Ratio Energy Secures New Financing Deal Ahead of Leviathan Field Expansion
Ratio Energy has announced an updated financing agreement totaling $600 million, aimed at reducing its debt costs and enhancing financial flexibility as investments in the Leviathan natural gas field's expansion project are set to increase. The key change involves a revised interest rate margin, which will now be a fixed 2%, down from the previous range of 2.7%-3.25%. While this margin is applied above a base interest rate, the reduction of 0.7 to 1.25 percentage points is significant given the debt's scale. Of the total financing, $450 million is already utilized. This reduction is estimated to save Ratio between $3.2 million and $5.6 million annually on interest costs for this portion alone, with savings varying as the principal is repaid between October 2026 and October 2030.
In addition to the loan, Ratio will receive a $150 million revolving credit facility, available until the end of 2028 and then gradually repaid until October 2030. This facility provides accessible liquidity for investment and cash flow needs rather than an immediate increase in debt. The timing of this financing update aligns with the Leviathan field's development phase. Ratio holds a 15% stake in the field, alongside NewMed Energy (45.34%) and Chevron (39.66%).
Following a final investment decision in January for the Leviathan expansion, valued at approximately $2.36 billion, production capacity is expected to rise to about 21 billion cubic meters (BCM) per year by 2029. Ratio's share of this investment is around $354 million. Infrastructure development is progressing, with a third pipeline completed and the Ashdod-Ashkelon pipeline nearing completion to enhance southern gas transmission. These upgrades aim to support both domestic supply and increased regional exports, with Leviathan currently supplying gas to Israel, Jordan, and Egypt.
Ratio's CEO, Yigal Landau, stated that the financing update is a "significant strategic step" in expanding Leviathan's operations by lowering financing expenses and strengthening financial flexibility. He added that the agreement reflects the company's ability to improve its financing terms and the confidence it receives from financial institutions globally. For Ratio, this reduction in debt cost is crucial as it manages existing cash flow from the field while undertaking substantial capital expenditures for future production growth.
