Isramco Inc – ‘10-K’ for 12/31/07

On:  Monday, 3/31/08, at 8:28am ET   ·   For:  12/31/07   ·   Accession #:  1188112-8-1074   ·   File #:  0-12500

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         58    329K 
 2: EX-31.1     Certification -- Sarbanes-Oxley Act - Sect. 302        2±     9K 
 3: EX-31.2     Certification -- Sarbanes-Oxley Act - Sect. 302        2±     9K 
 4: EX-32.1     Certification -- Sarbanes-Oxley Act - Sect. 906        1      6K 

10-K   —   Annual Report
Document Table of Contents

10-K
1st Page of 58
TOC
↑Top
Previous
Next
↓Bottom
Just 1st
 
 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 FORM 10-K

MARK ONE:                                                                       

   [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007                

       [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934                                                            

COMMISSION FILE NUMBER: 0-12500                                                 

 ISRAMCO, INC.
(Exact name of registrant as specified in its charter)

Delaware                                       13-3145265   
(State or Other Jurisdiction                 (IRS Employer Identification No.)
of Incorporation)                                                   

 4801 Woodway Drive Suite 100E Houston Texas 77056
(Address of Principal Executive Offices)

713-621-3882
(Registrant's Telephone Number, including Area Code)

 Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:
 Common Stock, par value $0.01
(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as    
defined in Rule 405 of the Securities Act. Yes [ ] No [X ]                      

Indicate by check mark if the registrant is not required to file reports        
pursuant to Section 13 or Section 15(d) of the Securities Act of 1933.          
Yes [ ]   No [x]                                                                

Indicate by check mark whether the issuer (1) has filed all reports required to 
be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months   
(or for such shorter period that the registrant was required to file such       
reports), and (2) has been subject to such filing requirements for the past 90  
days. |X| Yes |_| No                                                            

Indicate by check mark if disclosure of delinquent filers in response to Item   
405 of Regulation S-K is not contained in this Form, and will not be contained, 
to the best of registrant's knowledge, in definitive proxy or information       
statements incorporated by reference in Part III of this Form 10-K or any       
amendment to this Form 10-K. |X|                                                

Indicate by check mark whether the registrant is a large accelerated filer, an  
accelerated filer, or a non-accelerated filer. See definition of "accelerated   
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.           

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ]     
Smaller Reporting Company [X]                                                   

Indicate by check mark whether the registrant is a shell company (as defined in 
Rule 12b-2 of the Securities Exchange Act). Yes [ ] No [x]                      

As of March 31, 2008 there were 2,717,691 shares of the Registrant's common     
stock par value $0.01 per share ("Common Stock") outstanding. The aggregate     
market value of the Common Stock held by non-affiliates of the Registrant at    
June 30, 2007, based on the last sale price of such equity reported on the      
Nasdaq market, was approximately $59.7 million.                                 

10-K
2nd Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 2nd
 DOCUMENTS INCORPORATED BY REFERENCE

The information called for in Items 10, 11, 12 and 14 in Part III will be       
contained in the issuer's definitive proxy statement which the issuer intends to
file within 120 days after the end of the Issuer's fiscal year ended December   
31, 2007 and such information is incorporated herein by reference.              

10-K
3rd Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 3rd
 ISRAMCO, INC.
2007 FORM 10-K ANNUAL REPORT

 TABLE OF CONTENTS

PART I

ITEM 1.  DESCRIPTION OF BUSINESS.........................................       

ITEM 2.  DESCRIPTION OF PROPERTY.........................................       

ITEM 3.  LEGAL PROCEEDINGS...............................................       

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............       

 PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS........       

ITEM 6.  SELECTED FINANCIAL DATA.........................................       

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION.....       

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.....       

ITEM 8.  CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA........       

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING            
AND FINANCIAL DISCLOSURE............................................  

ITEM 9A. CONTROLS AND PROCEDURES.........................................       

