30 August 12 16:23–Deutsche Bank analyst Dan Harverd has reiterated his target price of NIS 1,080 for Delek Group Ltd. (TASE: DLEKG) – an 85% upside on today’s opening price of NIS 563.90 – following the publication of the Tzemach Committee’s final report yesterday. He says that the report’s recommendations are slightly more supportive for the sector than the interim report issued in April and remove uncertainty from the sector.
Harverd notes that the report emphasizes the importance of attracting an oil major to invest and develop the local gas sector, with a strategic investor in the Leviathan as the next milestone. Delek is a partner in Leviathan, as well as the Tamar field, and Cyprus’s Block 12.
Harverd adds, “The most significant change in our view is a softening of the stance regarding the location of an LNG facility. While the report states an “absolute preference” for a facility to be located in Israel, it goes on to state that “export from a foreign site will be allowed in the framework of bilateral agreement between the countries”. This would appear to open the door for gas to be exported from a Cypriot LNG facility, either in addition or in place of a facility in located Israel,depending on the government’s stance.”
The sliding scale for gas exports, which permits 50% of exports of reserves larger than 200 billion cubic meters (7 trillion cubic feet (TCF)) is relevant for the 17 TCF Leviathan field. More importantly, the requirement to allocate at least 15% of its annual production to the domestic market, was dropped in favor of the Ministry of Energy and Water Resources’ discretion…Read More>>