Drilling Complete on Ma’anit-Rehoboth #2

Zion Oil CEO Richard Rinberg announced to shareholders today in his weekly drilling update that drilling of the Ma’anit-Rehoboth #2 well has been completed at 17,913 feet; 131 feet short of its intended target depth. From company reports, it still isn’t clear whether or not the bottom of the Ma’anit-Rehoboth #2 is in an upper Permian or lower Triassic stratum.

Rinberg stated that, “There were a number of factors that influenced our decision not to drill deeper.” But the only factor he gave stockholders was the increased risk of loosing the well from a cave-in due to a long section of ‘open hole’ (uncased) at the bottom of the well. Given the fact that the distance between the drill bit and the motor was nearly 3.4 miles, losing the well due to a cave-in or other catastrophic failure is a very real concern. Whatever the other factors influencing the decision to stop drilling were, they weren’t stated by Rinberg – so we’ll have to leave any other reasons to speculation.

Speculation, however, is something Zion’s managers can’t do – at least not publicly. Because the company is publicly held and in the process of another stock offering, SEC regulations prohibit Zion’s management from any form of public ‘speculation’ that could be construed as an attempt to paint a picture of the company’s future prospects in way that might not be a 100% factual projection at the moment. The SEC calls these “Forward Looking Statements”. That means Zion’s management is pretty much limited to telling us what they ‘know’ they’ve got in the Ma’anit-Rehoboth #2 well and not what they ‘think’ they’ve got. Which, at this point, doesn’t make for much news.

So if you’re going to draw conclusions, you can draw some of them from what’s not said :

1. The Ma’anit Rehoboth #2 isn’t a gusher (“Gusher” is an old term for a self pressurized free-flowing oil well). If oil was flowing out of the top of the well, it would be a fact, not a “Forward Looking Statement.” Zion shareholders (and the rest of the world) would know about it.
2. There’s no definite agreement as to whether or not the bottom of the Ma’anit-Rehoboth #2 is in the Permian.
3. The Ma’anit Rehoboth #2 hasn’t suffered any sort of catastrophic failure. As sparing as Zion’s management has been with potential good news, to their credit, they’ve always been forthcoming in reporting any bad news. If any sort of trend can be discerned, as far as Zion is concerned, no news is more likely good news than bad … or simply, no news.
4. If you follow the general energy exploration news coming out of Israel as closely as I do (that’s pretty close), then you may have discerned by now that Israel is in the beginnings of an energy ‘gold -rush’. The HUGE natural gas discovery off the Haifa coast has insured Israel’s energy (gas and electric) needs in the foreseeable future. Givot Olam has reported, and the state of Israel has accepted, that they have nearly a billion barrels of oil under the ground just south of Zion’s license area; they just haven’t been able to get it to the surface yet (by the way – they’re drilling as I write).  Oil discoveries in the Dead Sea region (not huge, but there) are being reported and same companies involved in the off shore discovery are now buying into the Dead Sea exploration. Translation: Oil and gas discoveries in Israel aren’t a future possibility, they’re a present reality.

Now let’s draw some conclusions from what has been said:

1. The Ma’anit-Rehoboth #2 well is at 17,913 feet (2071 feet deeper than the Ma’anit #1).
2. Their are “seven zones that warrant completion testing” (I can’t locate documentation, but I believe there were three to five “zones that warranted testing” in the Ma’anit #1).
3. What’s been concluded is the “drilling phase”. The determination as to whether or not the well will produce commercial hydrocarbons comes in the “completion phase.”
4. The rig will soon be moved to the next drilling site, at the ‘foot of Asher.’ Zion Oil & Gas is a professional oil exploration company with multiple leases and multiple drilling prospects in the nation of Israel. Zion Oil is not a ‘one hole wildcatter.’ There is absolutely no reason to give up on the Ma’anit-Rehoboth #2 at this point, the well hasn’t even been tested yet. But regardless of how much or how little oil and/or gas the Ma’anit-Rehoboth #2 produces, Zion will continue drilling for oil and gas in northern Israel.

