Bethel Finance: Analysts see negative Leviathan market reaction as overblown

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Bethel Finance news:
Analysts covering gas exploration shares told "Globes" today that the sharp drop in the share prices of Leviathan partners - Delek Group Ltd. (TASE: DLEKG) units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L), and Ratio Oil Exploration (1992) LP (TASE:RATI.L) - to their announcement this morning was overblown. The companies announced that Leviathan's deep strata have less oil, but more natural gas than previously estimated.

IBI Investment House analyst Gil Bashan said, "I think that there's a chance that oil will be found. Today's report indicates a greater chance of this. I think that it's about 31%." He added that the important points were the addition of a third oil-bearing strata and their greater probabilities of success. "The importance of today's announcement is greater than the quantities, because it can affect other reservoirs, including Tamar. Today's fall in the share prices creates an opportunity, especially for Avner and Delek Oil."

Clal Finance analyst Yaron Zar said that today's announcement about the presence of oil at Leviathan was disappointing, but, "All in all, the report itself was not bad because there is the possibility of finding hundreds of millions of barrels of oil. There are two bright points: first, the finding of a third oil-bearing strata, and second, the potential for substantially greater quantities of gas."

Zar says that models for Levianthan's partners do not take an oil discovery into account, and that it was therefore better to calibrate for a discovery hundreds of millions of barrels of oil rather than millions of barrels. "In the end, an oil discovery is a bonus at the current prices," he concludes.

Leumi Capital Markets analyst Ella Fried says that the news about the potential oil reservoir is good news. "The probability of 600 million barrels of oil at a depth of 7,000 meters is a realistic prospect. However, it should be remembered that only three or four companies in the world have the track record and producing oil from this depth, and Noble Energy isn't one of them."

Fried says that Leviathan's partners will have to find a big oil company to produce oil from the reservoir.

The share prices of Avner, Delek Drilling, and Ratio fell 5% on the news. By midday, Avner and Delek Drilling had recovered half the earlier losses, but Ratio's share price continued to fall. At midday, Avner's share price was down 2.1% to NIS 2.66, Delek Drilling's share price was down 2.3% to NIS 15.22, and Ratio's share price was down 9% to NIS 0.37.