After reporting last week that substantial signs of hydrocarbons had been found in upper target strata of the Yam 3 well, Shemen Oil and Gas Resources Ltd. (TASE: SOG) announced on Sunday that the well had reached the final target strata at a depth of 5,700 meters.
Shemen Oil added that the well operator, Caspian Drilling Company Ltd., had begun open hole wireline logging tests, on the basis of which the partners in the well will decide whether to carry out production tests. The Yam 3 well is owned by Shemen Oil, Zerah Oil And Gas Explorations LP (TASE: ZRAH), Zmiha Investment House Ltd. (TASE: TZMI), and Caspian Drilling Company.
In late August, Shemen Oil announced that the well's target strata began at a depth of 5,175 meters, and that the well had reached a depth of 5,510 meters. "Drilling in the target strata is not complete, but preliminary analysis of the information gathered during the drilling including the carrying out of logging while drilling, indicate that the upper target strata bearing hydrocarbons have a gross thickness of 90 meters," it stated at the time.
Shemen Oil cautioned that the indications were only preliminary, and that full information about the thickness of the strata and their quality had not yet been obtained.
The estimated cost of the production tests is $12 million, and they will take several weeks. When completed, the investors will have full information whether the field is worthwhile. The field has an estimated 120 million barrels of oil.
Shemen Oil's share price rose 16.9% yesterday in heavy trading. On Thursday, the company's series 3 warrants expired deep in the money.
Published by Globes [online], Israel business news - www.globes-online.com - on September 2, 2013
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