Shares of Delek Group Ltd. (TASE: DLEKG), its subsidiaries Delek Energy Systems Ltd. (TASE: DEOL) and Delek Energy subsidiaries Delek Drilling LP (TASE: DEDR.L) and Avner Oil and Gas LP (TASE: AVNR.L) are the main beneficiaries from the disruption in natural gas deliveries by Egypt's East Mediterranean Gas Company (EMG), as Yam Tethys has the supply and the capacity to make for any delays in gas from Egypt, and can also bridge the gap until Tamar is online, says Barclays Capital analyst David Kaplan.
Kaplan says that there will be disruptions in gas deliveries due to the explosion in the EMG pipeline, but that Yam Tethys can meet Israel's current demand for gas. "Assuming that Israel maintains the same level of demand for the next three years (until Tamar is online), we do not see a serious risk to Israel’s energy needs." Therefore, Yam Tethys's Israeli partners are short-term beneficiaries.
Kaplan reiterates his recommendations and target prices for the companies: Avner and Delek Drilling have "Overweight" recommendations with target prices of NIS 2.89 and NIS 16.17, respectively. Their partner in Tamar, Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) has an "Underweight" recommendation with a target price of NIS 0.34.
Kaplan devotes much of his report to Ratio Oil Exploration (1992) LP (TASE:RATI.L), Delek's partner in Leviathan. He gives Ratio an "Overweight" recommendation with a target price of NIS 0.80, 19% above today's opening price. He has been bullish about Ratio for a long time, and gave it an ambitious target price even when the share was traded at NIS 0.50. He is the most bullish analyst on the share.
"Where we believe that the market is not giving Ratio enough credit is in: the potential for oil, and the ability to begin production (even if only on a small scale) prior to 2014, which may lead to some tax benefits," says Kaplan.
16 trillion cubic feet of natural gas have already been found in the first target strata of Leviathan reserve. There are three billion barrels of oil in the second target strata, with a 17% chance of geologic success, and 1.7 billion barrels of oil in the third target strata, with an 8% chance of geologic success.
Gas exploration shares were mixed in morning trading today. Delek Group's share price rose 0.4% by midday to NIS 876.80, Delek Energy's share price fell 1.5% to NIS 1,404, Delek Drilling's share price fell 0.3% to NIS 13.64, and Avner's share price rose 0.3% to NIS 2.47. Ratio's share price fell 1.2% to NIS 0.66, and Isramco's share price fell 0.7% to NIS 0.40.
Published by Globes [online], Israel business news - www.globes-online.com - on February 7, 2011
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