ITEM 9B. OTHER INFORMATION...............................................       

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;          
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT...................  

ITEM 11. EXECUTIVE COMPENSATION..........................................       

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT         
AND RELATED STOCKHOLDER MATTERS.....................................  

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................       

ITEM 14. PRINCIPAL ACCOUNTANT FEES & SERVICES............................       

ITEM 15. EXHIBITS........................................................       

10-K
4th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 4th
FORWARD LOOKING STATEMENTS

CERTAIN STATEMENTS MADE IN THIS ANNUAL REPORT ON FORM 10-K ARE "FORWARD-LOOKING 
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT  
OF 1995. FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY TERMINOLOGY SUCH AS    
"MAY", "WILL", "SHOULD", "EXPECTS", "INTENDS", "ANTICIPATES", "BELIEVES",       
"ESTIMATES", "PREDICTS", OR "CONTINUE" OR THE NEGATIVE OF THESE TERMS OR OTHER  
COMPARABLE TERMINOLOGY AND INCLUDE, WITHOUT LIMITATION, STATEMENTS BELOW        
REGARDING EXPLORATION AND DRILLING PLANS, FUTURE GENERAL AND ADMINISTRATIVE     
EXPENSES, FUTURE GROWTH, FUTURE EXPLORATION, FUTURE GEOPHYSICAL AND GEOLOGICAL  
DATA, GENERATION OF ADDITIONAL PROPERTIES, RESERVES, NEW PROSPECTS AND DRILLING 
LOCATIONS, FUTURE CAPITAL EXPENDITURES, SUFFICIENCY OF WORKING CAPITAL, ABILITY 
TO RAISE ADDITIONAL CAPITAL, PROJECTED CASH FLOWS FROM OPERATIONS, OUTCOME OF   
ANY LEGAL PROCEEDINGS, DRILLING PLANS, THE NUMBER, TIMING OR RESULTS OF ANY     
WELLS, INTERPRETATION AND RESULTS OF SEISMIC SURVEYS OR SEISMIC DATA, FUTURE    
PRODUCTION OR RESERVES, LEASE OPTIONS OR RIGHTS, PARTICIPATION OF OPERATING     
PARTNERS, CONTINUED RECEIPT OF ROYALTIES, AND ANY OTHER STATEMENTS REGARDING    
FUTURE OPERATIONS, FINANCIAL RESULTS, OPPORTUNITIES, GROWTH, BUSINESS PLANS AND 
STRATEGY. BECAUSE FORWRD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES,    
THERE ARE IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS. ALTHOUGH   
THE COMPANY BELIEVES THAT EXPECTATIONS REFLECTED IN THE FORWARD-LOOKING         
STATEMENTS ARE REASONABLE, IT CANNOT GUARANTEE FUTURE RESULTS, PERFORMANCE OR   
ACHIEVEMENTS. MOREOVER, NEITHER THE COMPANY NOR ANY OTHER PERSON ASSUMES        
RESPONSIBILITY FOR THE ACCURACY AND COMPLETENESS OF THESE FORWARD-LOOKING       
STATEMENTS. THE COMPANY IS UNDER NO DUTY TO UPDATE ANY FORWARD-LOOKING          
STATEMENTS AFTER THE DATE OF THIS REPORT TO CONFORM SUCH STATEMENTS TO ACTUAL   
RESULTS.                                                                        

10-K
5th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 5th
PART I

ITEM 1. BUSINESS                                                                

GENERAL                                                                         

Isramco, Inc., a Delaware corporation incorporated in 1982, together with its   
wholly-owned subsidiaries, Isramco Energy LLC ("IEN"), Jay Petroleum LLC ("Jay  
Petroleum") and Jay Management LLC ("Jay Management") (collectively "Isramco" or
the "Company"), explores for, develops and produces natural gas and crude oil in
the United States of America (United States), and in Israel. Isramco's principal
producing and exploring areas are further described in "Exploration, development
and production" below. Isramco 's Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports   
are made available, free of charge, through its website, as soon as reasonably  
practicable after such reports have been filed with the Securities and Exchange 
Commission (SEC).                                                               

