Hezbollah’s Drones Drive Down the Value of Energean’s Shares
Story Code : 1003090
Energean is a hydrocarbon exploration and production company. It owns the rights to explore, excavate, and extract natural gas at the Karish site. The company owns a number of other fields in the occupied Palestinian waters.
On Monday, the first business day after the incident involving Hezbollah’s drones, the company’s shares on the London and Tel Aviv stock exchanges appeared unphased by the events that transpired just a few days earlier.
The share price on the London Stock Exchange rose by 3.4% and remained stable throughout the day. On the Tel Aviv Stock Exchange, it even increased by 3%.
However, with the opening of trading on the London Stock Exchange on Tuesday, the share price fell by 6.6% to its lowest level since May. On the Tel Aviv Stock Exchange, trading opened with a sharp decline of 5.1%, and soon its pace increased, with Energean stock losing what it had achieved on Monday, recording the worst trading period since May.
Financial experts attribute Monday's improvement before Tuesday's decline to the "false support process" for stocks following the drones operation to suggest stability and not be affected by Saturday's events.
Such operations are usually handled by a third party that works to buy shares to maintain their price. It seems that the parties contributing to Energean have resorted to this process to suggest that they are not affected by the resistance’s drones.
However, things took a turn for the worse amid intensifying discussions within "Israel", affecting the support process and ending its effect. Furthermore, the resistance’s operation is fueling a decline in investor confidence, which stems from the perceived high security risks.
Usually, events of this kind push companies to refrain from working in areas experiencing conflicts that often lead to a significant increase in insurance costs.
This appears to be Energean’s current predicament, despite its efforts to employ “remedial” measures to increase the level of confidence. These measures include claims that Saturday’s incident did not affect the company’s work or the work team on board. The company is also voicing confidence in the “Israeli” security establishment.
The decline in the value of the company’s shares on Tuesday cannot be separated from a decision by Energean CEO Mathios Rigas last month to sell 2.8% of his stake in the company. Those shares were sold at 5.6% lower than market price.
Rigas’ move set off alarm bells, leading to questions about whether there are any security risks or other factors that drove him to limit the level of his investment in the company. There is also speculation that it had other goals related to enhancing the presence of “Israeli” companies in Energean at the expense of other companies, and thus enhancing their presence in the Tel Aviv Stock Exchange.