Oilman's Divine Inspiration
Boosts His Company's Stock
By AARON ELSTEIN
THE WALL STREET JOURNAL INTERACTIVE EDITION
Harold "Hayseed" Stephens, a Texas oilman and evangelical preacher, says he had a
divine inspiration in 1982: Deep beneath the earth near the southwest end of the Dead Sea
in Israel lies the richest oil field in the world.
The 61-year-old president of Ness Energy International and founder of the Living Way
Church in his hometown of Weatherford, Texas, is stirring up an active debate among
investors on the Internet by promoting plans recently based on his "God-given revelation."
Mr. Stephens says Ness Energy has leased 400,000 acres near the Dead Sea and plans
by year end to start digging a 30,000-foot hole to do what no oil company has ever done:
Profitably drill for oil in Israel. Ness, by the way, means "miracle" in Hebrew.
"The scriptures point out that a gentile will discover the oil in Israel, not a Jew," Mr.
Stephens says. "Who is more likely to discover Israel's oil than a full-time Christian
preacher who just happens to be head of his own oil company and is now going to be
drilling for the oil God has been saving for Israel?"
Mr. Stephens has promoted his intentions through his company's Internet site and earlier
this month through a religious radio program. Ness Energy was also plugged on two other
Web sites -- one that caters to day traders and another affiliated with the religious group
that produces the radio show on which Mr. Stephens has appeared.
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Shares of Ness Energy, which traded at 1 7/8 Aug. 10 on the OTC Bulletin Board, soared
to a high of 4 11/16 on Tuesday as Mr. Stephens's plans made the rounds. On the day it
hit its high, the stock was the second-most active issue on the OTC Bulletin Board, with
1.35 million shares changing hands. It was quoted at 3 in afternoon trading on Friday.
Believers and naysayers have flocked to the Internet to debate whether Mr. Stephens is
really being guided by some divine message or is simply trying to deceive investors.
"I have total confidence in his spiritual perception," wrote one person on a message board
on the Raging Bull (www.ragingbull.com) Web site. "I know what he's done and what a
dedicated Christian he is."
However, another poster on the message board wasn't a bit convinced: "It's pretty darn low
for someone to prey on peoples emotions and beliefs by quoting the Bible in an effort to
benefit their own bank account."
Mr. Stephens swears he is not abusing the Holy Scripture to lure investors or for his own
personal financial benefit. While the gain in Ness's share price is nice, he says that
means little compared with the impact that he hopes his oil-drilling plans will have. He
believes Ness will be able to usher in an oil boom that will ensure Israel's economic
salvation.
Indeed, Mr. Stephens says he will give the profits from any oil discovery to Israel. "I will
deliver the nation from economic bondage," he said in a recent telephone interview.
Mr. Stephens became president of Ness Energy last year, when he took over and
renamed a money-losing penny-stock oil company called Kit Karson Corp. He owns 51%
of the 54 million outstanding shares in Ness Energy, which is based in Willow Park,
Texas. Kit Karson posted a $1.5 million loss last year and had revenue of just $22,301.
The company owns a 25% stake in a Texas gas field and a 4% share in another gas field
in Oklahoma.
In its annual report, released Aug. 11, Ness Energy's accountant said the company's
limited capital resources and new activities "raise substantial doubt about its ability to
continue as a going concern." Nevertheless, investors aren't discouraged. Ness Energy
managed to raise $281,000 in a private equity placement in June.
While the oil venture in Israel has some investors excited, it won't be the first time that Mr.
Stephens has gone there to explore. In the 1980s, he was among hundreds of evangelical
Christians from America who had scrambled to the Promise Land in an unsuccessful effort
to find oil based on a Biblical prophesy. They spent millions of dollars in their quests,
relying on Scripture and ancient maps instead of seismographic studies.
