Yossi Langotsky, Israel’s Unlucky Oil Man
December 11, 2009 by admin · 6 Comments
On November 30 the Wall Street Journal printed the story of Yossi Langotsky, an Israeli who has been searching for oil in the Promised Land for fifty years. The WSJ story focuses on Yossi’s involvement in Israel’s recent off-shore gas discovery and how he was left behind in its reward.
I met Yossi almost five years ago and learned about his role in the search for Israel’s oil. It was early April, 2005; Elaine and I had been invited to the Zion Oil & Gas ‘Ma’anit #1′ spudding (beginning drilling operations) ceremony; the company’s first oil well drilling project in Northern Israel. Before the ceremony we were introduced to Mr. Langotsky, and then aside, we learned the unfortunate story of Yossi’s relationship to the Ma’anit #1. The hole in which Zion Oil was to begin drilling in the spring of 2005 was, at that time, already 7,661 feet deep. This spudding ceremony wasn’t the first for the Ma’anit #1; in 1995 and Yossi headed the first drilling of the Ma’anit #1, but at 7,661 feet the project had run out of money and the hole was abandoned. Zion Oil & Gas reopened the Ma’anit #1 in 2005, drilled to 15,500 feet and then abandoned the well due to mechanical problems. Earlier this year, Zion re-opened the Ma’anit #1, now dubbed the ‘Ma’anit-Rehoboth #2′ and drilled directionally to a total depth of 17,913 feet.
Today seven zones of the Ma’anit-Rehoboth #2 are being tested for hydrocarbon (oil and gas) potential. According to Zion CEO Richard Rinberg, in his October 30 newsletter, “With regard to our log analysis, an independent log analyst noted that the Ma’anit-Rehoboth #2 well does have a specified amount of potential ‘net pay’.” Although he was quick to warn readers, “You will appreciate that, until such time as we recover hydrocarbons at the surface (or not), we are not able to give any estimates of what (if anything) we believe we may recover.”
At this point, whether or not the Ma’anit-Rehoboth #2 becomes a productive well, no one knows. Whatever happens, Yossi Langotski, the man who chose the location and drilled the first 7,661 feet, once again, will have his share of the bragging rights but not the profits. Below is the WSJ story.
For One Man, Israel’s Big Gas Find Is Bittersweet Victory
By CHARLES LEVINSON
HERZLIYA, Israel — Two natural-gas fields in Israel’s Mediterranean waters were found in January to contain enough resources to meet Israel’s energy needs for 20 years — a huge find after more than half a century of lackluster carbon exploration here.
But for Yossi Langotsky, who for 10 years has been the driving force behind the project, the gusher was a bittersweet victory. He has been drilling holes in the Promised Land for nearly four decades, in a mostly futile search for energy. A month before drilling started on what would become the largest find in Israeli history, his financial backer pulled out. That forced him to relinquish his stake — today valued at an estimated $350 million.
“After 60 years of no success in oil exploration here in Israel, a miracle took place, and I lost out 30 days before it happened,” says Mr. Langotsky, 75 years old.
The pivotal role played by Mr. Langotsky in the historic discovery is undisputed. The two fields are named for his daughter, Dalit, and granddaughter, Tamar.
The fields, which won’t start producing gas until 2014, are relatively modest by Mideast standards. But they have already triggered a frenzy in the country’s quiet energy industry.
Photo by: Debbie Hill for the Wall Street JournalYossi Langotsky was forced to relinquish his stake in a natural-gas project shortly before drilling started on the largest find in Israeli history.
Since January, Israeli oil companies’ stocks have soared, some rising as much as tenfold. In 2009, oil companies have invested between five and 10 times as much in Israel exploration as at any point in the country’s history, says Yaakov Mimron, head of Israel’s Petroleum Commission.
In recent weeks, two international companies, including Houston-based Noble Energy Inc., which led the team that made the gas find in January, separately began extensive and costly 3D seismic surveys of more offshore prospects. A Noble spokesman said they expect to drill new wells next year.
In the past 60 years, oil companies have drilled about 450 wells, but choked out just 20 million barrels of oil, less than Saudi Arabia churns out in three days.
Israel’s dearth of oil in a region awash in it became a national joke. “My closest friends laughed at me,” says Mr. Langotsky.
