May 20 (Bloomberg) -- Oil Refineries Ltd. gained the most in more than seven months as the refiner of crude oil products narrowed its quarterly loss on better refining margins.
The shares surged 4.7 percent, the biggest advance since Oct. 2, to 1.76 shekels at the close in Tel Aviv. Trading volume was more than triple the three-month daily average. The stock led gains in the benchmark TA-25 index which added 0.6 percent today.
The company said a first-quarter loss declined to $2.58 million from $5.92 million a year ago as refining margins rose to $6.50 a barrel from $4 a barrel in the comparable period. In January the company started operating its new hydro-cracker for the production of high-quality fuel and in April started using natural gas from the Tamar field for all its energy needs, according to a filing with the Tel-Aviv Stock Exchange today.
“The start of the operation of the hydro-cracker at the beginning of this year helped improve refining margins,” Guil Bashan, an analyst at IBI-Israel Brokerage & Investments Ltd. said by phone from Tel Aviv. “There is an expectation that operating results will continue show an improvement based on the margins and on the natural gas supply.” He has a neutral rating on the shares and a price target of 2.20 shekels.
The Tamar offshore field started production on March 30, supplying Israel with natural gas and saving the economy a projected 1 billion shekels in energy costs a month, according to Israel’s Ministry of Energy and Water Resources. Migdal Capital Markets estimates Oil Refineries will save $130 million a year from the use of natural gas.
The refiner’s shares have declined 12 percent this year compared with a 3.8 percent rise in the benchmark gauge as the company has posted seven consecutive quarters of losses, according to data compiled by Bloomberg. Oil Refineries has started a reorganization process including pay cuts and early retirement of workers.
Israel Corp., which has a 37 percent stake in the company, gained 2.7 percent.
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