | About NIS 10 million | Collection quality in the U.S. business already hurt the result |
| Tools from the shut service activity | About NIS 18 million carrying value after impairment | Even after shutdown, assets are still waiting to be monetized |
The contingent-liabilities note adds another layer. The company states that claims and demands against consolidated companies total about NIS 195 million, and that provisions of about NIS 20 million were recorded against part of that amount. The remaining NIS 175 million of claims and demands is described as being overwhelmingly filed against a U.S. consolidated company. This is no longer just accounting discomfort. It is an indication that the U.S. arm has started generating legal friction that now shows up both in the consolidated report and in the note disclosures.
Put those figures together, NIS 15.1 million of impairment, about NIS 18 million of legal-provision expense, and roughly NIS 10 million of doubtful debts, and the message is straightforward: 2025 was not merely a weak U.S. year. It was a year in which the company acknowledged that part of the asset base, part of the receivables book, and part of the old exposure stack already needed explicit accounting and operating cleanup.
The Service Shutdown Means The Cleanup Is Not Finished
The July 2025 board decision to stop one of the ancillary-service activities in the U.S. is probably the clearest sign that management now prefers to shrink rather than simply carry the activity. The company does not describe this through a vague headline. It lists the steps it took: stopping new service contracts, ending obligations under existing contracts, collecting existing customer debts, reducing headquarters headcount tied to the activity, and moving the tools into storage and out of service.
The most important detail is that the process is still open. As of the approval date of the financial statements, Isramco Inc. was still working to sell those tools in the market, and at year-end 2025 their carrying value, after impairment, still stood at about NIS 18 million. In other words, the closure decision is already made, but the cash has not yet come back. So it cannot be treated as a one-off event that disappears the moment it is announced.
This is also why the doubtful-debt line matters more than the number alone. The company explicitly describes collection of existing customer debts as part of the shutdown process, and in the same year it recorded roughly NIS 10 million of doubtful-debt expense. That means the shutdown did not begin from a clean receivables base. It began when management already understood that part of the collection profile had become problematic.
Texas Is A Real Option, But Not Yet An Offset
Against this cleanup story, the report also introduces a new option. Isramco Inc. is examining an investment in a Texas project to build a plant that separates natural gas liquids and sells them into the U.S. and Mexican markets, together with an independent local partner. The full project cost is estimated at about $100 million, and Isramco Inc.'s share is estimated at 66.66%.
This is more than a generic strategic intention. In September 2025, the company gave the local partner a loan of about $4.5 million, at annual interest of SOFR plus 3%, secured by the land on which the project is expected to be built. That means the company has already put money at risk at a bridge level. It is not only drawing an arrow on a strategy slide.
But this is exactly where the line between option and real offset runs. The same note also states explicitly that the company intends to advance the investment only subject to the local partner finding customers for the project. So the Texas project is neither an operating asset nor a final investment decision. It is an option with two conflicting characteristics: it is tangible enough to justify a bridge loan and collateral on the land, yet not mature enough to offset the cleanup that 2025 already forced the company to recognize.
That is also why the option matters. If customers are found, Nefta could replace part of the shut service exposure with a different type of U.S. infrastructure activity. If not, 2025 will remain the year in which the U.S. layer both absorbed write-downs and provisions and began sending more capital into a project that still has not proved demand.
Bottom Line
The U.S. layer no longer fits the description of background noise alone. It is still not Nefta’s value engine, and Tamar remains the center of the story. But in 2025 it already became a layer that filters part of that value on the way up: revenue stayed large mainly because oil marketing expanded, profitability flipped, the accounting and operating cleanup became visible, and one of the service activities was shut in practice.
The Texas project keeps this from becoming an overly bearish read. There is a real option here, with a defined project, an estimated capex envelope, a local partner, and a bridge loan that has already been made. But without customers it is still an option, not an offset. So the 2026 test here is simple: whether the legal and doubtful-debt charges were one-time cleanup rather than a new earnings base, whether the shut service assets are actually monetized and closed out, and whether the Texas project advances from land and bridge financing into customers and an investment decision.
If those three checks line up, the U.S. arm can go back to being disciplined optionality. If not, it will move from a side note in the report into a more permanent filter on how Tamar value reaches the shareholder.
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