The Givot Olam partnership announced to the Tel Aviv Stock Exchange today that in, an extraction test at the Meged 2 bore, opened yesterday, unidentified fluids gushed out at a rate of 400 barrels a day. The company suspects that an examination, to be carried out today, will show that the fluids contain oil, in the light of the fact that gas, which the company is burning, gushed out along with the fluids. In general, an outbreak of gas indicates the presence of oil.
The oil and gas gusher came from a 15 meter thick layer at a depth of 4,365 meters. The Meged 2 bore, it should be pointed out, was drilled four years ago, and in a partial extraction tests carried out at the time, indications of oil in non-commercial quantities were discovered. Four years later, after the company finished processing the shaft-sinking data, a repeat test was carried out - this time in one specific stratum. As soon as the bore was opened to carry out the test, fluids began to flow, and this morning, gas began flowing as well.
Partnership director Shmuel Bakar reported that, this afternoon, the gas and fluids were continuing to gush out from the well, and that the company should be able to gauge the composition of the fluids, and the quantities involved, tomorrow. In other words, by tomorrow the partnership will be able to estimate whether it has a commercial discovery on its hands.
This time, the timetable has decisive importance, as Givot Olam has a prospectus open for a NIS 16 million rights issue. The issue is scheduled for next week. Even today, the price of a participation unit in Givat Olam shot up some 70%, and the test results will clearly have a decisive effect on the response to the issue. If the issue fails, Givat Olam will be left without capital: the company failed in its attempts to raise money overseas, and after completing the test at Meged 2, it will be left with only $500,000 in cash.
Published by Israel's Business Arena on December 9, 1998