Is Zion Oil on the Rocks?

I received a comment from a reader (Bill) yesterday; he was worried, as a lot of folks are, about the recent fall Zion’s stock price. Here’s the comment:

“The price today at $1.50. What’s the process at this end. Does the company fall off the board if it hits below a dollar say? Is there limits? Is there continued values to these stocks if the price falls to say .50 cents or less than a dollar, or less than a quarter? I’m not a stock guy, so if you have this type of information, please post it.
Thanks!”

I’m not a genie or a guru and, like Bill, I’m “not a stock guy.” I do have my own opinion of the situation, but before I share it, let me tell you a story.

Not quite 2,000 years ago there was a guy – his parents named him ‘Saul’, but he went by ‘Paul’. After a dramatic meet up with G-d on the road to Damascus, Saul/Paul literally ‘saw the light’ and became the world’s most famous Jewish missionary. This did not please the Jews at the time, at least those who held the community’s political and religious power. They were always accusing him of ‘crimes against G-d and against Rome’ (whatever that meant) and as a result, Paul spent a lot of time in court or in jail. Things began to get dicey; there were death threats and plots, and there was a pretty good chance that if Paul let the locals have their way he would meet an ‘accidental’ death on the way to court. Paul played his trump card – even though he was a Jew, he was also a Roman citizen, and as such he had a right to be tried for his ‘crimes’ in Rome, far away from the locals who had promised that Paul would be dead before he made his court date.

The Roman authorities put Paul on a boat to Rome (really it was just a connector boat, but it did get him to the real boat to Rome). While he was sailing on the real boat to Rome a storm came up – a big storm. The crew did all they could but everyone on the ship knew this storm would be the end of them. Everyone but Paul. In the night an angel visited Paul and said (paraphrased), “Look, you’ve got to tell Caesar your story, you’re definitely going to Rome. Don’t worry about your life or the lives of those on the boat, not one person will be injured or die from this storm … but, the ship will run aground on some island.” Paul would fulfill his mission of standing before Caesar; the storm wasn’t a catastrophe, just a detour.

Nice story, but what does it have to do with Zion Oil?

Zion Oil isn’t the only stock in the cellar right now, have you looked at the Dow averages? We won’t even talk about European economies. It ain’t pretty. How about Israel and all this talk at the UN about Palestinian Statehood? That can’t be good. And there sure is a lot of sabre rattling by Israel’s neighbors to the north about offshore drilling. Things are tense, they don’t look good, there’s a storm a-brewing!

The sailors on Paul’s boat threw everything overboard and tried to escape in the lifeboat. Good thing they didn’t, they would have been killed.

When you’re in the middle of a storm the natural thing to do is panic, toss stuff overboard and go for the lifeboats. That’s the natural thing … sometimes the natural thing is the wrong thing. It’s tough to keep the goal in mind when waves are coming into the boat, but storms come, and then they go, and the goal remains.

John Brown was given a vision and a mission thirty years ago; before there ever was a Zion Oil & Gas, before there were any stock prices to worry about, before anyone knew there actually was oil and gas in Israel. In thirty years there’s been a lot of foul weather and a lot of fair weather, but the goal hasn’t changed. I don’t know if Paul’s angel ever visited John Brown in the night, but I do know that there’s oil and gas in Israel and that Zion is committed to finding their share of it. It’s not easy to ignore the storm and keep your focus on the goal. The easy thing to do is cut and run for the lifeboats … it’s just not the right thing to do.

So Bill, I’m not a ‘stock guy’. I’m just a guy on the boat; I know that storms don’t last forever and, eventually, we’ll get to where we’re going. Until then, I’ll look for daylight.

Arab Murmuring Over Israeli Gas Already Begun

Most of the people following the story of Israel’s recent off shore gas discovery and possible onshore oil discoveries see idea of Israel as energy independent and economically prosperous as  a good thing. At least that’s the assumption. But not everyone sees Israel’s independence and prosperity as a plus – especially her neighbors.

