Its oil-exploration business long left for dead, Givot Olam suddenly came back to life two weeks ago when it announced it was getting a $50 million cash infusion by a mysterious investor group called Alberta-Texas Energy Ventures.
Alberta-Texas retained the Israeli public relations man Rani Rahav, but a statement released by his firm was short on details. It described the group as including “Jewish families that work for Israel’s stability and inclusive regional development.” It also said the group has been in the global oil and gas sector and invested in Israeli startups but never in Israeli energy.
Givot Olam, whose shareholders Monday backed the investment plan that will give Alberta-Texas a 40% stake in the company, declined to name any of its backers.
But a source told TheMarker that the key figure is a former Israeli named Ben Shani, who also works as president of Houston-based Agar Corporation, a maker of equipment used in oil-well testing and production.
His No. 2 is Benny Mehr, a retired brigadier general who left the Israel Defense Forces four years ago as Northern Command chief. He has since helped manage and invest in security companies as founder and head of Beemehr Consulting & Management.
Mehr reportedly led the negotiations with Givot Olam and is in charge of Alberta-Texas’ Israel operations.
A source close to the group who asked not to be named said Alberta-Texas was incorporated in Canada only a few months ago and had no operations yet. However, its team includes people with decades of experience.
“The company has a website with names of people, but Shani doesn’t appear there,” the source said. “Shani undertook a major obligation of $50 million, but it’s not clear he has the business acumen and if [Israel’s] oil commissioner will approve Alberta-Texas as a drill operator. There are still a lot of questions surrounding the deal – a lot that isn’t understood.”
Regarding the other parties to Alberta-Texas, another source described them as “private individuals, Jewish families, but not only. There are also funds that invest in the sector. We’re talking about well-known families in the Houston oil business. This is very serious money.”
One source speculated that the Alberta-Texas backers declined to be named because they are still raising capital. “Right now there is $50 million on hand, but it will require another $100 million to develop the Meged field in later stages. That money hasn’t been raised,” the source said.
As to why Shani has chosen to remain behind the scenes, a source said: “Shani has various businesses around the world, including places where he would prefer not to make his connection with Israel so prominent,” the source said. “The anonymity isn’t to hide anything.”
Givot Olam has an unusual history. Tovia Luskin, its founder and CEO and a Russian immigrant who arrived in Israel via Canada, chose to prospect for oil near the central Israeli town of Rosh Ha’ayin based on clues from the Bible.
As he understood it, a verse from Deuteronomy in which the tribe of Joseph is blessed “with the crop of early mountains and the bounty of perennial hills” refers to a hydrocarbon reservoir. The Meged field near the city is situated in what Gilot Olam says belongs to the biblical tribal allocation of Ephraim, a son of Joseph. The company’s name, Givot Olam, means perennial hills in Hebrew.
Luskin joined up with Jerusalem businessman Noga Ben-David and lawyer Shmuel Becker to form the Givot Olam partnership, which listed on the Tel Aviv Stock Exchange in 1993. Many investors affiliated with the Chabad religious movement are shareholders.
Biblical verses aside, Givot Olam has had only spotty success. It drilled three wells over the years, with only one producing commercial quantities of oil – 1 million barrels worth $85 million over five years before technical problems forced it to stop pumping.
Meanwhile, the partners got into a bitter dispute and Givot Olam’s participation units were moved to the TASE’s maintenance list because the company failed to meet trading regulations. Its market value fell to as little as 100 million shekels ($28 million at current exchange rates). Two years of efforts to find a strategic investor failed, and last June the oil commissioner canceled its license.
The company is appealing the decision with Energy Minister Yuval Steinitz, but Givot Olam is now back on the TASE main list and its market value stands at about 245 million shekels.
Boas Arnon, an Israeli geologist who is part of the Alberta-Texas team, told TheMarker that the Meged field has considerable potential if it can be developed.
“The conservative estimates are that they will be able to extract 20 million to 50 million barrels of oil, which is a lot,” he said. Comparing Meged to Israel’s biggest find to date, he said: “In the Heletz field, for the sake of comparison, they pumped 18 million barrels over 50 years.”
But he said the area was very difficult to drill due to a very thick 4,000-meter (13,123-foot) stratum of limestone, and faults lying above the oil. He estimated that drilling would cost as much as $30 million per well.
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