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Givot Olam (TASE: GIVO) announced yesterday - two days after a rights issue to shareholders - a decision to carry out production tests at its Meged-4 exploration site. The tests would be conducted at depths of 4,320 and 4,680 meters, Givot Olam said.

Its decision is based on the initial interpretation of electric logs and core samples by the U.S. firm CoreLab.

In a somewhat obscurely-worded announcement, Givot Olam reported that the general partner had located a number of segments with good pores and conductivity at the target configuration between 4,320 and 4,860 meters. These porous segments, the partnership said, had shown a high level of saturation with oil.

CoreLab confirmed oil saturation in three of the four cores found to have low porosity, indicating the presence of a high level of oil and gas saturation.

The saturation results of all four cores indicated a high level of light gases or condensate gas, Givot Olam added.

Exploration market sources say the announcement is some cause for worry. The partnership had announced its saturation data and discovery of oil beforehand, while the low porosity it now reveals indicates the partnership will have difficulty extracting the oil at the levels from which the cores were extracted.

Givot Olam said the production tests would be carried out jointly with advisers from the U.S., after the equipment it needed reached Israel. But, it added, the general partner would determine its stand on the question of Meged-4's commercial prospects.

Two previous Meged-license explorations, 2 and 3, were abandoned by Givot after learning the results of the Meged-4 production tests.