Bethel Finance news:
The enormous potential in natural-gas fields located in waters off the northern coast of Israel came into stark focus for investors Tuesday as UBS initiated coverage of five companies with interests in the discoveries.
The investment firm assigned buy ratings to Delek Energy Systems Ltd., Delek Drilling LP and Avner Oil Exploration LP as well as neutral ratings to Ratio Oil Exploration LP and Isramco Negev 2 LP.
Four deepwater prospects are in question: Mari-B, with natural-gas reserves estimated at 1.2 trillion cubic feet; Tamar, with a projected 8.7 trillion cubic feet of gas; the Leviathan field’s gas reserves, estimated at 16 trillion cubic feet, and Leviathan’s oil reserves, estimated at 3 billion barrels.
The buy-rated companies “constitute the exploration-and-production arm of Delek Group and hold stakes in all discoveries, while Ratio is a pure play on Leviathan and Isramco on Tamar,” the UBS analysts wrote in a research note explaining their recommendations.
UBS analysts Roni Biron and Ziv Tal see both domestic-market and export opportunities for the companies.The “geopolitical climate in the Middle East and North Africa reinforces the case for Israeli gas,” they wrote Tuesday.
“Domestically, it underscores Israel’s need for strong indigenous gas supply, as consumption is expected to more than double by 2015,” they wrote.
Egypt provides Israel with substantial amounts of the natural gas it needs for power and electricity generation, the analysts wrote.
However, they cited a pipeline explosion early in February that disrupted Egyptian gas supplies to Israel as well as an “ongoing political debate” that’s emerged in Egypt about whether to continue exports to Israel.
“From an export perspective … Israeli gas may be perceived favorably against current MENA exporters, as supply diversification and improved conditions create a window for” new long-term supply contracts, the UBS analysts wrote, referring to the abbreviation for Middle East and North Africa.
Israel “compares favorably against Libya and other MENA exporting regimes, which should help the Leviathan partnership secure long-term contracts,” they wrote, adding that exports from the Leviathan field will likely be “targeted at Europe and/or Asia via liquefied natural gas.”
“Against the backdrop of the latest events in the Middle East and North Africa … Israel’s relative political stability and democratic regime stand out,” the analysts also pointed out. Read Amotz Asa-El ‘s View from Jerusalem column for more on the political and financial implications of the gas discoveries for Israel’s government.
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