Now let’s look at the big picture:

1. Zion Oil owns most of the exploration license area in northern Israel – 327,000 acres.
2. The Ma’anit-Rehoboth #2 is among the deepest wells ever drilled, in one of the most promising locations, drilled with the best equipment, manned by the most adept crew, tested with the most sophisticated equipment that onshore Israel has ever seen. That’s not hyperbole, it’s fact.
3. Geology and recent experience have proven – natural gas and oil lie beneath the land (and offshore) of Israel.
4. If you want big picture, here’s the biggest – Zion Oil, Noble Energy, Delek, Givot Olam and the rest didn’t promise Israel’s children “The blessings of the deep that lies beneath.” Israel’s God did (Genesis 49:25). From where I sit, it looks like He’s keeping His promise. We’ll find out more about the Ma’anit-Rehoboth specifically as Zion begins their “completion phase”.
5. Just as a reminder, I’ve dug up a photo taken at the Ma’anit #1 in 2005. That’s a hydrocarbon flare from the well – it’s down there.

Keep the faith.

Tamar partners to raise large sums for development

The partners in the Tamar and Dalit offshore natural gas fields are preparing to raise capital to develop Israel’s largest natural gas field. Delek Group Ltd. (TASE: DLEKG) subsidiary Delek Energy Systems Ltd. (TASE: DEOL) has published a shelf prospectus to raise hundreds of millions of shekels in the coming weeks and is currently working on the structure of the offering.

Delek Energy controls Delek Drilling LP (TASE: DEDR.L) and Avner Oil and Gas LP (TASE: AVNR.L), which each own 15.625% of the Tamar and Dalit prospects. Last week, both companies, authorized Noble Energy Inc. (NYSE: NBL), which owns 36% of the prospect, to buy $230 million worth of equipment and services by 2011 to develop the gas fields. Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), which owns 28.75% of the prospect approved purchases of up to $160 million.

The partners in the Tamar and Dalit offshore natural gas fields are preparing to raise capital to develop Israel’s largest natural gas field. Delek Group Ltd. (TASE: DLEKG) subsidiary Delek Energy Systems Ltd. (TASE: DEOL) has published a shelf prospectus to raise hundreds of millions of shekels in the coming weeks and is currently working on the structure of the offering.

Delek Energy controls Delek Drilling LP (TASE: DEDR.L) and Avner Oil and Gas LP (TASE: AVNR.L), which each own 15.625% of the Tamar and Dalit prospects. Last week, both companies, authorized Noble Energy Inc. (NYSE: NBL), which owns 36% of the prospect, to buy $230 million worth of equipment and services by 2011 to develop the gas fields. Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), which owns 28.75% of the prospect approved purchases of up to $160 million.

Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) unit Dor Gas Exploration LP, which owns 4% of Tamar and Dalit, is also getting ready to raise capital. Dor Alon plans to split its holding in the prospects from its gas stations and convenience stores business, and create a partnership that will hold the Tamar stake. Dor Alon is working with the Israel Tax Authority on this new structure, which will make it possible for the new partnership to raise capital directly to develop the gas fields.

Dor Alon is meeting with institutional investors to hold a bond issue of up to NIS 250 million for this purpose.

Published by Globes [online], Israel business news – www.globes-online.com – on September 1, 2009

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.

Changing Israel’s Energy Future

Zion's Aaron Kahn

Gas Discovery Already the Bright Spot in Israel’s Economy

One bright spot in Israel’s financial markets. Today Israel’s Haaretz news organization posted a fairly bleak story on Israel’s financial markets. (http://www.haaretz.com/hasen/spages/1065141.html) Nothing new in that; stories of down markets are the daily fare in the midst of our worldwide economic meltdown. There was, however a bright spot (brilliant bright!) “Isramco, a main partner in the Tamar-1 exploration that found the huge field of gas off the Haifa shore, exploded upwards again, closing 24% higher on huge turnover of NIS 90 million.” Stock value in Delek Group, also a partner in the Tamar-1 gas discovery, has more than doubled in the last two months. Could Israel’s massive gas discovery (and possibly and oil discovery in the near future) play a major role in saving Israel’s economy? It looks like it already is. Just so you know, here are the partners in the Tamar -1:

