Cyprus Block 12 gas estimates disappoint

Share prices of the partners in the neighboring Leviathan field fell sharply after Noble Energy announced the results.

The Cypriot Block 12 offshore concession has 3-9 trillion cubic feet of natural gas, with a 60% chance of geological success, said Noble Energy Inc. (NYSE: NBL) in an analysts conference today. The figure is less than the earlier estimate of 10 trillion cubic feet (TCF), making the find considerably smaller than the Leviathan and even the Tamar discoveries in Israel. Block 12 also has deep oil potential of 3.7 billion barrels.

The announcement has hit Noble Energy's partners in Leviathan and Tamar. Share prices for Delek Group Ltd. (TASE: DLEKG) and its units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) fell sharply on the news. Delek has an option to acquire a stake of up to 30% in Block 12, subject to approval by the Cypriot authorities.

Delek Group's share price fell 1.3% by mid-afternoon to NIS 794, giving a market cap of NIS 9.1 billion, Avner's share price fell 0.6% to NIS 2.37, giving a market cap of NIS 7.9 billion, Delek Drilling's share price fell 1% to NIS 13.53, giving a market cap of NIS 7.4 billion.

Tamar partner Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) share price fell 2.6% to NIS 0.457, giving a market cap of NIS 5.6 billion, and Leviathan partner Ratio Oil Exploration (1992) LP (TASE:RATI.L) share price fell 7.9% to NIS 0.37, giving a market cap of NIS 2.9 billion, even though neither company has any connection with Block 12. Basically, it is collateral damage.

Noble Energy said that it has identified a total of 12 additional prospects that target sands equivalent to those discovered at Tamar with estimated gross unrisked resource potential of more than 20 TCF. The Leviathan 3 exploratory well is still being dug, and company plans to resume the Leviathan 1 exploratory well, which is targeting the deep oil-bearing strata, in early 2012.

Noble Energy said that the Mari-B field achieved record levels of production this year and has been successful in lowering Israel's energy costs by over $7 billion and reduced CO2 emissions by 17 million metric tons since 2004. Noble Energy and Delek jointly own the field through Yam Tethys. The increased output of the field is causing its faster-than-expected depletion.

Noble Energy said that the recently sanctioned development project of the nearby Noa field, which is also jointly owned with Delek, should add 100 million cubic feet of gas beginning in mid-2012, partially offsetting the depletion at Mari-B.

A reappraisal of the Tamar field increased its gross resource estimate to 9 TCF from 8.4 TCF. Development of the field is on schedule for commissioning in late 2012. The platform jacket and deck fabrication, as well as pipeline installation, are about 50% complete and onshore facility expansion is underway. The Tamar partners are in the final stages of sales contract negotiations with Israel Electric Corporation (IEC) (TASE: ELEC.B22), and are in active discussions with existing and new customers.

Noble Energy said that Israel gas demand remained robust and expects demand to grow by 10% a year through 2020.

Published by Globes [online], Israel business news - - on November 15, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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