March 28 (Bloomberg) -- Shemen Oil & Gas Resources Ltd., an Israeli explorer, expects to pump at least 125 million barrels of crude over 10 years from its first wells off the country’s Mediterranean coast.
Shemen is preparing to start drilling in August at a site 15 kilometers (9 miles) west of the port city of Ashdod, pending Defense Ministry approval, according to Chaim Lebovits, whose ACC International Holdings Ltd. is the company’s biggest shareholder. The wells may generate $12.5 billion or more in revenue based on an assumed oil price of $100 a barrel, he said.
“If, as we believe, we’re going to be able to do 5,000 to 7,000 barrels a day per well, it’s ‘bingo,’” Lebovits said in an interview at his office in Petach Tikvah, a Tel Aviv suburb. North Sea Brent, a European benchmark grade of crude, traded yesterday in London at about $125 a barrel.
Israel, which imports almost all its oil needs, is setting up a sovereign wealth fund that will be based on taxes from the profits earned from gas produced at fields discovered in its waters in 2009 and 2010. Shemen, which is exploring in an area near Modiin-LP’s Gabriella prospect, had its biggest gain in Tel Aviv trading on March 13 after energy consultants Netherland, Sewell & Associates said Gabriella may be commercially viable.
Shemen will probably have to wait until November to learn whether its drilling will yield the quantities of oil Lebovits hopes for, Yaron Zer, an analyst at Clal Finance Brokerage Ltd. in Tel Aviv, said in a telephone interview.
“There could be a huge upside, but it’s also a high-risk project so the results could be zero,” Zer said. Previous efforts to tap the site failed because high pressure and temperatures foiled the drilling, he said.
The Levant Basin, a triangular slice of the ocean floor between Israel and Cyprus, may hold 122 trillion cubic feet of gas, according to U.S. Geological Survey estimates. An Israeli-U.S. group led by Houston-based Noble Energy Inc. discovered the Tamar gas field in 2009 and the Leviathan deposit in 2010. Shemen’s Chief Executive Officer Yossi Levy was previously CEO of Isramco Inc., part of that exploration group.
ACC International owns 23.88 percent of Tel Aviv-based Shemen.
Lebovits raised Shemen’s profile in Israel in December by recruiting as chairman the retired general, Gabi Ashkenazi, who was most recently the army’s chief of staff. Besides its stakes in Shemen, the Hebrew word for oil, and Rialto Energy Ltd., an energy company based in Australia, ACC is also the biggest shareholder in Brainstorm Cell Therapeutics Inc., which is developing a treatment derived from adult stem cells for amyotrophic lateral sclerosis and Parkinson’s disease.
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