The share price of Givot Olam Oil Exploration LP (TASE:GIVO.L) rose 4.4% to NIS 0.071 by early afternoon today, giving a market cap of NIS 693 million on unsubstantiated rumors that a foreign financial investor might invest in the partnership, which owns the Meged 5 well near Rosh Ha'Ayin.
The rumors claim that a foreign financial investor is in contact with Givot about an investment. There is no substantive information about who the investor is, the nature of the investment (such as an allotment of partnership units to raise capital, acquisition of stake in the general partner, or a loan), or the amount of the investment.
A Givot spokesman said that various parties were interested in investing in the company, but he disclosed no details. He said that when the company had something to report, it would do so via a notice to the Tel Aviv Stock Exchange (TASE).
Givot has less than NIS 30 million in cash, and it needs tens of millions of shekels to develop the Meged 5 well, including the upcoming production tests on sections 7 and 8 of the bore.
Assuming that the production tests are positive, Givot plans to begin production at the well. It also wants to drill more development wells, but needs money to do so.
There is nothing new about foreign financial investors in Israel's energy industry, but it always came after unequivocal proof of a commercial discovery, and detailed production and financial plans by the companies owning the rights to the discovery. For example, Deutsche Bank AG (NYSE: DB; XETRA: DBK) participated in the development of the Tamar well only after a commercial discovery was proven, and after Tamar's partners had prepared financial and development plans.
Published by Globes [online], Israel business news - www.globes-online.com - on October 24, 2010
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