Many Israeli oil geologists quit the profession. Many of those who stayed are a touch unconventional by industry standards. The two exploration companies currently drilling for oil onshore in Israel are both run by pious prospectors, one an Orthodox Israeli Jew and the other a born-again evangelical Christian from Texas. They both use a combination of biblical prophecy and sound geological data to decide where to drill.
Mr. Langotsky began his oil career as a graduate student in the late 1950s, studying oil prospects along the Dead Sea. He left the profession when he was called on to serve in the army. He played a prominent role commanding an elite reconnaissance unit that helped capture Jerusalem from the Jordanians in the 1967 war.
After leaving the army in 1979, Mr. Langotsky returned to the oil business. For most of the next two decades he roamed Israel, drilling as many as 60 wells.
In the 1990s, Mr. Langotsky and a handful of others began looking offshore. Israel’s fortunes started to turn with a series of moderate-size gas finds in waters off the coast of southern Israel and Gaza.
It was then that Mr. Langotsky first turned his attention to a vast tract of territory deep underwater in the Mediterranean Sea, farther offshore than others were looking.
He pitched the prospect to about 100 top international oil firms, he says. They all turned him down, except for Britain’s BG Group PLC, which agreed to form a partnership with Israeli companies to study the site. The site was set to drill in 2002, but then the project snagged.
Drilling costs in such deep waters nearly 60 miles offshore would likely reach hundreds of millions of dollars, and the partner firms started squabbling about who would shoulder what percentage of the risk. There were also technical problems. Many international oil companies were wary of working in Israel, for fear of alienating oil-rich Arab governments.
Companies started dropping out, including, in 2005, BG itself. The company said the project wasn’t one of its drilling priorities at the time. Eleven different companies were in and out of the project at various times in the nine years it took to start drilling.
At last, in 2007, Noble, a midsize Texan oil company, agreed to buy a 35% stake and take over operations.
Since the project’s conception in 1999, Mr. Langotsky remained its public face. He convinced new firms and investors to join whenever one dropped out, and lobbied the Israeli government.
“If Yossi had not been there, then things would be looking quite different today,” says Charlie Druckman, Israel’s petroleum commissioner until 2004.
Early in the project, BG offered Mr. Langotsky the chance to buy a 5% stake. Unable to finance the stake himself, he brought in Israeli billionaire diamond and real-estate magnate Benny Steinmetz, who agreed in 1999 to buy the stake and give Mr. Langotsky one-fifth of his share, Mr. Langotsky said.
But in the summer of 2008, amid the global financial crisis, another infusion of cash was needed to start drilling, and Mr. Steinmetz balked, according to Mr. Langotsky. He said he would no longer invest in the project, relinquishing his 5% stake — including the share pledged to Mr. Langotsky, according to Mr. Langotsky. Other investors in the project took over the stake.
Mr. Langotsky still had the option to buy a 5% stake, but couldn’t find an investor to back him. Soon after, Noble announced the big find at Tamar, followed by the smaller Dalit field — finds amounting to nearly 1.2 billion barrels of oil equivalent. Mr. Langotsky was left with nothing but bragging rights.
Mr. Langotsky has captured some sympathy from industry colleagues and in the Israeli media. In the Israeli media’s portrayal of the situation, Mr. Steinmetz has been vilified. In September, Israel’s leading economic newspaper named him most in need of forgiveness for Yom Kippur, the Jewish day of atonement, for leaving Mr. Langotsky in the cold.
Supporters of Mr. Steinmetz say it didn’t make sense to continue with a risky, capital-intensive oil venture at a time of global economic uncertainty.
Mr. Langotsky remains defiantly upbeat. The son of early Zionist pioneers who valued duty to country over self, he insists his passionate search for oil was never about the money. “I’m very proud; I feel great,” he says. “I am totally disappointed that I failed to keep my rights, but this discovery is one of the greatest achievements of my life.”
Write to Charles Levinson at charles.levinson@wsj.com
Zion Drilling into the Permian
Glen Perry, Stephen Pierce and Eliezer Kashai reviewing Triassic results
Zion Oil & Gas reports in their weekly update that they have finished Triassic logging operations and have resumed drilling at the Ma’anit-Rehoboth #2 to a finished depth of 18,000 feet; well into the Permian.