At December 31, 2007, Isramco's total estimated net proved reserves were 50,353 
million cubic feet equivalent (MMcfe), of which 25,352 million cubic feet (Mcf) 
were natural gas reserves, 2,003 thousand barrels (Bbl) were crude oil and 2,164
thousand barrels (Bbl) were natural gas liquids (see "Supplemental Information  
to Consolidated Financial Statements").                                         

Isramco's business strategy is to maximize the rate of return on investment of  
capital by controlling operating and capital costs, acquiring of strategic      
Oil&Gas properties and improving the existing Oil & Gas properties. Over the    
course of 2007, Isramco has expanded its activities in the United States through
the combination of strategic acquisitions and continued development of existing 
proved and unproved properties. An additional important goal for implementing   
the Isramco's business strategy is to maintain the lowest possible operating    
cost structure by among other things, serving as operator of a substantial      
portion of its oil and natural gas properties, among other things.              

On December 31, 2007 the Company sold to I.O.C Israel Oil Company, a related    
party, the majority of the Company's Israeli based activities and assets        
currently conducted and managed by the Company's Israel branch office, including
its share in Isramco Oil & Gas ,the general partner of Isramco Negev 2 LP       
("Negev"). The decision was made in light of the Company's expanding oil and gas
operations in the United States and management's decision that it is the        
Company's best interests to focus on the oil and gas operations in the United   
States and terminate activities in Israel which, prior to the sale transaction  
reported hereunder, comprised a relatively insignificant component of the       
Company's overall operations. See "Closure of the Israeli Branch office"        

EXPLORATION, DEVELOPMENT AND PRODUCTION                                         

UNITED STATES                                                                   

Isramco, through its wholly-owned subsidiaries, IEN, Jay Petroleum and Jay      
Management is involved in oil and gas exploration, developing, production and   
operation of wells in the United States. Isramco owns varying working interests 
in oil and gas wells in Louisiana, Texas, Oklahoma and Wyoming and, currently   
serves as operator of approximately 270 wells located in Texas and New Mexico.  
The following is a summary of significant developments during 2007 and certain  
2008 plans.                                                                     

During 2007, Jay Petroleum participated in the drilling and completion of two   
gas wells in Parker County, Texas and had a 15 percent working non-operated     
position in approximately 13,000 acres. The objective producing formation is the
Barnett Shale. All the wells are directionally drilled to maximize gas recovery.
The operator is XTO Energy, Inc. in Fort Worth, Texas. As of the date of the    
10-K the Company has participated in drilling of 21 wells in the Barnett, 11    
wells are producing, one well is shut in, 2 wells are on completion process and 
7 wells are waiting for pipeline connection. The pipeline connection was        
initiated in late December 2006 and will be completed during the year 2008.     

On October 19, 2006, Jay Petroleum and Delek Energy US Inc. ("Delek") each      
purchased a 50% working interest in 2,800 non producing Barnett Shale acreages  
in Wise County Texas from McCommons Oil Company. Jay Petroleum and Delek each   
paid $1.2 million for these rights. In addition, Jay Management LLC and Delek   
entered into a joint operating agreement as of October 19, 2006 for Jay         
Management to serve as operator of the acreages. A 3D seismic survey of the area
has been carried and one exploratory well are currently planned and expected to 
be drilled during the year 2008 and, based on the results thereof, additional   
drillings will be considered.                                                   

TRANSACTION WITH FIVE STATES. On February 16, 2007, Isramco and Five States     
Energy Company, L.L.C. ("Five States") entered into a certain Purchase and Sale 
Agreement (the "Purchase Agreement"), pursuant to which                         

1 

10-K
6th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 6th
Isramco agreed to purchase from Five States, through IEN, certain oil and gas   
properties (including 650 oil and gas wells) located in Texas and New Mexico).  

