Bank Hapoalim has initiated coverage of Tamar partners Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) with a "Market perform" recommendation and Delek Group Ltd. (TASE: DLEKG) Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) with "Outperform" recommendations. All the shares are listed on the Tel Aviv 25 Index.
Bank Hapoalim cautions, however, "The sector is not recommended for the weak-heated, but only for investors with stamina. We think that the sector has not yet said the last work, and that it will be especially volatile in the coming months."
Bank Hapoalim gives Avner a target price of NIS 2.60, an 18% premium on today's opening price. and Delek Drilling a target price of NIS 14, a 14% premium. In addition to Tamar, both companies are partners in natural gas producer Yam Tethys, Leviathan, Noa, Dolphin, and other offshore natural gas fields. The bank says that both companies are underpriced, given the potential of their gas fields and licenses.
Bank Hapoalim believes that Isramco is fairly priced, given its holding in Tamar. "The upside in the security is due to the potential in finding other gas reservoirs in other licenses in which it is a partner." The bank gives Isramco a target price of NIS 0.48, a 9% premium on today's opening price.
Clal Finance today updated its sales forecasts for Tamar and Leviathan. It believes that Tamar will enjoy exclusivity as Israel sole natural gas supplier in 2013-16, due to the unreliability in gas deliveries from Egypt. "The collapse of Egyptian gas will boost sales from Tamar in the first years… Egyptian gas is out of the game."
Noble Energy Inc. (NYSE: NBL) owns 36% of Tamar, Delek subsidiaries Avner and Delek Drilling each own 15.625%, Isramco owns 28.7%, and Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) unit Alon Natural Gas Exploration Ltd. (TASE: ALGS) owns 4%. Noble Energy owns 39.66% of Leviathan, Avner and Delek Drilling each own 22.67% and Ratio Oil Exploration (1992) LP (TASE:RATI.L) owns 15%. Noble Energy owns 51.5% of Yam Tethys, Avner owns 23% and Delek Drilling owns 25.5%.
Delek Group's share price rose 3.4% to NIS 785.60 by early afternoon today, Avner's share price rose 2.2% to NIS 2.21, Delek Drilling's share price rose 2.6% to NIS 12.85, and Isramco's share price rose 1.4% to NIS 0.441.
Published by Globes [online], Israel business news - www.globes-online.com - on November 8, 2011
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