Investment house IBI analyst Yuval Zehira, commenting this morning on signs of natural gas at the Tamar-1 drilling site, reiterated his "Buy" recommendation for Delek Group Ltd. (TASE: DLEKG), with a target price of NIS 450 per share, which is 200% higher than its opening price today.
Zehira finds that the Tamar project is not priced into Delek's current share price at all, which is understandable to an extent, until the reserves are proven.
Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling Limited Partnership (TASE: DEDR.L) reported yesterday that an initial analysis of drilling at the Tamar site off of Haifa indicated natural gas was contained in the layer of sands on the seabed.
Delek Drilling and Avner Oil and Gas each hold a 15.625% stake in the drilling site. Therefore, Delek Energy Systems Ltd. (TASE: DEOL), which owns 62% of Delek Drilling, and 38% of Avner, holds 15.625% of the site. That gives Delek Group, which controls 88.87% of Delek Energy, 14% of the Tamar drilling site.
Other partners in the exploration are Noble Energy (36%), Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) (28.75%), and Dor Gas Exploration of the Dor-Alon( Group (4%).
In the coming days, the partners in the project will conduct further tests that should provide definitive answers as to the feasibility of continuing exploration.
According to Zehira, the economic feasibility of the reserves is not being checked yet, but it could be that the reserve is larger than the Yam Tethys reserve, and at current gas prices, the sales value of the reserve could be bigger than the value of Yam Tethys, or more than $3.2 billion.
On the Tel Aviv Stock Exchange (TASE), share prices of the exploration's partners jumped. By late afternoon, Isramco was up over 30%, Delek Group was up over 13%, Delek Drilling was up 15.1%, and Avner Oil and Gas rose 14.6%.
Published by Globes [online], Israel business news - www.globes-online.com - on January 12, 2009
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