The evangelicals, including Mr. Stephens and his partners at the time, dug many dry
wells. While many were truly driven by their interpretation of passages in the Bible, some
were suspected by regulators of running investment scams. Some states even took steps
to prevent the Bible-based drilling ventures from floating securities. Mr. Stephens says his
previous efforts were unsuccessful because "I wasn't drilling on the spot where God
touched my heart."
Regulators in Texas and Washington state, where Ness is incorporated, say they haven't
heard of Mr. Stephens and don't have any record of complaints about Ness Energy and its
plans.
Mr. Stephens contends the world's biggest oil field is sealed deep under the earth by a
salt cap and it has never been found because no one has ever dug far enough at the right
place.
Ness Energy's Web site (www.nessenergy.com) is laden with quotations from Holy
Scripture that Mr. Stephens believes point to oil riches in Israel. The quotations are often
accompanied by Mr. Stephens's interpretations in parentheses, such as this one: "I will
give you the treasures of darkness (oil) riches stored in secret places (oil traps) so that
you will know that I am the Lord the God who calls you by name."
Few oil drilling ventures in Israel have been successful. In 1988, Occidental Petroleum
Corp. tried drilling 17,000 feet down off Israel's coast, but little resulted from the project.
Most other big drillers were wary of exploring too much for fear of angering Israel's oil-rich
Arab neighbors. But in 1997, an Israeli company called Givat Olam Oil Ltd. said it found a
sizable oil field near Tel Aviv. Israel still imports most of its oil, however.
Ness Energy is hoping to find oil beneath the ancient towns of Sodom and Gomorrah, Mr.
Stephens says.
The Ness Energy Web site cites the Book of Genesis as proof. "The Lord (exploded)
rained on Sodom and Gomorrah brimstone and fire (sulphur and flaming rock filled with oil)
from the Lord out of the heavens. ... He overthrew, destroyed and ended those cities (by
the great oil reserves exploding) ... and he (Abraham) looked toward Sodom and
Gomorrah, and toward all the land of the valley, and saw, and behold, the smoke of the
country went up like the smoke of a furnace (a hole 60 KM long, 8-12 KM wide, and
16,000 feet deep)."
Mr. Stephens, the son of Texas sharecroppers and a former professional football player
with the New York Titans (now known as the Jets), has been in the oil business for over 40
years as an independent "wildcatter." He says he made his first big strike in 1964 and
became a millionaire the first of four times by selling his finds to refiners. In 1983, he
founded his own company, Hayseed Stephens Oil & Gas.
But he was a self-confessed "hell-raiser" and threw away his millions on drinking and
carousing, until he had a born-again experience on Jan. 16, 1978. Ever since then, he
says, his oil endeavors have been to serve God.
Word got around about Mr. Stephens's Israel project after he spoke about it earlier this
month on a religious radio program, which can be heard in 29 states and is produced by a
ministry called the Prophecy Club. The club's Web site (www.prophecyclub.com) contains
an article in its July/August newsletter entitled "25 Reasons Why I Think the Oil God Has
Saved for Israel Will Be Discovered by Hayseed Stephens and Ness Energy," written by a
Timothy C. Davis, a Ness stockholder. The article concludes with a pitch for a video
prepared by Mr. Stephens, "Oil -- the Road to Armageddon."
Another possible reason behind the jump in Ness Energy's stock price: A financial Web
site called EquityAlert.com (www.equityalert.com) that got started two months ago and
caters to day traders. The company was mentioned in press releases that EquityAlert
issued every trading day from Aug. 11 to Aug. 18.
Mr. Stephens says he did not solicit attention from the site. Gurm Kundan, a spokesman
for EquityAlert, says the Scottsdale, Ariz., company receives no compensation from the
companies it promotes. He says he's unaware of EquityAlert owning any Ness Energy
stock. EquityAlert.com hopes to generate revenue by selling advertising, though it runs no
ads right now.
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Write to Aaron Elstein at: aaron.elstein@news.wsj.com
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