The closing of the transactions contemplated in the Purchase Agreement was      
completed on March 2, 2007 for an aggregate purchase price of $92 million       
(before adjustments). According to an engineering report prepared by an         
independent consulting company relating to the properties purchased under the   
Purchase Agreement, the estimated proved developed producing reserves are       
1,447,161 net barrels of oil, 20,078,174 net MCF's of natural gas and 1,305,705 
net barrels of natural gas liquids. Isramco funded $7.7 million of the Purchase 
Price from working capital and the balance from a combination of commercial bank
loans and loans from related parties. (See "Financing" below. Additionally,     
pursuant to an agreement between Sigma Energy Corporation ("Sigma"), an         
unrelated party that originated the transaction with Five States, Isramco and   
IEN, IEN paid to Sigma on March 2, 2007, the amount of $300,000 and after Payout
(as defined in the Agreement with Sigma), IEN undertook to assign to Sigma a    
direct ownership interests equal to 3.75% of the interests acquired by IEN under
the Purchase Agreement                                                          

TRANSACTION WITH GFB LLC AND TRANS REPUBLIC RESOURCES LTD. On February 15, 2008,
Jay Petroleum, entered into Purchase and Sale Agreements (the "Agreements") with
GFB Acquisition - I, L.P. ("GFB") and Trans Republic Resources, Ltd. ("Trans    
Republic," and, together with GFB, the "Sellers") pursuant to which Jay         
Petroleum agreed to purchase the Sellers' interests in certain oil and gas      
properties located in Texas, New Mexico and Oklahoma for an aggregate purchase  
price of approximately $102 million. The transaction includes mainly operated   
oil and gas properties in approximately 40 fields (approximately 490 Leases) in 
East Texas, Texas Gulf Coast, Permian, Anadarko and San Juan Basins. Significant
fields are the Alabama Ferry Field in East Texas, the Bagley Field in West Texas
and New Mexico, and the Esperson Dome Field on the Texas Gulf Coast. Net daily  
production from the properties is approximately 600 Barrels of oil and 3.6 MMCF.
Based on a third party Consulting firm that has performed a reserve report as of
January 1, 2008, total net proved reserves are approximately 3.26 million       
barrels of oil and 18 BCF of natural gas. Contemporaneously with the execution  
of the Agreements, the Company paid to GFB a deposit of approximately $10       
million (the "Deposit"). The final Purchase Price is subject to adjustment, as  
specified in the Purchase Agreement. The closing of the transaction was on March
27, 2008.                                                                       

For funding the Oil and Gas Properties acquired from GFB LLC and Trans Republic 
Resources Ltd. (see Note 19) the Company obtained, during 2008, loans in the    
total principle amount of $102.9 million from commercial bank ($54 million) and 
from related parties ($48.9 million).                                           

Contemporoneously with cosigning the agreement, the Company entered to swap     
agreements with the commercial bank to sell 605,016 barrels of crude oil during 
48 months commencing April 1, 2008 and 3,433,348 MMBTU of natural gas during 48 
months commencing April 1, 2008, which constitutes 74% out of the forecasted    
production for 2008-2011 and 18% out of the forecasted production for 2012.     

The following pro forma information assumes the acquisition of the GFB and Trans
Republic properties occurred as of January 1, 2007                              

--------------------------------------------------------------------------------
                                                            ISRAMCO INC COMBINED
December 31, 2007            ISRAMCO INC   GFB ACQUISITION        WITH GFB      
--------------------------------------------------------------------------------

RESERVES                                                                        
PROVED (MMCFE)                 50,353            37,694            88,047     
Oil (BBls)                  2,003,081         3,258,447         5,261,528     
Plant Product (BBls)        2,163,661                 -         2,163,661     
Gas (Mcf)                  25,352,566        18,143,838        43,496,404     

