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Berenberg downgraded Energean Oil & Gas (ENOG:LN) (OTC:EERGF) from Buy to Hold with a price target of GBP10.00 on Monday, citing increased geopolitical risks in Israel.
The London-based energy company confirmed on June 13 that Israel’s Ministry of Energy and Infrastructure ordered it to halt production from its Karish gas field, located 90km offshore Israel. The partners of Leviathan, Israel’s largest gas field, also received orders to stop production.
Energean expects regular updates from the Ministry and plans to inform the market accordingly, though the duration of the Karish shut-in remains unclear at this time. The company produces natural gas from the Karish field as part of its Eastern Mediterranean operations.
Berenberg noted that energy infrastructure appears to be targeted by both sides in the conflict, pointing to impacts on the Bazan oil refinery in Haifa as an example. The research firm believes a prudent approach is warranted given the deteriorating security situation in the region.
While Berenberg has not made changes to its financial forecasts for Energean at this stage, the uncertainty surrounding the production halt led to the downgrade decision and the establishment of the GBP10.00 price target.
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