A dry hole is no disaster; failures are part and parcel of the oil and gas business. But the disappointment at the Myra 1 well pales into insignificance in comparison with the failure of the licensees to fulfill their duty by providing accurate information to investors who trusted them.
If I were an investor in Israel Land Development Company Energy Ltd. (TASE: IE), Modiin Energy LP (TASE:MDIN.L), or IPC Oil and Gas Holdings Ltd. (IPC) (TASE: IPC), I would feel cheated today. For a month, there have been two versions about what was going on at the Myra well making the rounds in Israel. The difference between them was so great that you could become confused and think that there were two different wells of the same name being drilled.
The first version, which has been current since early August among a small number of geologists, professionals, and other parties involved in the well, can be summed up in three words: “Myra is finished”.
The second version, which was alive and kicking until this morning, was that of the well’s owners. This version was presented to the public at a press conference on August 13. A few days earlier, “Globes” reported that there was no gas in the well’s target strata. But at the press conference, the companies’ executives appeared as if they did not understand what all the hullaballoo was about. The target strata are simply deeper than first believed, they explained. There was a technical breakdown, true, but breakdowns happen at all wells.
Don’t be confused. The Myra partners misled investors at that press conference. This is a harsh assertion, true, but in this case they do not deserve any benefit of the doubt. When a well reaches its target strata and no gas is found, that’s a bad sign. This is known to every geologist, and all the Myra partners knew it when they convened the press conference.
Nonetheless, they chose to give the public a misleading presentation, which stated that there had been no worsening of the well’s risk/reward ratio. All that the partners had to say was that not only were the target strata deeper than they thought, but that the chances of success were lower. They did not say that. They did not even imply it, even with a wink…Read More>>