NewMed Energy: Israel-Based Energy Firm With Strategic Partnerships Is Worth A Look

seekingalpha03-29

NewMed Energy's stock price remains stable despite tensions in Israel due to a $50 million profit distribution for investors.The company's Q4 sales and EBITDA remained consistent, but net profit fell ...

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Limited Partnership (OTCPK:DKDRF) is noticeably absent despite tensions in Israel. Fortunately, the stock price change is related to the $50 million profit distribution for investors of record on November 27, 2023. DKDRF stock is trading closer to its 52-week high at $2.82. At these levels, are shares a buy? Background on NewMed Energy The Eastern Mediterranean firm has been a key partner in nearly every gas discovery made in the last three decades. It has a 45.34% holding in the Leviathan Reservoir. This gas production is a key source of energy for the State of Israel and countries of the region. Looking ahead, NewMed's strategic policy includes plans to invest in the development of new technologies. Its objective includes producing energy from alternative sources, such as blue hydrogen. Additionally, it intends to apply carbon capture and storage in those upcoming new technologies. Fourth Quarter Review NewMed Energy operates in a robust price environment. Prices of Brent increased in the last four years, as the orange line indicates below. NewMed's realized blend prices remained steady throughout: NewMedEnergy Source: NewMed Presentation This resulted in consistent Q4 sales of $277 million and EBITDA of $191 million. However, net profit fell compared to the last two years: NewMedEnergy Net financial expenses accounted for most of the drop in net profit. NewMedEnergy The firm posted strong profits, thanks to a drop in depreciation, depletion, and amortization expenses. However, the cost of natural gas and condensate production increased while sales of natural gas decreased. In the table below, the cost of production of those items increased compared to 2021 levels. NewMedEnergy For the fiscal year, sales and EBITDA are more consistent year-on-year. Net profit in 2023 is comparable to that of 2021: NewMedEnergy Opportunity NewMed operates partnerships whose primary business is the exploration, development, production, and marketing of natural gas, condensate, and oil. The objective of natural gas-based projects is to increase the volume of natural gas production. Concurrently, the partnership assesses business growth opportunities. This includes exploration, development, production, and marketing. The company wrote in its financial report that it is exploring investments in renewable energy with Enlight Renewable Energy Ltd. Blue hydrogen, for example, is produced from natural gas. It is a potential low-carbon substitute for its energy customers. Risks NewMed Energy has natural gas platforms, production, transmission facilities, and other related infrastructure systems in Israel. They risk being targets for attacks, such as missile fire and sabotage. The firm believes that its operator, Chevron Mediterranean Ltd. (CVX), and the Partnership do not have enough coverage for such risks. In addition, the insurance firm may not renew the policy. The company cited the continuation of the war increases the risks of an export disruption of natural gas from the Leviathan reservoir. Fortunately, since the War began, exports from the Leviathan reservoir continued. Latest News On March 13, 2024, BP p.l.c. (BP) and Adnoc, a United Arab Emirates state energy firm, suspended their plans to buy a 50% stake in NewMed Energy. The firms cited external environment uncertainties for pausing the $2 billion bid. BP would have increased its geographical exposure in the eastern Mediterranean. In October 2023, BP claimed that the deal was still on track, despite the war. That same month, Israel's Energy Ministry awarded Eni S.p.A. (E), Dana Petroleum, and Ratio Energies a license to explore natural gas in an area west of Leviathan Field. Socar, an Azerbaijan national oil company, BP, and NewMed may explore north of the Leviathan. Comparable Stock Grade According to Seeking Alpha's Peer analysis, NewMed Energy's peers are Gulfport Energy Corporation (GPOR), Baytex Energy Corp. (BTE), Black Stone Minerals, L.P. Common Units (BSM), Kosmos Energy Ltd. (KOS), and Comstock Resources, Inc. (CRK). Seeking Alpha Although DKDRF is the second-best performer on the list, it does not have any quant factor grades. Seeking Alpha BSM, GPOR, and BTE have grades of A+ to B- in various categories. Gulfport Energy is worth considering more closely. The firm posted a total net production of 1,063.3 MMcfe/day, net income of $245.7 million, and adjusted EBITDA of $190.8 million. These figures are all above consensus expectations. Takeaway Energy investors should consider following NewMed Energy. Though currently suspended, the potential to close the deal with BP and Adnoc is a positive catalyst. In the interim, the firm will continue exploration and new green energy developments.  Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2423128913"}