Business in Brief: December 31

Psagot warns investors about gas shares; Fischer: We need gas export markets; Elbit Imaging sells London hotel stakes

58_Stanley Fischer (photo credit: Bloomberg)
58_Stanley Fischer
(photo credit: Bloomberg)
Psagot warns investors about gas shares • By OMER RABIN
“Delek Energy Systems Ltd. and its subsidiaries Avner Oil and Gas LP and Delek Drilling LP will likely fall 26 percent,” Psagot Investment House Ltd. said in a report Thursday, following Wednesday’s announcement that the Leviathan reserves are as large as previously estimated. Psagot gives Avner a target price of NIS 1.92, Delek Drilling NIS 10.56 and Delek Energy NIS 1,092. It also gives the parent company, Delek Group Ltd., a “market perform” recommendation, with a target price of NIS 839, compared with Thursday’s opening price of NIS 942.
“The world’s greatest deepwater discovery of the past decade strengthens the confidence of more potential discoveries and will probably bring the Israeli economy to an era of exports,” Psagot said, adding it had raised its estimated value of Leviathan to $5.3 billion from $3.8b. “As for the original valuation, the capitalization rate was lowered to 13%, but the recommendations of the Sheshinski Committee were partly weighted (50%). It should be noted that under the current tax regime, the estimated value of the reserves is $6.5 billion.”
Psagot said investors in the companies were not taking into account the likely impact of the Sheshinski Committee.
“In practice, the companies are traded on the basis of a scenario that assumes there will be no change in the tax regime... We therefore reiterate our “underperform” recommendations and advise exploiting the rise [in the shares’ prices] to reduce holdings,” the report said.
Fischer: We need gas export markets
Israel will have to find export markets for natural gas after Wednesday’s announcement of a major field off the country’s Mediterranean coast, Bank of Israel Governor Stanley Fischer said Thursday. “We don’t have a domestic market for the Leviathan gas, at least not at the moment, so we will have to export it, and this requires a large investment in infrastructure,” he said at a Bank of Israel conference in Tel Aviv. “The State of Israel will have to solve the problem of where we will find markets for the gas.”
Delek Drilling LP and Noble Energy Inc. said drilling test results in its Leviathan field off had confirmed a significant find of at least 16 trillion cubic feet of natural gas. Leviathan is almost double the size of the Tamar field, discovered in 2009 by Noble, Delek and their partners.
The Leviathan and Tamar partners intend to examine options for exporting the gas from Israel via a pipeline or by turning it into liquefied natural gas, Delek said Wednesday. • Bloomberg
Elbit Imaging sells London hotel stakes • Globes correspondent
Elbit Imaging Ltd.on Thursday sold its holdings in three London hotels for £21 million to its partner in them, Park Plaza Hotels Ltd. The deal came a day after it bought seven shopping centers in the United States.
Elbit Imaging, controlled by chairman Mordechai Zisser, owned 45 percent of the Park Plaza Riverbank Hotel and the Park Plaza Sherlock Holmes Hotel and 50% of the Park Plaza Victoria Hotel. Park Plaza, controlled by chairman Eli Papouchado, manages the hotels. Park Plaza will also assume Elbit Imaging’s £11.9m. guarantees to Aareal Bank AG.
Elbit estimates the total asset value of the hotels at £230m., and the company books their value at £166m.
Elbit Imaging said it would report a fourth quarter gain of NIS 185m. on the sale.