Ormat results to shed light on Hawaii project
The Puna Geothermal Venture could see its capacity expand.
Merav Ankori 20 Mar 08 10:42
Investors in Ormat Industries (TASE: ORMT) are waiting to see how the company's controlling shareholders and group managers, Lucien and Yehudit Bronicki, intend to cover the NIS 560 million loan they took last December from Bank Hapoalim (LSE: 80OA; TASE: POLI), to consolidate their control over the company, which is due to publish its financial report for 2007 next week. The Bronickis made the move after finding themselves in an apparent battle for control of Ormat with Gazit-Globe (TASE: GLOB) controlling shareholder Chaim Katzman.
This issue is clearly one on which further light will be thrown when the company unveils its results. One issue which has remained unknown since it was not part of the full-year forecast that Ormat's US subsidiary, Ormat Technologies (NYSE: ORA) gave earlier this year, is the potential upside from the Puna Geothermal Venture (PGV) in Hawaii, which could add as much as $4 million, or 10%, to Ormat Technology's net profit for 2008. Wholly owned by Ormat Technology, the PGV project is currently producing 30 megawatts of electricity, but could see its capacity expand by a further 8 MW in 2009.
IBI Investment House analyst Yuval Zehira notes that "Since the Puna project is operating under an avoided cost formula, Ormat is likely to record an immediate profit on it. Prices based on this formula are updated monthly."
Zehira believes that if oil prices remain at their current levels, the project could yield $4-5 million in surplus revenue for Ormat Technology, most of which will be seen in its pretax profit, since the company has not incurred any additional costs on its operation.
Published by Globes [online], Israel business news - www.globes-online.com - on March 20, 2008
