Friday, September 17, 2010

Levant Basin Hydrocarbons

To begin with, I am not recommending the stock nor desirous of providing investment advice.  You are on your own for that.  This investment report is a good look see at developments in offshore oil prospects controlled by Israel.  They are clearly important and not just for Israel.

Egypt also has a big chunk of this party and Lebanon is not left out.  The point is that the Levant stands to land a lot of oil and gas over the next century nicely underpinning the coastal economy and supporting the rise of a wealthy megalopolis strung out along the coast from the Delta through Tyre.

Certainly Israel will take full advantage of all this.  The plausibility of serious investment may bring even the irrational types in the neighborhood around to the table.  It is a pretty big carrot.

I am not aware yet of what Egypt is doing in this regard but they should not be sitting on it all.

God's Chosen Investment

By Christian A. DeHaemer | Friday, September 10th, 2010

The Bible predicts that Israel would discover oil...
The Torah also proclaims that Israel would "suck honey out of the rock, and oil out of the flinty rock... "
That Zebulun and Issachar "shall suck of the abundance of the seas, and of treasures hid in the sand... " (Deut 33:19)
And that Asher would "dip his foot in oil" (Duet 33:24).

And oil they found...

The U.S. Geological Survey estimates 122 trillion cubic feet of undiscovered, recoverable natural gas located in the Levant Basin Province in the Eastern Mediterranean region.
The oil lies in the coastal areas near IsraelLebanon, and Syria, and can be recovered using modern technology.
This bullish report is the first by the USGS to identify viable resources in this basin, and it backs up a recent study commissioned by seismic data company Spectrum using Multi-Client seismic data acquired and processed in the Levant Basin and surrounding areas.
According to Rigzone, an oil industry journal:
Spectrum has an extensive library of Multi-Client data covering the region, the majority of which was acquired between 2000 - 2002 and reprocessed as recently as 2008 using both pre-stack time and depth migration. The data spans the Levant basin and has been instrumental in securing a significant gas discovery in the region.
This is a big find
USGS Energy Resources Program Coordinator Brenda Pierce said, "The Levant Basin Province is comparable to some of the large hydrocarbon provinces around the world and its gas resources are bigger than anything we have assessed in the United States."
That’s a lot of natural gas.
The USGS also estimated the Levant Basin contains 1.7 billion barrels of undiscovered, recoverable oil.
Depending on the price of natural gas and oil, the value of the Levant Basin is somewhere between $650 and $718 billion...
The vast majority of the Levant Basin lies within the land and territorial water of Israel.
Offshore, some of the 'undiscovered' natural gas has been proved and will provide for the countries energy needs for decades. There is even speculation that Israel will become a net exporter of oil and gas.
Pipe to Europe
Speculators are currently drawing up plans to run underwater pipelines to Greece.
Greek Prime Minister George Papandreou and Israeli PM Ben Netanyahu got together last weekend to discuss new ties both military and trade. Papandreou wants to step in where the Turks left off.
There are two risks to profiting from this new energy mega-find...
The first is that Israel is revisiting its oil and gas regulation last updated in 1952, an attempt to extract more money from the oil and gas companies. 
Oil and natural gas production is an expensive process that takes years to pay off. Companies don’t put billions down if they think the rules are going to change midstream...
The second risk is the lack of official boundaries with Lebanon. Israel is still officially at war with that country; part of the Levant find is over the line, and Hezbollah doesn’t seem to need a reason to blow stuff up.
Noble Energy
The largest player in this area is Noble Energy (NYSE: NBL). Noble has been looking for energy in the Eastern Mediterranean for a long time. The company has 1.6 million acres under lease for exploration.
Noble has a 47% interest in the Mari-B field offshore Israel, which produces 138 mcfpd of natural gas. In the third quarter, an additional 600 mcfpd will come online.
The company also has the Tamar development which is approved but not producing. There are 8.4 trillion cubic feet of oil in Tamar. Production is expected to being in 2012.
Noble Energy also has 40% of the Leviathan field, which may hold up to 16 trillion cubic feet of natural gas, and up to 4.2 billion barrels of oil in two other formations. 
Noble is a 13 billion company in terms of market capitalization. They have a forward P/E of 17 and are covered by at least 10 analyst firms — which means a lot of the upside is priced in. (ExxonMobile, for example, has a P/E of 10.)
God’s chosen investment
I prefer to invest in companies for which I am the only analyst who covers them. In this way, I can be sure that I know more about the company than 99% of investors.
One of the men who compiled the data in the USGS report used to be a researcher for the Geophysical Institute of Israel. Today, he owns a small company that just announced it has started drilling for undiscovered oil on land.
This company has a $105 million market cap and has exploration rights within the Levant Basin. Part of the reason that this company it is so cheap is that the CEO believes and professes that the Torah says they are preordained to strike oil, and quotes the verses in the first paragraph. 
MBA/investment types don’t go in for that sort of stuff and dismiss this company with a smirk.
But I think there's a lot more value here than meets the eye. They started drilling two weeks ago; there’s plenty of upside, little downside, and nice catalyst to spark a rally. 
If these guys hit oil, this stock it will launch.
I’m giving the buy report to my readers in Crisis & Opportunity today. Join us.
Good hunting,
Christian DeHaemer

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