Givot Olam Oil Exploration LP (TASE:GIVO.L) today announced that section 8 of the borehole at its Meged 5 well, has had a natural flow of light oil with a little water - less than 3% - over the past 15 hours. The company did not mention the strength of the flow, however.
Givot concludes, "There is no water problem in section 8." It adds that it intends to continue the flow in section 8 until the Sabbath begins on Friday evening, and, on Saturday night, it will take a sample of the oil and water from the section to send to a laboratory for testing. Afterwards, it will carry out an injection test, and if the results are positive, it will conduct hydraulic fracturing (fracing) in section 8.
Givot concludes, "On the basis of the results received at the completion of activity in section, the general partner, with the assistance of its consultants, will decide on subsequent activity at the Meged 5 well and how to try to solve the problem in sections 6 and 7."
Givot's announcement yesterday that it was stopping the drilling of the Meged 5 well after water was found in section 8 and that it could not tell if the fracing of sections 6 and 7 had succeeded, sent the share price tumbling 52%.
The share price rose 31% by mid-afternoon today to NIS 0.051.
Clal Finance analyst Yaron Zar told "Globes", "The fact that there is apparently no water in section 8 and that there is oil does not solve the main problem, which is that the fracing seems to have failed. Investors are clinging today to a marginal sliver of optimism. The optimistic scenario of a gas cap has collapsed. It's a pity that the company did not mention the pace of the oil flow in section 8."
Published by Globes [online], Israel business news - www.globes-online.com - on January 27, 2011
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