THE HEATING ELEMENT IN THE TEST FACILITY IN COLORADO HAS FAILED.
FROM THEIR JUST RELEASED REPORT:
Genie Oil and Gas (GOGAS)
GOGAS currently generates no revenues. GOGAS’ operating expenses consist primarily of research and development expense and expenses of its intellectual property development and other business development efforts. GOGAS accounts for its investment in AMSO, LLC using the equity method.
GOGAS reported $2.8 million of combined R&D and G&A expense in 1Q13, compared to $2.3 million in the year ago quarter and $2.9 million in 4Q12. The year over year increase primarily reflects increased G&A expense incurred by GOGAS’ business development efforts in Mongolia and Israel. Equity in the net loss of AMSO, LLC increased to $1.1 million in 1Q13 from $0.8 million in the year ago quarter, reflecting the operating costs of the pilot project and the cost of equipment modifications and other preparations for the re-start of the pilot test plant. GOGAS’ loss from operations was $(3.9) million for both 1Q13 and 4Q12, compared to $(3.1) million in 1Q12.
AMSO, LLC is a joint venture oil shale exploration and production initiative with Total, S.A. operating pursuant to a federal Research, Development and Demonstration lease on federal lands in Colorado.
AMSO, LLC has constructed a pilot facility designed to validate key assumptions of its in-situ oil shale recovery process and has received all permits required for pilot test operations. In early March, 2013, AMSO, LLC initiated its oil shale pilot test in Colorado by turning on the electric heater. After approximately two weeks of operation, before the pilot could attain steady-state operations, the down-hole electric heater failed. While pilot operations were too short to allow conclusions to be drawn about the ultimate viability of our approach, the operating team did learn valuable information that will help to optimize operating conditions for future pilot operations.
AMSO is currently evaluating additional modifications to the electric heater to improve its reliability while simultaneously developing engineering plans for a hot fluid circulating (HFC) heater. In this approach, the heat is generated above ground and transferred to the retort zone via piped fluids. Although development and testing of these units could delay the pilot test re-start by approximately a year, the HFC approach is more readily applicable to the approach expected to be used in AMSO’s eventual commercial operations. During the current quarter, AMSO expects to make a decision whether to proceed with another electric heater test or to move directly to HFC heater development and testing.
IEI holds an exclusive Oil Shale Exploration and Production license covering 238 square kilometers in the Shfela basin region in Israel. In mid-April, IEI received the governmental directives required for preparation and submission of an environmental impact statement. The environmental impact statement is a necessary component of IEI’s pilot permit application, and a permit is needed to construct and operate an oil shale pilot test facility. IEI intends to submit its pilot application during the second quarter of 2013.
In April 2013, the government of Israel finalized the award to a Genie Energy subsidiary of an exclusive, 36 month petroleum exploration license covering 396.5 square kilometers in the Southern portion of the Golan Heights. Afek Oil and Gas, Ltd., (formerly Genie Israel Oil and Gas, Ltd.), a Genie subsidiary, is carrying out the work pursuant to this license. Afek has added seasoned oil and gas exploration professionals to its team and has begun initial geophysical tests to characterize the site and is currently making preparations for additional geophysical, seismic, and drilling operations.
On April 19, 2013, Genie Oil Shale Mongolia, LLC (Genie Mongolia), and the Petroleum Authority of Mongolia entered into an exclusive oil shale development agreement to explore and evaluate the commercial potential of oil shale resources on a 34,470 square kilometer area in Central Mongolia.
The five year agreement calls for Genie Mongolia to explore, identify and characterize the oil shale resource in the survey area and to conduct a pilot test using in-situ technology on appropriate oil shale deposits. Genie may seek to proceed to commercial development via a production sharing agreement in accordance with Mongolian law.
