Friday, October 16, 2009

Whatever pleased the Lord, he did, in heaven and on earth, in the seas, and all the depths…

After considerable exchange with Zion's lawyers I have amended this post. The well is "probably" dry. For an explanation see this post.

For a small exploratory oil company with limited funds a dry well is really bad news. Three dusters and it is game over. Two and – well – you probably should be looking elsewhere.

And so I want to report to all that Zion Oil and Gas has had a probably dry well.

Zion is a special company drilling for oil in a special land. An alliance of fundamentalists Jews and fundamentalist Christians are fleecing their flock with a string of rights offerings to fund drilling in essentially non-prospective land in Israel. The company’s promotional dross is simply funny. This you-tube clip is simply a gem…

Zion however has reported the main well they were drilling to be dry. But – even funnier than the video is the press release announcing the bad news.


25 September 2009 – Operations Update # 20

As noted last week, we have successfully drilled this well to a depth of approximately 17,913 feet (5,460 meters).

This past week, we ran a ‘velocity survey’ in order to help increase our understanding of the geology of our license area.

A ‘velocity survey’ is a type of seismic survey where the seismic travel time from the surface to a known depth is measured. Geophones are lowered into the wellbore and a pulse wave sent out from ground level; the resulting signals are then recorded.

The velocity survey data will be used to correlate specific formations to reflections seen on the seismic sections that we used to map the Ma’anit structure.

We have decided, for the present, not to drill any deeper in this well and are now analyzing and establishing the priorities of the seven zones that warrant completion testing. However, the well bore is in excellent condition and it is possible that we will drill this well deeper in the future. Next week, I will comment further, but I’ll mention that this week Zion’s Chairman, John Brown, gave me a note with the reference Psalm 135:6 – ‘Whatever pleased the Lord, he did, in heaven and on earth, in the seas, and all the depths…’


  1. Does this prove the existence of God, and that she has a sense of humour?

  2. yes.

    that, or the inverse...

  3. I disagree with John Hempton's assessment. The absence of any confirming statement by Zion Oil at this point on the Maanit Rehoboth #2 drilling does not translate into a dry well. With oil discovery affirmations by two other firms in the neighboring offshore area near Haifa and by the Dead Sea point to interesting geologic formation under all of Israel. The country is not that big. I am waiting for the well logging data and think it will provide the substantive data that investors are interested in. Speculation is just not that revelvant to me at this point

  4. I am amused at WarSmith's promotion. Yes there are offshore structures that have gas.

    But drilling to that depth and not reporting anything - most companies would say "plugged and abandoned".

    There ain't nuttin' there...

  5. was curious is there might be an update on the FRE/FNM situation after KBW downgrade yesterday.

  6. Let us know what you think of the FNM , FRE downgrades by keefe bruyette

  7. now that Goldman forecasts FNM , FRE to go to $0 .... maybe we can get an update to what may or may not be wrong with the previous thesis

  8. I agree with Warsmith. Zion hasn't stated that they have a dry well and they've installed a 'Christmas tree' on the well head. Odd behavior for a dry well. The presence of nat gas offshore doesn't guarantee hydrocarbons onshore but it sure is a positive indicator. Noble Energy (who discovered the offshore nat gas)is moving their focus from nat gas to oil, and they're staying in Israel as one of their territories of 'best economics'.
    Your post isn't just a little jaded due to the religious aspect is it?

  9. Delinquencies and defaults clearly rise from here. I model that the future lot o defaults will be 6.4 times the past - and I can handle 8-9 times.

    The default of the mortgage insurers (still a possibility) will be pretty bad for Frannie.

    But yes - delinquencies rising - a second wave - is part of my story.

    If defaults double and stay at that elevated level for three years I am comfortable.

    If defaults quadruple from here I will have problems.


  10. Taken from Bronte Capital October report explaining that months losses

    "The first was a short position on an oil-and-gas company whose claims we are highly skeptical of.
    We were forced to cover most of our short as the stock went against us."

    Is this the same company if you are referring to? doesnt look good if it is.