Leader Capital Markets today increased its estimate of the value of the Tamar natural gas field, and raised its recommendations on drilling partners Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), Alon Natural Gas Exploration Ltd. (TASE: ALGS), and Avner Oil and Gas LP (TASE: AVNR.L) shareholder Cohen Development & Industrial Buildings Ltd. (TASE: CDEV) to "Buy".
Leader analyst Oz Levy says, "The rise in the risk premium due to the events in Egypt cut the level of competition and weakened the attractiveness of Egyptian gas."
Levy adds, "The substantial rise in the cost of coal, the expected hike in the excise, which will substantially increase the cost of energy alternatives to gas, are likely to result in a sharp increase in gas prices in Israel, which will be reflected in the long-term contracts that will probably soon be signed between the Tamar partners and their customers."
Levy believes that Israel Electric Corporation (IEC) (TASE: ELEC.B22) will have to choose between signing gas supply contracts at coal-linked prices at a minimum of $5.60 per million BTU in quantities that take into account the conversion to gas of the coal-fired power station at Hadera, and signing fairly limited supply contracts at more than $6 per million BTU. We believe that gas prices for industry will probably exceed $6.30 per million BTU."
Isramco's share price rose 3.2% by mid-afternoon to NIS 0.385, giving a market cap of NIS 4.21 billion. Alon Gas's share price rose 11.8% to NIS 33.70, giving a market cap of NIS 460 million, and Cohen Development's share price rose 5.5% to NIS 58.94, giving a market cap of NIS 370 million.
Published by Globes [online], Israel business news - www.globes-online.com - on February 2, 2011
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