Shemen Drops Most in Year as Drilling Halted: Tel Aviv MoverShoshanna Solomon
Shemen Oil & Gas Resources Ltd. fell the most in more than a year after the Israeli energy explorer said high gas pressure at its off-shore site forced it to temporarily halt drilling.
The shares of the company plunged 21 percent, the most since December 2011, to 0.122 shekel, in 18 times the three-month average daily volume at the close in Tel Aviv. The shares have declined 26 percent this year. The benchmark TA-25 index lost 1 percent today.
Shemen is evaluating alternative plans to resume drilling at the Yam-3 site in the 387 license after “high gas pressures” prevented it from proceeding deeper than about 12,000 feet. The plan will increase costs and prolong the drilling period, the company said in an e-mailed statement today. Shemen said it is evaluating alternative plans to enable drilling to reach the oil target at depths of 17,000 feet to 19,000 feet.
The halt has “investors concerned that Shemen may have to replace the drilling rig which would lead to an even-more significant delay,” Yaron Zer, an analyst at Clal Finance Brokerage Ltd., in Tel Aviv said today by phone.
Israel, which imports almost all its oil needs, started production of natural gas from the Tamar field offshore field at the end of March, moving the country a step closer to energy independence and to becoming a natural gas exporter. Shemen’s license is located approximately 10 miles west of the port city of Ashdod.
In December Shemen said its consultants estimated the crude oil potential at Yam-3 of about 120 million barrels and gas potential of 1.8 trillion cubic feet. Chief Executive Officer Yossi Levy said that month the company’s licenses could generate $20 billion to $24 billion, if oil is found. Shemen said on March 18 that the site’s drilling budget increased to 128 million shekels ($35 million).