Sept. 6 (Bloomberg) -- Israel Land Development Co. Energy Ltd. plunged the most on record and Modiin-LP slumped after the natural gas exploration companies said they found “no significant signs” of petroleum at the Myra 1 well.
Israel Land Energy, which owns a stake in the drilling rights to the offshore well, tumbled 50 percent, the most since the shares started trading in Israel in 2010, to 0.168 shekel at the close in Tel Aviv. Modiin LP, also a partner, fell 24 percent to 0.139 shekel, the lowest close since September 2009. IPC Oil and Gas Holdings Ltd., another partner, plunged 40 percent to 0.12 shekel.
The companies found high-quality sands at the drill but with water at the point of drilling, they said in a filing with the Tel-Aviv Stock Exchange today. The announcement “may put pressure on export quotas allowed,” said Richard Gussow, senior analyst at DS Securities & Investments Ltd. A government panel recommended on Aug. 29 that Israel allow as much as 500 billion cubic meters (18 trillion cubic feet) of natural gas for export.
“The export recommendations were based on new discoveries,” Tel Aviv-based Gussow said by phone. “They were hoping to find natural gas. This is bad news for the companies but also a negative for other players, partners in the Tamar and Leviathan fields.”
A series of natural gas discoveries off Israel’s Mediterranean coast over the past three years has given the country an opportunity to become a gas exporter. No drilling for oil has happened at the Myra site, the companies said today, adding the rig would move to the adjacent Sara 1 well for drilling to commence there.
The TA-Oil and Gas Index dropped 2.9 percent, while the TA-25 benchmark index retreated 0.1 percent.
Israel Land Energy is “disappointed with the results, but that is part of the business,” Chief Executive Officer Ohad Marani said today in a phone interview. “The first well is always the hardest.” The company may revisit the Myra well in future, also for oil exploration purposes, but that focus has now moved on to the Sara well, he said.
Marani said drilling will start at Sara next week, and that data from Myra will help with the drilling at the Sara site. “The well has a simpler and easier to reach target,” he said.
An agreement for an investment by Mikhail Mirilshavili in the company isn’t at risk, the CEO added.
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