Well 41 in the Irus petroleum license area, part of the legendary Heletz field, is still stuck in the mud: The drilling contractor, Lapidoth-Heletz Limited Partnership, announced late Sunday that it was immediately shutting all operations at the site, claiming that its license partner, Avenue Energy Israel, owes it NIS 5 million.
For the past three years the two Heletz licenses, Irus and Heletz-Kokhav, have been 75% owned by Avenue Energy Israel, an Avenue Group subsidiary owned by the Mochkin brothers, Levi and Mendel. Lapidoth-Heletz, a 50% owned subsidiary of Jacob Luxenburg's Lapidoth Israel Oil Prospectors Corp., holds the remaining 25%.
For more than a year, Lapidoth has been hoping that the petroleum and mining commissioner at the National Infrastructure Ministry will tell Avenue that it is in breach of its working plan obligations. This would trigger a clause in the partnership agreement that would transfer 50% of the license to Lapidoth, which would then own 75%.
Avenue has been suffering from cash flow problems, and the commissioner is threatening to cancel the licenses if the company doesn't meet its working plan objectives. Lapidoth-Heletz said it has sent Avenue frequent requests for payment. Over the last few months Avenue has been trying to obtain financing to continue working the two licenses; currently, operations are stuck at the stage of cleaning out the old wells.
After Avenue's attempts to find funding failed, Arko Holdings - listed on the Tel Aviv Stock Exchange and controlled by Arie Kotler - announced in February that it was considering extending Avenue a $5 million loan. The two companies then began discussing taking Avenue's operations public through the TASE-listed shell company GO.D.M. Investments, with Arko and Avenue each receiving a 40% stake in the new enterprise.
However, GO.D.M. announced two weeks ago that, rather than negotiating with both Arko and Avenue, it was negotiating solely with Avenue. Arko, taken by surprise, issued its own announcement stating that it had not been informed of the change, which it said violates binding agreements between Arko and Avenue Group.
In a March interview with TheMarker, one of the Mochkin brothers said: "The current production, 50 barrels per day, is being sold to the Ashdod refineries, and we hope that technological improvements of the last few years will allow us to increase the pace. We know there is 10 million barrels of producible oil reserves in the license areas, and are looking at several other drilling targets."
The Mochkin brothers are hoping to produce 1,000 to 1,300 barrels of oil a day by operating six to eight wells, including the well currently in production. In comparison, at Givot Olam Oil Exploration's Meged 5 site, one well is producing 785 barrels a day, and this isn't considered a substantial quantity either.