Shemen Oil and Gas Resources Ltd. (TASE: SMOG) today announced that it had received approval from the Defense Ministry to drill the Yam 3 prospect. The drilling is expected to begin in the coming months off the coast of Ashdod.
Shemen's share price, which has fallen by nearly half its value since its IPO seven months ago, rose 15.4% today to NIS 0.12 in a higher than average trading volume, giving a market cap of NIS 371 million.
The Shemen license is located 15 kilometers west of Ashdod in an Israel Navy training zone, thus requiring a special permit for the drilling. The permit given today allows Shemen to begin drilling in September for a period of six months.
According to Netherland Sewell & Associates Ltd. (NSAI), the Shemen license has potential of 227 milllion barrels of oil.
Shemen is headed by former IDF chief of staff Lt. Gen. (res.) Gabi Ashkenazi who serves as chairman and CEO Yossi Levy. Shemen has rights to 95% of the license that bears its name. Market sources say that the main reason for Ashkenazi's appointment was to facilitate the granting of the permit to drill by the Ministry of Defense. In addition to handsome salaries, Ashkenazi and Levy were given a lucrative share options package worth millions of shekels on the eve of the IPO.
The remaining stake in the license is held by the Caspian Drilling Company, Azerbaijan's national oil company, which is the operator responsible for the drilling.
The Shemen license (formerly known as Med Ashdod) was awarded to Chaim Lebovitz's ACC International Holdings Inc. in February 2010. ACC today has a 23.8% stake in Shemen along with Financial Levers Ltd. (TASE:LVR) which has a 12.9% stake, Jacky Ben Zaken and Avraham Nanikshvili (11.6% each) and Yeshai and Yosef Mor (6.6%)
Published by Globes [online], Israel business news - www.globes-online.com - on July 23, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012.