A couple of questions keep coming up:
1. Why did they stop at the Triassic and what do they expect to find there?
2. Why is the Permian so important?
I’ll try to answer those questions from an amateur’s perspective.
Q: Why did they stop at the Triassic and what do they expect to find there?
A: Because of their experience and data from the Ma’anit #1 well, drilled in 2005, they have a pretty good idea of what they’ll find in the Triassic this time. The Ma’anit #1 yielded hydrocarbon shows from 12,000 to 15,500 feet (the bottom of the hole). At 15,128 feet they encountered heavy salt water with oil on top. At 14, 245 – 14, 593 feet they encountered hydrocarbons again (and water again). Finally, at just under 14,000 feet Zion encountered natural gas and were able to maintain a six to ten foot gas flair at the well head. When they shut the well down for evaluation, water infiltrated the hole again and they elected to give up on developing the Ma’anit #1. Translation – Zion knows they’ve got gas, or gas and oil between 12,000 and 15,500 feet because they’ve seen it. With better equipment and fore-knowledge of what to expect, they had a lot of confidence in what they would find in the Triassic strata this time. Wire logging in the Triassic is finished, they’ve seen the initial data, but news of what the Triassic holds won’t go public until the data is confirmed.
Q: Why is the Permian so important?
A: Zion Oil’s research in 2007 confirmed that northern Israel sits on top of a formation called the ‘Permian Arqov’ and that this formation is of the “same age and depositional environment” as the ‘Permian Khuff’ formation in the Persian Gulf that holds 25% of the world’s known natural gas reserves. Noble Energy’s massive natural gas discovery off the Haifa coast certainly supports the idea that there’s a lot of natural gas in Israel. If Zion taps into an enormous field of natural gas, along with Noble’s off-shore discovery, Israel may become one of the world’s significant energy exporters. The Permian also holds most of the world’s oil reserves. If Zion discovers a lot of oil, it will most likely be found in the Permian.
Zion’s CEO Richard Rinberg isn’t saying much of anything about initial test results from the Triassic or of what Zion hopes to find in the Permian, and rightly so; he’s the guardian of a public company. Anything he says, positive or negative, has an effect on the company’s value and the shareholders’ investment and trust. He’ll make darned sure that what he announces, when he announces it is fact; in his position there’s no room for conjecture.
I’m not an employee of Zion Oil and this newsletter and the oilinisrael.net website is completely independent of Zion Oil or any other exploration company in Israel, but outside of Zion’s managers and few Israeli oil professionals and government officials, it’s fair to say that I know more about the history of Israel’s search for oil, biblical or otherwise, than any other ‘outside’ observer. So until we hear official news of what the Ma’anit-Rehoboth #2 holds for Zion Oil, I’ll keep telling you what I know.
Zion Drilling Report
May 19, 2009 by admin · 3 Comments
Zion's Ma'anit Rehoboth #2
As promised, here is Zion’s first progress report on the drilling of the Ma’anit Rehoboth #2.
Here is a progress report (#1) regarding the drilling operations, for the 30 days ended Friday, May 15, 2009, from Zion’s President and Chief Operating Officer, Glen Perry:
The drilling operations of the Ma’anit-Rehoboth #2 well can be divided into eight distinct steps:
(2) The setting of a cement plug to allow the hole to be deviated.
(3) ‘Kicking off’ of the plug and establishing both the angle and direction of the deviation.
(4) Drilling directionally into the Triassic formation, a depth of approximately 15,400 feet (4,750 meters).
(5) Appraisal and evaluation of the Triassic formation using electrical wireline well logs.
(6) Setting and cementing casing at that depth.
(7) Drilling deeper to the Permian formation, a depth of approximately 18,000 feet (5,500 meters).
(8) Appraisal and evaluation of the Permian formation using electrical wireline well logs.
During the period covered by this report, we completed steps (1), (2) and (3).
On Friday, May 15, 2009, we went into the hole with directional tools, in order to start the directional drilling operations.
The rig has been operating on a 24 hour basis, utilizing two drilling crews on 12 hour shifts. To date, the work has gone well, with few problems encountered. We are ‘on schedule’.
