Over the weekend, Britain's BG Group plc (NASDAQOTH: BRGYY) signed a letter of intent seeking to buy 105 billion cubic meters of natural gas from the offshore Israeli Leviathan reservoir. The 15-year deal is not finalized, but would be worth approximately $30 billion.

BG Group envisions the gas being sent by an underwater pipeline to its nearby liquefaction facility in Egypt, where it would be turned into liquefied natural gas and exported to Europe for a big profit.

Leviathan: Israel's first foray into offshore energy production
The Leviathan field is in the Mediterranean Sea, 80 miles west of Haifa. The reservoir of Leviathan and the nearby Tamar gas field are estimated to contain 535 billion cubic meters of gas, of which the BG Group's deal would be essentially 20%.

The initial development was slowed by a maritime boundary dispute with Lebanon, though Lebanon has since clarified its status on where the border actually lies, and Leviathan is free and clear in Israeli waters.

The operator of the Leviathan project is Noble Energy (NBL), which also owns a 39.66% interest in it. Two subsidiaries of Israel's Delek Group (DGRLY -0.56%) own a further 45%.

The production at Leviathan and Tamar is set to make Israel a major player in the regional natural gas market at an ideal time. Israel's own imports have been cut off by the fighting in Egypt's Sinai Peninsula since last summer's military coup. The BG Group facility in Egypt has similarly been having supply problems because of Egypt diverting more of its own production to domestic use.

A win-win
Liquefied natural gas prices have been surging in recent months in Asia, and with questions about Russian giant OAO Gazprom's ability to continue shipments to Western Europe amid a pricing dispute with Ukraine, the price in Europe is under similar upward pressure.

The Leviathan project and the availability of offshore gas so close to its plant is a godsend to BG Group, as it could give the company a reliable source of gas for liquefaction just when those exports are coming into the highest demand.

That's great for BG Group, but the bigger winners here are Noble Energy and Delek Group, as they have a great chance at securing a reliable export market. That's not to be underestimated, as Israel isn't on the best of terms with anyone else in the region for making big trade deals.

Buying by the numbers
BG Group is a major liquefied natural gas producer worldwide, so as you might imagine it's already trading at a fairly substantial premium on the hopes prices will continue to rise. The stock is trading at 17.1 times FY2015 earnings, and 2.2 times book value.

A well-run, substantial player in field, BG Group deserves a high premium, and while the Leviathan deal will likely further help the bottom line, it's difficult to call it a value play at this point, and investing in it is primarily speculation on the continued rise in liquefied natural gas prices.

Delek Group is involved in a lot of different projects, from selling cars to running desalination plants. The Leviathan project is a chance for the company to improve its razor-thin margins of 1.28%. Estimates are pretty wide on the company's forward earnings, but they should be substantially better than the 34.36 P/E ratio it currently sports. Unfortunately, Delek Group is also extremely thinly traded in the US, so investors need to take care if they decide to buy in.

Noble Energy is the easiest, safest play on the prospective Leviathan deal, and while it is trading at 21 times future earnings and three times book, it has a very strong operating margin of 18.15%, and could be a major growth play going forward if the deal is finalized. 

Is it too late?
The high multiples of all these companies mean no one is really in that deep discount value field where we look for bargains. With all the money investors have poured into natural gas in recent months, it's worth asking if it might be too late to jump into the sector. 

That said, both BG Group and Noble Energy should benefit greatly if this deal goes through, and if one is looking to play Leviathan field development, either warrants some consideration. Delek Group, by contrast, seems to have far too many different interests in far too many different segments to justify them on the Leviathan deal alone.