Tamar SW: The Reserve Uplift Is Real, But How Much Value Really Stays With Isramco
The main article already showed that Tamar SW adds real geological depth beyond Tamar's original license area. This follow-up shows that the uplift is real, but it comes with a new 5.9% override royalty to the state, roughly 5% of the reservoir that is still open with the remaining Eran-rights holders, and conditions precedent that were still unresolved at the report date.
The main article already made the broader point: Tamar SW strengthens Isramco's asset base, but that does not automatically mean the same amount of new value remains available to unit holders. This follow-up isolates only that question: is the reserve uplift real, and if it is, how much of it actually stays with Isramco after the state's layer and the rights that are still not fully settled.
The answer is nuanced, but clear. On the geological and operating side, Tamar SW is very real. Development was completed in July 2023, and regular production has been taking place since February 2024. On the economic side, the picture is much less clean. The 2025 annual report now brings about 95% of Tamar SW reserves into Tamar's reported reserve base, but that move relies on the August 2025 agreement with the state, which imposes a new 5.9% override royalty from July 2025, while about 5% of the reservoir still sits in ongoing negotiations with the remaining Eran-rights holders.
That is the key point. Tamar SW is no longer a distant option or a presentation slide. But it is also not correct to read the reserve headline as if almost all of the new economic value now remains cleanly inside Isramco. The filing itself shows that the distance between "a reserve that entered the table" and "value that stays with unit holders" is still real.
What Was Really Added To The Reserve Base
The first thing to clean up is what exactly the report confirms. In the updated reserve table, Tamar and Tamar SW are presented together. Tamar's 2P reserve estimate, including Tamar and Tamar SW, stands at about 9,583.9 BCF of natural gas and about 12.5 million barrels of condensate. That is an important figure, but it does not give the reader a separate line that isolates Tamar SW on its own.
That is why the real insight comes not from a single number, but from the explanatory note. The filing states that the reserves now attributed to Tamar SW consist of the 78% located within the Tamar license area, plus 76% of the reserves that spill outside that area into the expired Eran license, meaning together about 95% of Tamar SW's total reserves. That is already a meaningful change. It means the report is no longer relying only on the 78% that sits inside Tamar itself. It is also bringing in most of the layer that spilled beyond the original license boundaries.
It is also important to understand why this is real reserve support rather than convenient wording. Tamar SW was discovered back in 2013, but it is not a reservoir that remained only on paper. Development works were completed in July 2023, it was connected to Tamar's production system, and regular production has been taking place since February 2024. So the 2025 inclusion is not about a purely theoretical opportunity. It is about a reservoir that is already tied into the system and already producing.
| Layer | What the filing confirms | What it means for unit holders |
|---|---|---|
| Reserve base | Tamar and Tamar SW are presented together in 2P at about 9,583.9 BCF and about 12.5 million barrels of condensate | The uplift is real, but the filing does not isolate Tamar SW on a stand-alone basis |
| What is already included from Tamar SW | 78% inside Tamar plus 76% of the spillover into Eran, meaning about 95% of Tamar SW's total reserves | Most of Tamar SW now sits inside a broader reported economic reserve frame |
| What remains open | 24% of the Eran rights, equal to about 5% of Tamar SW's total reserves | Not all of the reserve uplift is economically settled yet |
| Price of the settlement | A new 5.9% override royalty to the state from July 2025, with an effective rate of about 4.9% in 2025 | Part of the new value is already carved out at the state layer |
That chart is the core of the argument. It shows that the reporting jump is not fictional, but it is also not a single clean number that flows straight into unit-holder value. 78% already sits inside Tamar. Another roughly 16.7% enters the economic frame only through the agreement with the state. The remainder, roughly 5.3%, is still open against the remaining rights holders in the expired Eran license.
Where The Value Leaks On The Way
This is where the real economic question begins. The original government decision set a cap on Tamar SW's approved production, limiting it to gas whose sale would generate up to $575 million of revenue. That production cap was only supposed to be removed once the state and the Tamar partners agreed on the way the rights in the reservoir would be monetized.
