Givot Olam Oil Exploration Limited Partnership (TASE:GIVO.L) today announced it received a special report from consultants in London that addressed the rate at which oil could be pumped from its Meged 4 reservoir near Kfar Saba.
The aim of the report was to calculate test results from drilling in recent months, and to set appropriate measures to complete the drilling for the development of the oil field.
The experts from London recommended horizontal drilling within a 1,000 meter section, to yield an initial production of 900 barrels per day during the first year.
During the second year, production will fall to 350 barrels per day. After another two years, production will decline further to 250 barrels per day, and for the five years after that it will stabilize at 200 barrels per day.
Givot Olam says it now needs to estimate the economic viability of developing such an oil field. By such a statement, the company implies production may not be worthwhile, given the relatively low amount of barrels per day.
The company, in its announcement today, did not refer to its earlier statement from a month ago, in which it said the oil field had a potential of 100 million barrels of oil.
The current estimate from the London experts’ calculations has the oil field producing a total of just 1.4 million barrels, worth about $42 million at current prices.
According to the company’s earlier announcement, the value of the reservoir was set to reach $2.5 billion. Although production from the oil field is due to last over 7 years, the discrepancy between the numbers is still wide. Globally speaking, this is not a large reservoir, if it ends up producing just 1.4 million barrels of oil over the next eight years.
Givot Olam said in its previous announcement that analysis of the electronic testing of the reservoir found that it had 2 million barrels of pre-production oil per sq.km. The reservoir includes a closed oil structure covering over 50 sq.km, with a potential of 100 million barrels of oil.
The company further noted that it was not yet clear if the oil could be commercially exploited, or how much could be produced from the reservoir.
Published by Globes [online] - www.globes.co.il - on 19 October, 2003