The members of the Turkish rig crew have been pleasantly surprised with the courteous and helpful attitude that they have received from everyone they have met in Israel. As a direct consequence, their attitude is very positive and they want to do a ‘first class’ job for Zion.
Rights Offering
Anyone who was a stockholder on the record date of May 4, 2009, has the right to purchase some more Zion stock at $5.00 per share of stock.
If you are a stockholder, I hope you will exercise your rights to purchase Zion stock at $5.00 and even consider an over-subscription, as I believe we have arrived at the most exciting stage of Zion’s development and that the offer before you may well never be repeated.
The rights offering is set to expire on June 10, 2009, although we may, at our discretion, extend that expiration date.
Psalm 51:18 – In your good pleasure, make Zion prosper…
Thank you for your continued support of Zion, and
Shalom from Israel
Richard Rinberg
CEO of Zion Oil & Gas, Inc.
www.zionoil.com
Zion Oil & Gas Public Offering Update
September 22, 2008 by admin · Leave a Comment
“With faith there are no questions.
Without faith, there are no answers.”
Dear Zion Shareholder and/or Friend of Zion
We are extending the initial 90 day period for our public offering of $10 units. The extension gives us an additional 60 days (until October 11th, 2008) to sell the minimum subscriptions required of 325,000 units at $10 each (= $3,250,000). If we don’t reach the minimum by October 11th, then we will have to close our offering and return to every subscriber the subscription amounts that we will then have in the escrow account.
We have almost everything we need to drill our next two wells in Israel, but we need money to pay for importing the drilling rig from Turkey and the daily drilling costs. Since we began planning our next well, the US dollar has fallen 25% in value against international currencies, while associated oil industry costs have risen by 50% to 100%.
For example, when we drilled our first well, the Ma’anit #1, the contractor’s daily rate was $14,000. For our next planned well, the Ma’anit-Rehoboth #2, the daily rate will be $28,500 per day (and that is considered to be a very good price in a market that can charge up to $40,000 for a similar drilling rig).
The current economic downturn has hurt many and prevented us from reaching the minimum in the initial 90 days of our public offering, but we sincerely believe that the Joseph Project will be a financial blessing to those who have the vision and faith to support it. (Ruth 2:12)
If you do not have money to invest then I pray that G-d will send it to you. But if you do have the funds, perhaps this is the intended use for them. (Esther 4:14)
Please consider what number of $10 units you want to take. The minimum is 100 units but we hope you will want to take more. 500 units at $10 each is $5,000 and, if we are successful, this may be the best money you ever invested… and you will be blessed… (Genesis 12:1-3)
Please give this message your serious consideration; Zion depends on your support and without your prayers and financial support, we may not be able complete our work in Israel. (Numbers 10:32)
Shalom
John Brown
(Hosea 12:10)
NOTICE:
This communication shall not constitute an offer to sell or the solicitation of an offer to buy Units of Zion’s securities, which may only be by prospectus, nor shall there be any sale of the Units in any state or country in which such offer, solicitation or sale would be unlawful prior to the registration, qualification or exemption under the securities laws of any such state or country.
FORWARD LOOKING STATEMENTS: Statements in this communication that are not historical fact, including statements regarding the closing of the offering, the timing and results thereof, Zion’s planned operations, potential results thereof and potential effects of those results on the market for Zion’s securities and returns on investments in those securities, are forward-looking statements as defined in the “Safe Harbor” provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions that are subject to significant known and unknown risks, uncertainties and other unpredictable factors, many of which are described in Zion’s Prospectus and its periodic reports filed with the SEC and are beyond Zion’s control. These risks could cause Zion’s actual performance to differ materially from the results predicted by these forward-looking statements. Zion can give no assurance that the expectations reflected in these statements will prove to be correct and assumes no responsibility to update these statements.
Zion Oil & Gas, Inc. has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about Zion Oil & Gas and its offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, Zion Oil & Gas or its underwriter will arrange to send you the prospectus if you request it by calling toll free 1-888-TX1-ZION (1-888-891-9466). Direct links to the SEC location, or to the documents in PDF, may be found on the home page of Zion Oil & Gas. Inc., at www.zionoil.com.
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Contact Information
Zion Oil & Gas Inc
Phone: 1-888-891-9466
Fax: 214-221-6510
Email Address: dallas@zionoil.com
Website: www.zionoil.com
