Givot Olam's test production at its Meged 5 drill site has been proceeding at 800 barrels a day - a figure it confirmed after the Israel Securities Authority had raised doubts.
"Givot Olam must warn investors that the production rate it reported ... is based on a relatively short period and is not necessarily an indication of commercial production rates," the ISA said. The watchdog told the company to give more details.
Givot Olam complied yesterday, issuing a report detailing its general plan, including the types of tests done and the dates they were performed.
Givot Olam said that "since this section was tested over an extended period during trials held in February and March, the general partner believes that, despite the relatively short time for which the production rate was measured, there is no apparent reason to doubt the information's reliability or fear that it could mislead a reasonable investor."
Two weeks ago Givot Olam's participation units jumped on rumors that commercial production had kicked off at 1,000 barrels a day at the dubiously high price of $150 a barrel.
The limited partnership already announced several months ago that it would begin long-term production test drilling at the beginning of June, and it has remained on schedule. Oil produced during the tests has been sold to refineries; in the first quarter the crude produced from test wells was sold for NIS 4.6 million.
Short-term production testing ended in March with the firm reporting a steady production rate of 785 barrels a day from the 8b section, with a daily potential of 1,085 barrels a day if drilling had proceeded in all sections.
It has been known for many years that the Meged field contains oil. But the question over the last two decades and through five previous drillings was how to get the crude flowing fast enough for commercially viability. The latest numbers indicate that the production rate was low and that the company took steps to try to boost it.
According to a report by the international consultancy Baker Hughes, Givot Olam plans to begin producing oil from Meged 5 while developing the entire field. In the first stage the company will drill Meged 6 and Meged 7 and perform well stimulation for all its drillings; in the next stage the company will drill up to 40 wells throughout the Meged field.
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