July 22 (Bloomberg) -- Shemen Oil & Gas Resources Ltd. dropped the most in almost three weeks after the explorer said drilling at the Yam-3 well offshore Israel is taking longer and costing more than expected.
The shares of the company plunged 6.3 percent, the most since July 3, to 0.871 shekel at the close in Tel Aviv. Investors traded three times the three-month average daily volume. The stock has declined 44 percent since the company encountered earlier drilling difficulties in April. The benchmark TA-25 Index today advanced 0.3 percent.
Slow progress at current drilling levels and security checks at the rig are causing delays at the Yam-3 well, 16 kilometers (10 miles) from the port city of Ashdod. It expects an additional $12 million in drilling costs, for a total cost of $150 million. Shemen raised money from investors twice this year. The oil explorer said it expects to hit the well’s oil target depth of 5,800 meters at the end of August, according to a filing today with the Tel-Aviv Stock Exchange.
“It is a highly speculative share,” Steven Shein, an international trader at Tel Aviv-based Psagot Investment House Ltd., said today by phone. “The smallest bit of news can have a dramatic impact on the stock direction.”
The 30-day historic volatility, a measure of price swings, rose to 80, the highest since June 5.
The U.S. Geological Survey estimates the Eastern Mediterranean’s Levant basin, of which Israel covers approximately 45 percent, holds about 1.7 billion barrels of recoverable oil. Shemen’s consultants estimate the crude oil potential at Yam-3 is about 120 million barrels and gas potential of 1.8 trillion cubic feet, the company said in December.
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