The August 2025 agreement solved that bottleneck, but not for free. Under that agreement, the Tamar partners pay the state an additional override royalty of 5.9% on revenues from gas produced from Tamar SW, based on wellhead market value, starting in July 2025. The financial statements also say that this new override carried an effective rate of about 4.9% in 2025.
The implication is straightforward: reserve inclusion is not the same thing as net value capture. The portion of Tamar SW that lies outside the Tamar license did receive a broader economic framework, but it entered that framework with a new state claim on part of the future revenue stream. So the headline "about 95% of Tamar SW reserves are now included" is correct at the reserve level, but it is too strong if it is automatically converted into "about 95% of the value now stays with Isramco."
That chart matters because it prevents two different readings from being blurred together. Over the long run, the contractual burden is 5.9%. Inside 2025, because the arrangement only started in July, the filing shows an effective rate of about 4.9%. So even in the first year the economic leakage is already visible, but the filing itself suggests that the full burden will only be properly visible after a full year under the arrangement.
That also leads to the main analytical conclusion. The filing proves that Tamar SW adds a real reserve base. It does not provide a stand-alone number that translates that addition into net value for Isramco after the new state override. So the more conservative, and more accurate, reading is not "the reserves increased and therefore the same value remains," but "the reserves broadened, while part of the new value has already been assigned outward to the state."
What Was Still Open Even After August 2025
This is the friction the reader can most easily miss. Removal of the production cap was not presented as a final and unconditional resolution at the report date. It was granted only until the agreement's conditions precedent are met. Those conditions include, among other things, approval by the relevant governing bodies of all rights holders in Tamar SW, the approvals the state needs for the agreement, changing Tamar's license boundaries so they cover the entire Tamar SW area, tax approvals, the petroleum commissioner's approval for granting the override royalty to the state, and the commissioner's permanent approval to remove the production cap.
If those conditions are not met by April 16, 2026, or by a later agreed date, the parties are supposed to try for 90 days to reach alternative arrangements that reflect the same economic understandings. If that also fails, each side has the right to terminate the agreement. In that case the production cap returns, payment of the state override stops, but the royalties already paid are not refunded. That is a very important asymmetry: Isramco can pay on the way without having full certainty that the final framework is permanently closed.
There is another open layer as well. As of approval of the financial statements, the Tamar partners were still negotiating with the remaining rights holders in the expired Eran license, those 24% of the license rights that represent about 5% of Tamar SW's total reserves. In other words, even after the agreement with the state, Tamar SW's economic framework was still not fully closed against all relevant rights holders.
There was some progress after the balance-sheet date. On March 5, 2026, the Petroleum Council decided to recommend that the Energy Minister approve the required boundary change, but even that recommendation was based on an expectation of a binding agreement with the expired Eran-license holders. So there is progress here, but not full closure. That is exactly why the reader should not turn the reserve line into a certainty line.
Bottom Line
Tamar SW is a real reserve addition. That part of the story is clear. It is already connected, already producing, and about 95% of its reserves have already entered Tamar's reported reserve framework. But for Isramco unit holders, that is not the same thing as saying that almost all of the new value now remains with them.
The right read on the 2025 filing is this: the geological uplift is real, the value capture is partial. It is partial because the portion outside the Tamar license was settled through an agreement that imposes a new override royalty to the state, because about 5% of the reservoir is still subject to settlement with the remaining Eran-rights holders, and because even removal of the production cap was still conditional at the report date on a series of approvals that had not yet been fully closed.
So the key question from here is no longer whether Tamar SW exists or whether it adds reserves. The filing already proves that. The question is how much of that reservoir's value will still remain with Isramco after a full year under the new override, after the boundary change, and after the remaining rights are finally settled. Until those three things are closed, the reserve line is stronger than the value-capture line.
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