Berenberg downgrades Energean to 'hold' as regional risks intensify

(Sharecast News) - Berenberg downgraded Energean on Monday to 'hold' from 'buy' citing uncertainty caused by the increased geopolitical risk and deteriorating security situation in Israel. The company confirmed on 13 June that it had been ordered by the Ministry of Energy and Infrastructure to halt production from its Karish gas field, 90km offshore Israel. The partners of Leviathan, Israel's largest gas field, were also ordered to stop production.

Berenberg said Energean expects regular updates from the Ministry and will update the market in due course, but it is not clear at this stage how long the Karish shut-in is expected to last.

"We have not made any changes to our forecasts at this stage; however, with energy infrastructure appearing to be targeted by both sides in the conflict (the Bazan oil refinery in Haifa has been affected, for example), we believe it is right to take a prudent approach and downgrade Energean to hold," it said.

Berenberg, which kept the price target at 1,000p, pointed out that Energean's Karish gas field accounts for 74% of its 2025 production forecasts, rising to roughly 80% from 2026. It also accounts for around 80% of the bank's total asset NAVs, before any adjustments for net debt.

"We understand the company is exploring its options and believes it would be insulated from any penalties under its gas sale and purchase agreements (GSPAs)," it said.

"However, the if Karish is shut-in for an extended period, this could potentially have a meaningful impact on our production and cash flow forecasts."

At 0940 BST, Energean shares were down 3.4% at 789.50p.