Isramco, Delek Drilling drop as shekel rallies

Delek Drilling-LP, Avner Oil Exploration LLP and Isramco Negev 2 LP, partners in the Tamar offshore natural-gas field, declined on Sunday on concerns the shekel’s rally could hurt revenues.

Delek Drilling slid 1.2 percent, the most since April 18, to NIS 15.18 at the close in Tel Aviv, trimming the 12month gain to 12%. Avner retreated 1.2% to NIS 2.608, and Isramco dropped 0.5% to NIS 0.635. The benchmark TA-25 Index slipped 0.1%.

“The declines may be linked to the strengthening of the shekel against the dollar,” Noam Pincu, an analyst at Psagot Investment House Ltd. in Tel Aviv, said Sunday by telephone. “All the operations of these companies are in dollars, and when revenues are translated into shekels, these are lower.” He has a hold rating on Delek and Avner, while he rates Isramco a buy.

The shekel strengthened for a 12th day on Friday, adding 0.4% to 3.5549 per dollar and capping the longest stretch of daily gains since at least April 1981, when Bloomberg started compiling data. The currency has rebounded 15% from a three-year low reached on July 26, leading gains among 31 major currencies tracked by Bloomberg.

The partners in the Tamar gas field, which started production on March 30, have signed 15-year dollar contracts with Israeli customers, including an agreement for at least $14 billion with Israel Electric Co. and for $700 million with Paz Oil Co. The country’s offshore energy assets are also valued in dollars. Pincu estimates Tamar’s value at $14b. and Leviathan at $6.7b.

“The shekel value of these projects and that of the contracts drop as a result of the stronger shekel,” Pincu said.

(Bloomberg)