Who all is involved in Israel’s offshore gas discovery? Just so you know, here are the partners in the Tamar -1:

1. Noble Energy: 36 percent (Houston, TX, ticker symbol: NBL – NYSE, http://www.nobleenergyinc.com)

2. Isramco Negev: 28.75 percent (Petach Tikvah, Israel, ticker symbol: ISRA.L – TLV)

3. Avner Oil Exploration: 15.625 percent (Petach Tikvah, Israel, ticker symbol: AVNR.L – TLV)

4. Delek Drilling: 15.625 percent (Netanya, Israel, ticker symbol: DEDR.L –TLV, http://www.delek.co.il )

5. Dor Gas Exploration: 4 percent (Yakum, Israel)

Haifa Gas Discovery Bumped to 5 Trillion Cubic Feet

The pre-drill gross mean resource potential for Tamar was originally estimated at 3.1 trillion cubic feet (Tcf) of natural gas. Immediately following discovery, we estimated the gross resource potential to be at least equal to the pre-drill mean estimate. After analysis of all the post-drill and production test data, the estimated gross mean resource potential of Tamar has now been increased to 5 Tcf.

The Company and its partners have elected to keep the Atwood Hunter, a semi-submersible drilling rig, offshore Israel for two additional wells. Subsequent to operations at the Tamar #1 well, the drilling rig will proceed to the Dalit exploration prospect in the Michal license. Dalit has a pre-drill gross mean resource of about 700 billion cubic feet of natural gas with an approximate 40 percent chance of success. Located in 4,500 feet of water and 28 miles offshore, the well has a proposed total depth of about 12,500 feet. Immediately after concluding operations at Dalit, the rig will be relocated to Tamar where it will drill an appraisal well to further define the resources of the structure.

Charles D. Davidson, Noble Energy’s Chairman, President and CEO, said, “The test results from the Tamar well confirm our initial analysis that the discovered reservoirs are very high quality. This discovery is clearly of a size for commercial development. We hope to extend the success in Israel by testing Dalit, our second prospect which is already covered by 3D. Discussions with our various partners are currently ongoing with plans to potentially conduct new seismic over our additional leads on other licenses in the area. Each incremental piece of information gathered is critically important as we continue to learn more about the potential of the Tamar discovery and this highly under-explored region. The implications of this discovery to Israel, Noble Energy, and our partners cannot be overstated, and we all have committed significant resources to better understand its scale and scope.”

Noble Energy operates both the Matan and Michal licenses with a 36 percent working interest. Other interest owners are Isramco Negev 2 with 28.75 percent, Delek Drilling with 15.625 percent, Avner Oil Exploration with 15.625 percent and Dor Gas Exploration with the remaining four percent.

Noble Energy is a leading independent energy company engaged in worldwide oil and gas exploration and production. The Company operates primarily in the Rocky Mountains, Mid-Continent, and deepwater Gulf of Mexico areas in the United States, with key international operations offshore Israel, UK and West Africa. Noble Energy is listed on the New York Stock Exchange and is traded under the ticker symbol NBL. Visit Noble Energy online at www.nobleenergyinc.com.

Expect Stock Surge in US Oil and Gas Companies Exploring in Israel

Noble Israel Based Offshore Drilling Rig

Israeli energy stocks surged today (see http://www.oilinisrael.net/oil-in-israel-articles/israel-energy-stocks-surge-on-large-gas-find)based on Noble Energy’s announcement of a discovery off the Haifa Coast of over three trillion cubic feet of natural gas.

Noble Energy (NBL, NYSE) who announced the discovery and Zion Oil (ZN, AMEX), both public companies trading on American Markets, and both involved in Israeli energy exploration, should experience similar stock surges on Monday when US markets open.

