Leumi: Tamar, Leviathan partners will benefit from Myra failure

Analyst Ela Fried: Myra 1 well's failure will increase the criticism of the natural gas reserves assumption made by the Tzemach Committee.

"The short-term main beneficiaries from the announcement about the Myra well are of course the partners in the Tamar and Leviathan reserves: Noble Energy Inc. (NYSE: NBL), Delek Group Ltd. (TASE: DLEKG) and its subsidiaries, Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) and its affiliates, Alon Natural Gas Exploration Ltd. (TASE: ALGS), and Ratio Oil Exploration (1992) LP (TASE:RATI.L)," says Leumi Capital Market Services analyst Ela Fried today in response to the failure of the Myra 1 well.

As for Tamar and Leviathan, Fried cautions, however, "Although their dominance, in the absence of competitors, increases, this is liable to result in a further focus of attention by the Antitrust Authority, so that one way or another, we're talking about a reservoir that is liable to be declared a monopoly in the supply of gas to Israel, and the strategic importance of the partnership rises."

As for Myra, Fried says, "The announcement seems clear and unequivocal, so it is hard to imagine what more can be said about the well, which unquestionably raised high hopes among the licensees."

Fried added that the Myra 1 well's failure will increase the criticism of the natural gas reserves assumption made by the Tzemach Committee, on which it based its gas exports recommendation. The committee assumed 950 billion cubic meters (BCM) in gas reserves, compared with 650 BCM in the latest estimates.

"The disappointing results in a significant drilling for its licenses that are not part of the Noble Energy-Delek group and its partners, and which has drawn considerable domestic and international attention, do not encourage investment," concludes Fried. "The results of the Myra well emphasize the importance of the Tzemach Committee's conclusions, which support foreign investment in the industry. Government policy supporting exports is important, especially after the adoption of most of the Sheshinksi Committee's conclusions, and it unquestionably softens the blow and encourages continued investment in the sector."

Published by Globes [online], Israel business news - www.globes-online.com - on September 6, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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