Ratio Rises as Barclays Says Leviathan Potential ‘Not Priced In’

Ratio Oil Exploration 1992 LP headed for the highest close in two weeks as Barclays Capital said the full potential of the Leviathan gas discovery isn’t priced into shares of Israeli explorer.

The shares advanced 6.4 percent to 0.612 shekel, at 12:57 p.m. in Tel Aviv, poised for the highest close since Feb. 9.

“Ratio is currently trading at a price that implies only the value of drilling gas from Leviathan, which is then sold to a third party distributor,” analyst David Kaplan wrote today in an e-mailed report. “This scenario completely ignores the potential for oil and participation in the export side of the Leviathan business model.”

Drilling test results at the Leviathan field off Israel’s coast confirm a “significant” find of at least 16 trillion cubic feet of natural gas, Noble Energy Inc., the Houston-based explorer with a controlling interest in Leviathan, said Dec. 29.

Middle East unrest is positive for the Israeli companies, driving a government push to make the country fully energy independent, Kaplan said. “Israel must guarantee energy independence especially in light of the regional instability and the economic implications,” Vice Prime Minister Silvan Shalom said yesterday.

Kaplan has an “overweight” recommendation and 0.80 shekel price estimate on Ratio.

To contact the reporter on this story: Ronit Goodman in Tel Aviv at rgoodman9@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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