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While the stock market may be disappointed from failures of more than a few stock offerings, one sector still has the energy and the pluck to keep going - oil exploration.

Every one knows Israel is a superpower in finding "traces of oil," but when it comes down to real numbers - in other words revenues and profits - the picture is much less bright. Most of the money invested in this field by players in the Tel Aviv markets is buried underground, or has leaked off into the pockets of the managers and owners of the oil exploration companies.

Except for the discovery of large gas reserves off the coast near Ashkelon, there has not been a single significant success in the sector.

Nevertheless, there are still two groups trying to look serious as they travel between dozens of investment groups attempting to sell two dream offerings - and no one has thrown them out yet. In fact, the opposite has happened. The managers of the oil exploration groups claim they have even had to do 12 presentations in one day. The reason is simple and straightforward: the rising price of oil in world markets. With the price of oil over $45 a barrel, the hope of extracting millions of barrels from the earth of the Holy Land has led even the most disappointed of investors to listen to an hour-and-a-half presentation.

The first and more veteran group is headed by a former broker, Jacob Luxenburg, through the Lapidoth holding company he controls.

The second group, Ginko Oil Exploration is a privately held Israeli concern run by Rami Karmin, accountant Yair Karni, Nissan Khakshouri and Yunes Naziran; and the market has yet to succeed in evaluating its worth.

The group was mostly put together by Yair Karni, who 10 years ago brought together the almost same group to invest in the Loutraki casino in Greece. Ginko has offered investors an interesting financial structure, where in case of failure they will receive their capital after seven years linked to the pound sterling. In case of success they are guaranteed a profit, since a large part of the investment, held as convertible bonds, will then become stock. But the guarantee for the capital requires a NIS 100 million deposit that cannot be used for the company's activities.

This means that out of NIS 150 million, only NIS 110 million can be used for drilling. Another NIS 5 million should be deducted for one-time offering costs, as well as NIS 2.5 million a year for management salaries and other expenses. Not a lot will be left for exploration and drilling. Experts claim that to find oil in commercial quantities in the Dead Sea region, at least 10 times that amount is needed.

Ginko's CEO, Rami Karmin - who owns 42 percent of the firm - claims he has enough money for three drillings; and he intends to raise more money soon, after having the company make a dual listing on the London Stock Exchange.

Lapidoth is trying to raise up to NIS 120 million to drill in two areas it owns in the Heletz oil field. The old field has already produced over 17 million barrels, and Lapidoth claims it has the potential to produce a few million more.

Lapidoth has promised NIS 25 million to underwriters, including NIS 5 million to Luxenburg's own firm. Ginko's offering will not be underwritten. According to Karmin, institutional investors are interested, but do not want their names to become public knowledge due to the negative image of oil exploration in Israel.

Luxenburg: I gave up NIS 40m

Jacob Luxenburg bought control of Lapidoth in 2001 at a value of $14 million. Today the firm is traded at a value of $70 million, after paying a $7 million dividend.

"This is one of the best investments in Israel," said Luxenburg. "I learned to work with the capital markets. I started as a broker and I understood that to work fairly with the market is the best way. At first I looked at what other controlling shareholders were doing, and so immediately after buying the company I managed to pass a resolution in the shareholder meeting for an options plan and high salary. According to the plan I would have received NIS 40 million by now," said Luxenburg.

"But after a year I gave it all up and cut my salary in half. Suddenly I realized and understood that if I want loyal investors for the long term, I cannot do this to them. The investors loved it and gave me credit for what I had done. Now they will follow me even when I recommend to them to invest in the new oil rights," Luxenburg explained.

Luxenburg has transformed Lapidoth into a successful investment company. It holds 2.5 percent of Scitex, as well 5 percent of ILD Insurance. Last year Lapidoth took control of the publicaly traded venture capital fund Inventech, previously controlled by the Shoval family. Luxenburg cut management fees for Inventech, and raised its value by NIS 15 million.