Zion Oil's License Area Near Natural Gas Discovery

Israel energy stocks surge on large gas find

JERUSALEM, Jan 1 8 (Reuters) – Shares of Israeli energy companies soared on Sunday after an exploration group led by Noble Energy (NBL.N) said it discovered more than 3 trillion cubic feet of natural gas off Israel’s Mediterranean coast.

Among Israeli partners in the Yam Thetis consortium, Isramco (ISRAp.TA), with a 28.75 percent stake, led gainers with a nearly 130 percent surge.

Delek Drilling (DEDRp.TA), which holds 15.625 percent of the group, jumped 48 percent, while Avner Oil Exploration, also with a 15.625 percent stake, (AVNRp.TA) was up 36 percent.

Delek’s parent, Delek Group (DELKG.TA), rose 54 percent.

Overall, the blue-chip Tel Aviv 25 index .TA25 was up 2.6 percent, while the broader TA-100 .TA100 was 3.7 percent higher at midday.

(Reporting by Steven Scheer; editing by John Stonestreet)

Israel Discovers Huge Natural Gas Field

“They shall call the people unto the mountain; there they shall offer sacrifices of righteousness: for they shall suck of the abundance of the seas, and of treasures hid in the sand.”

(Deuteronomy 33:19)

 Noble Energy (see my earlier post: http://www.oilinisrael.net/oil-in-israel-articles/more-detail-about-the-haifa-offshore-gas-exploration) has discovered “three massive gas fields” just off the coast of Haifa. This field is much richer, the natural gas reservoirs much larger than Noble energy expected. This find alone could be enough natural gas to power Israel’s electrical plants and supply it’s commercial and domestic natrual gas needs for the foreseeable future – and still with enough for export to other countries. Yitzhak Tshuva, owner of the Delek Group Ltd, a partner in the Tamar #1 well, called the discovery “one of the biggest in the world,” promising that the find would present a historic land mark in the economic independence of Israel.

The Jerusalem Post and many other news organizations announced the discovery to the people of Israel and to the world this morning. Below are excerpts of the JP article you can read it in its entirety at http://www.jpost.com/servlet/Satellite?pagename=JPost/JPArticle/ShowFull&cid=1232265973374.

Jerusalem Post Sunday January 18, 2009

Three massive  gas reservoirs have been discovered 80 kilometers off the Haifa coast, at the Tamar prospect, Noble Energy Inc. announced on Sunday.

The Tamar -1 well, located in approximately 5,500 feet of water, was drilled to a total depth of 16,076 feet. The thickness and quality of the reservoirs found were greater than anticipated at the location.

Charles D. Davidson, Noble Energy’s chairman, president and CEO, said in an announcement that his company was “extremely excited by the results. This is one of the most significant prospects that we have ever tested and appears to be the largest discovery in the company’s history.”

Speaking on Army Radio Sunday morning, an exhilarated Yitzhak Tshuva, owner of the Delek Group Ltd, one of the owners of the well, called the discovery “one of the biggest in the world,” promising that the find would present a historic land mark in the economic independence of Israel.

“I have no doubt that this is a holiday for the State of Israel. We will no longer be dependent [on foreign sources] for our gas, and will even export. We are dealing with inconceivably huge quantities; Israel now has a solution for the future generations,” Tshuva added.

An ecstatic Infrastructures Minister Binyamin Ben-Eliezer said before the weekly cabinet meeting that the discovery was a “historic” one and could “change the face of Israeli industry.”

Production testing at Tamar will be performed after the well is completed. Noble Energy and its partners may keep the rig to drill up to two additional wells in the basin. Pending positive test results, one well could be an appraisal at Tamar.

Noble Energy operates the well with a 36 percent working interest. Other interest owners in the well are Israeli companies Isramco Negev 2, Delek Drilling, Avner Oil Exploration and Dor Gas Exploration.

Following the announcement of the discover, shares of Delek Drilling jumped up 80%, while shares of Isramco Negev 2 skyrocketed by an unprecedented 120 percent.

« Previous Page