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Genie Energy fails to win permit for oil shale pilot project in Israel

  • Genie Energy (NYSE:GNE) says it is considering alternative ways forward for an oil shale pilot project in Israel after a Jerusalem planning committee declined to issue the company a permit to build and operate a facility.
  • GNE shares sank throughout the afternoon in NYSE trading before finishing -15%, as word of the rejection apparently leaked out.
Comments (11)
  • KonaCap
    , contributor
    Comments (50) | Send Message
     
    Knew yesterday the project was denied. Can't be the reason for the drop today & shouldn't care, northern israel is where it matters. $GNE
    3 Sep 2014, 05:45 PM Reply Like
  • john galt III
    , contributor
    Comments (87) | Send Message
     
    The environmental movement is very strong in Israel. The oil shale in Israel is located above the aquifers so there is no water contamination issues as there are in CO,WY and UT. Nevertheless Israel turned the pilot plant down.

     

    It helps that there have been 40 trillion cu. ft. of natural gas discovered in the Mediterranean on Israeli leases in the last few years. Israel yesterday just signed a $15 billion agreement with Jordan to supply that country with natgas.

     

    http://bit.ly/1pKiLX8

     

    Genie is probably not done going down. This is a huge blow to their future. Even having Dick Cheney, Jacob Rothschild and Michael Steinhardt couldn't
    save them.

     

    In my opinion this is very short-sighted of Israel. They have gas but import 300,000 barrels a day of crude oil. That could be cut off in heart beat. Not a smart move, just as not drilling for oil in parts of Alaska is pretty dumb also.
    3 Sep 2014, 05:55 PM Reply Like
  • KonaCap
    , contributor
    Comments (50) | Send Message
     
    Thoughts on their conventional project in Northern Israel? Afek?
    3 Sep 2014, 08:56 PM Reply Like
  • john galt III
    , contributor
    Comments (87) | Send Message
     
    All major oil/gas finds in Israel have been offshore. There have been hundreds of wells drilled on land and 30 million barrels produced since the 1950's.

     

    Genie's land belonged to Syria and Syrian oil fields are nowhere near where Afek will drill. See map of Syrian oil fields:

     

    http://bit.ly/1t3wcPI

     

    Most people believe Afek finding anything commercial is a long shot. We'll see. I wish them all the luck.

     

    Here is Israel's Government Energy Website - lot's of information:

     

    http://bit.ly/1t3waXW
    4 Sep 2014, 08:33 AM Reply Like
  • KonaCap
    , contributor
    Comments (50) | Send Message
     
    Thanks, do you have a link or specific info on the "Most people believe Afek finding anything commercial is a long shot". I would think that the oil shale play was the long shot, at least we know the technology in Golan works.
    4 Sep 2014, 09:03 AM Reply Like
  • john galt III
    , contributor
    Comments (87) | Send Message
     
    The kerogen in the oil shale is there - an incredible amount. That is proven. It is only a long shot because of the technology employed and the environmental movement in Israel that went ballistic. I read a few dozen articles at the time.

     

    Even Afek was opposed in the Knesset:

     

    http://bit.ly/1uDhQ9U

     

    There has never been a well onshore in Israel that has found a great deal of oil. Never, and that is after 400/500 holes have been drilled. Onshore drilling has been going on for 50 years and has been a failure. Therefore, finding a huge commercial field of oil is not impossible just a long shot.

     

    Nevertheless long shots do happen. So after Genie drops to $5.00 to $6.00 or wherever then buy 100 or 1,000 shares as a lottery ticket. The company has a small market cap and should they find 100 million barrels and upwards that is viable without fracking (which is assuredly to be opposed) then the stock will do well.

     

    Israel has a habit of allowing drilling, but then if a big field is found, raising taxes and royalty fees after the fact. Just ask Nobel Energy. So watch out for that as well.

     

    Oil fields tend to have pools in the same place. Syria never found much near their Israeli border, but has found commercial oil further away.

     

    So, to me it is a long shot based on the evidence, but then again the finding of 30 trillion cubic feet of natural gas on Israeli Mediterranean leases was the biggest offshore natural gas find of the last decade so who knows.
    5 Sep 2014, 03:12 PM Reply Like
  • KonaCap
    , contributor
    Comments (50) | Send Message
     
    Thanks for your thoughtful comments on Genie, I feel as though I'm the only one following this. Given that it's now a $170M market cap w/ $100M of cash, I feel as though the downside is limited. At worst they still have a $300M revenue business on the retail side w/ adjusted EBITDA of $17M by their calculations. Meaning, without GOGAS, we're left with a $70M enterprise value company with $17M of EBITDA, that's 4.1x, and 0.2x revenue, not bad downside, looks great against comparables.

     

    I haven't seen anything specific that's negative to the Golan, in fact it's all been positive, a bit circumstantial to conclude there might not be oil b/c Syria isn't drilling in the area. Though your point about Israel changing the rules post discovery is a good one. I bought into $GNE w/ a basis of $7.05 for the near term upside of Golan oil. The oil shale is an after thought in mind, wouldn't see revenue from that project for a decade anyway, I'm not willing to wait for that, and I don't think the stock moves up as much upon approval as it did downwards on rejection. If you do find comments in regards to the Golan permit, I'd appreciate you posting.
    5 Sep 2014, 03:32 PM Reply Like
  • john galt III
    , contributor
    Comments (87) | Send Message
     
    KonaCap,

     

    Will do.

     

    I have been following Harold Vinegar, their oil shale expert for over 20 years. They have a chance in the Golan. I think we could have a market rout soon worldwide - off 10 to 20% - if so Genie might get to $5.00 or so and I might buy some. To me oil shale was the big deal, but the Golan is lot easier to extract and as you say will happen sooner.
    6 Sep 2014, 05:13 PM Reply Like
  • john galt III
    , contributor
    Comments (87) | Send Message
     
    KonaCap,

     

    Read this. The watermelons who sunk the oil shale project are now trying to stop Golan drilling be Genie's Afek Oil. These people by the way are not pro-environment. They have other agendas, but it makes no difference if the project is halted. Too long a story to go into. Make up your own mind.

     

    IMHO much less of a chance to stop this vs. the kerogen project, as there have been hundreds of wells sunk in Israel in the last 50 years on land.

     

    http://bit.ly/XRSkmz
    20 Sep 2014, 11:26 AM Reply Like
  • KonaCap
    , contributor
    Comments (50) | Send Message
     
    Thanks John -- I had actually seen this last week, excellent and well presented article. With all that's going on around them, these people need to give a little and realize that securing their own oil is a huge step. If you have any information in regards to your statement that these people are not just pro-environment, but rather there's more to it, I'd be interested in reading up. - Kona
    22 Sep 2014, 09:14 AM Reply Like
  • john galt III
    , contributor
    Comments (87) | Send Message
     
    KonaCap,

     

    The environmental movement was taken over by the extremist, far left years ago. Read what Patrick Moore, founder of Greenpeace has to say. Just google him.

     

    In the meantime read this:

     

    http://bit.ly/1rkR4me
    24 Sep 2014, 07:08 PM Reply Like
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