Leviathan partners to raise gas reserves estimate

The new estimate will increase the reserves from 17 to 20-21 trillion cubic feet.

Sources inform ''Globes'' that the Leviathan partners - Noble Energy Inc. (NYSE: NBL), Delek Group Ltd. (TASE: DLEKG), and Ratio Oil Exploration (1992) LP (TASE:RATI.L) - will shortly announce that Leviathan's natural gas reserves are 3-4 trillion cubic feet (TCF) larger than previously estimated. In December, the partners increased Leviathan estimated gas reserves to 17 TCF from 16 TCF. The new estimate will increase the reserves to 20-21 TCF.

Energy market sources believe that the announcement will refer to higher quality natural gas than previously discovered in the upper strata at Leviathan - the gas which has made Leviathan the largest natural gas discovery of the decade. The sources also believe that the Leviathan 1 exploratory well, which is drilling to the deeper oil-bearing strata, found another hydrocarbon condensate reservoir.

In mid-January, the Leviathan partners sharply revised downward the potential oil reserves in the structure, but revised the gas reserves upwards. The revised estimates are of 600 million barrels of oil and an additional 4 (TCF) of natural gas. Delek and Ratio said that Leviathan's deep strata have two prospects have almost the same mean estimates substantial quantities of oil and gas. The upper Lower Oligocene strata could have 285 million barrels of oil and 2 TCF of gas with a geological probability of success of 15-17%. The lower Middle and Lower Cretaceous strata could have 280 million barrels of oil and 2 TCF. The high estimate for the reservoirs are 1.2 billion barrels of oil and 7.5 TCF of gas in the upper strata and 560 million billion barrels of oil and 3.6 TCF of gas in the lower strata.

Last week, "Reuters UK" quotes sources as saying that the Leviathan partners aim to sell stakes in the field to bring in other stakeholders and raise cash to help develop the project, and that they had hired Citigroup Inc. (NYSE: C) to bring in one or more new partners. One source added, "The partnership is seeking to bring in a partner who has liquefied natural gas (LNG) development and marketing skills."

Another source said that likely partners could include Russia's Gazprom, Spain's Gas Natural SDG SA (Madrid: GAS), and France GDF Suez SA (Euronext: GSZ).

Delek units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) both said in their financial reports for 2011 that the Leviathan partners have been seeking a strategic partner.

Noble Energy owns 39.66% of Leviathan, Delek units Avner and Delek Drilling each own 22.67%, and Ratio owns 15%.

Delek Group's share price rose 2.5% by early afternoon to NIS 742.80, giving a market cap of NIS 8.3 billion, Avner's share price rose 1.4% to NIS 2.51, giving a market cap of NIS 8.2 billion, Delek Drilling's share price rose 0.7% to NIS 14, giving a market cap of NIS 7.6 billion, and Ratio's share price rose 3.2% to NIS 0.36, giving a market cap of NIS 2.7 billion.

Published by Globes [online], Israel business news - www.globes-online.com - on April 22, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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