Good morning J777S! Here are some thoughts on the video...
Overall, most of what the video covers makes sense. Here are several items where additional info may help:
1. The packer trouble on MJ01 (high formation temp causing short packer life) was not a material factor in MJ01 being non-commercial. The packer trouble slowed down the test, but the final analysis was that the formation was too tight to produce oil. Many oil wells have packers; so the need for a packer is not a bad sign in and of itself. If the packer in MJ02 does not work it might or might not seal MJ02's fate; depends on why it failed and what other options are available to isolate the primary zone from water. In any event, I'm sure the high temp was taken into account when selecting a packer for MJ02. The video was too dramatic on the packer issue.
2. Zion is exploring for a reservoir and MJ02 is an exploratory well in that effort. So, the MJ02 drilling and testing cost to date is a sunk cost that will not have a direct effect in the decision to produce the reservoir or not. The key factor is what will the cost be to drill additional wells based on what was learned on MJ01 and MJ02. In other words, if it cost $XX million to drill and test MJ02, but with the knowledge gained then MJ03 can be drilled for $YY million where $YY<$XX and where $YY is economical, then the reservoir is commercial. The video was too focused on recovering the MJ02 sunk cost; going forward is always based on what the future cost is.
3. It may not be Zion's time to radically alter the energy landscape in Israel or the world. I tend to be in this camp, but that does not mean that MJ02 is non-commercial and the reservoir it may have found is non-commercial. The next step in the journey could be that MJ02 has found a modest reservoir that is commercial. The technical evidence that the MJ02 reservoir is not world-changing is:
a) MJ01 was non-commercial, so field does not extend in that direction (vertical or lateral, or both).
b) The pay zone is only 20 meter high. This height taken into consideration with the 3D area says the reservoir is not large as measured by the world stage.
If the MJ02 reservoir is commercial then the pps will encourage investment. If not, then THE Whale or someone else will likely step up and fund future operations.
4. The video was correct in stating that Zion is a speculative investment and that care should be taken. However, I would not recommend that all Zion share holders enter a stop loss. This would allow the market makers to see where the sell points are with price and volume. They could allow/make the price to drop to force the sell, then allow/make the price to rise again. The practice I use is to set price alerts so I'm notified is the price drops or rises to a certain point. Then I look at the circumstances and decide whether to hold or trade.
Hope this helps! Thanks for sharing the video.
AI