If the Arab world views Israel (without hydrocarbon resources) as a worrisome usurper and unwelcome squatter today, an economically and energy independent Israel certainly won’t reduce fear and loathing of it’s Jewish neighbor.

It’s easy to predict an Arab response to a massively successful hydrocarbon industry in Israel. If the Jewish State is viewed as a usurper now, the natural response would be that if the land (and the sea) doesn’t belong to Israel, then neither does its natural resources. It’s an issue today; when economic quantities of oil and gas come into play it becomes the issue.

It’s no surprise that the Arab world will cry foul when Israel becomes energy independent,  I just didn’t expect to see signs of it this soon. The excerpts below are from a March 11 article in Abu Dhabi’s newspaper, ‘The National’, written by Dubai-based energy economist Robin M Mills. The piece itself sounds well written and even handed … from an Arabist perspective. The general tone of the article , unsurprisingly, paints Israel as an aggressor and exploiter of the Palestinian people. If this apparently reasonable, thoughtful Arabist response predicts political storm clouds from Israel’s oil and gas success, you can imagine what a more radical response might be.

From “Israel’s new gas fields will do little for peace” by: Robin Mills

“Middle Eastern country finds large gas reserves. In our hydrocarbon-rich region, this would hardly be news, were it not for the identity of the country: Israel.
Golda Meir, the former Israeli prime minister, used to joke that Israel was the only place in the Middle East without oil. But in January last year, the US company Noble Energy found gas in the Mediterranean: not as good as oil, but a valuable second prize. More recent drilling confirms it is a giant discovery, probably just the first of several.

Suddenly, Israel can look forward to independence from energy imports, a cleaner environment, maybe even earnings from gas exports. But in this troubled region, such a bonanza is not likely to bring benefits to the Palestinians, nor peace. It may even contribute to further conflict (my emphasis) ….

… In a happier situation, these discoveries would be a driver for regional economic integration. Some gas could go to energy-poor neighbours and Israel could join the Arab Gas Pipeline that runs from Egypt up to Syria, and ultimately on to Turkey and Europe.

In such an unstable area, of course, these initiatives are impossible. In reality, any significant exports would be as LNG to Europe, bringing no benefits to neighbouring states.

Tamar has ramifications far beyond business and economics. Earnings from gas would make Israel more able to resist international pressure or boycotts over human rights and peace negotiations, and to weather any reduction in US aid. A secure domestic energy source avoids the need to look to Egypt, where recent legal action has sought to block gas exports to Israel.

Palestinians will feel they have some claim on this gas, but they are unlikely to gain anything from it. The people of Gaza can feel particularly aggrieved. In 1999, the British company BG found a large field offshore Gaza, enough to provide power to all Palestinians for a decade and more, but this gas has never been developed. Indeed, the former Israeli prime minister Ariel Sharon stated that Israel would never buy gas from the Palestinians because it had no intention of giving Hamas a source of revenues.

For the Israelis to exploit this gas themselves would be illegal under international law, and forbidden by the Oslo Agreement. They might have chosen to ignore the diplomatic consequences, but with the discovery at Tamar they can afford to leave Gaza’s gas lying idle indefinitely. In the meantime, Gazans face daily eight-hour electricity blackouts.

Tamar itself appears to lie within Israeli waters. However, with no peace agreement and hence border demarcation between Israel and Lebanon, there is always the possibility of new fields being uncovered in disputed areas, at a time of increasing speculation about an Israeli attempt to settle scores with Hezbollah. …

… This episode is a reminder that, in themselves, oil and gas are neither a blessing nor a curse. Everything depends on what is done with them. In this troubled region, Tamar brings benefits only to Israel, and it has the tragic potential to encourage Israeli intransigence.

In the absence of real progress towards peace, gas discoveries cannot be a force for regional prosperity. In the current circumstances, the best that Israel’s neighbours can do is to try to emulate its success.

For the full article go to: http://www.thenational.ae/apps/pbcs.dll/article?AID=/20100312/BUSINESS/703119913/1050