VOLUME                                                                          
Oil (BBls)                    96,793           220,487           317,280    
Plant Product (BBls)         100,534                 -           100,534    
Gas (Mcf)                  1,550,789         1,338,926         2,889,715    
TOTAL PRODUCTION (MMCFE )        2,735             2,662             5,397      
Daily production (MMfce/d)         7.5               7.3              14.8      

ISRAEL                                                                          

MED YAVNE LEASE. Based on the gas finds known as "Or 1" nd "Or South", a 30     
years lease, which covers 53 square kilometers (approximately 13,100 acres)     
offshore Israel, was granted to the Company in June 2000 (hereinafter: the "Med 
Yavne Lease"). The operator of the Med Yavne Lease is BG International Limited, 
a member of the British Gas Group ("BG").                                       

According to the operator's estimates, which are based on the results of the    
drillings in the Or 1, and a 3D                                                 

2 

10-K
7th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 7th
seismic survey performed in the area of the lease, the recoverable gas reserves 
of Or 1 reserve are estimated at 37 billion cubic feet. In November 2002 and in 
January 2007 and January 2008, Isramco received an opinion from a consulting    
firm in the United States that performed a techno-economic examination for the  
development of the Or 1 reserve. The opinion indicates that, under certain      
assumptions, development of the reserve by connection to a nearby platform (at a
distance of seven miles) and from there via an existing transportation pipeline 
to the coast, may be economically feasible. It is the intention of the partners 
in Med Yavne Lease to cooperate with independent third parties to jointly       
develop Or 1 reserve with their gas reserve.                                    

Isramco's participation interest of the Med Yavne Lease is 0.4585%.             

HOF LICENSES. On February 2008 the Petroleum Commissionaire has granted the     
company a license which covers 100,000 acres offshore Israel. According to the  
License terms the participants are required to drill one well in the license's  
area in a dates specified in the license. The Company has sold 40% working      
interests in the license in return to 10% carried working interests (up to      
investment of $4,000,000 in the license). Currently Isramco's participation     
interest of the Hof Licenses is 59% but it intends to sell additional 39%       
working interest in the same terms as mentioned above.                          

MED ASHDOD 2. On February 2008 the Petroleum Commissionaire granted the company 
a license that covers 100,000 acres offshore Israel. According to the License   
terms the participants are required to drill one well in the license's area in a
dates specified in the license.                                                 

The table below sets forth the Working Interests of Isramco and all related and 
unrelated participants in the lease and licenses in Israel, the total acreage   
and the expiration dates of each of the licenses and the lease as of December   
31, 2007.                                                                       

 TABLE OF WORKING INTEREST
(% INTEREST OF 100%)

NAME OF PARTICIPANT         MED YAVNE LEASE    MED ASHDOD 2 LICENSE       HOF   
License                                                                         

Isramco                        0.4584                  0.35             59.00(3)

Related parties                                                                 

Isramco Negev 2, Limited       32.411                 21.05             30.00   
Partnership                                                                     

I.O.C.                          7.800                 7.800              1.00   

I.N.O.C. Dead Sea                  --                  5.05              5.00   
Limited Partnership                                                             

Naphtha                        1.8033                  1.80                --   

Naphtha Explorations           2.2826                  1.85              5.00   
Limited Partnership                                                             

JOEL                           2.8807                    --                --   

Equital                        2.1639                    --                --   

Unrelated parties              54.215                  62.1                --   

Total                         100.000                100.00            100.00   

Area (acres)                   13,100               100,000           100,000   
Expiration Date (2)         6/10/2030             2/14/2011         2/14/2011   

(1) All of the oil and gas assets are subject to a 12.5% Overriding Royalty due 
to the Government of Israel under the Petroleum Law.                            

(2) The expiration dates are subject to the fulfillment of applicable provisions
of the Israel Petroleum Law and Regulations, and the conditions and work        
obligations of each of the above leases. the area.                              

3 

10-K
8th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 8th
(3) The Company intends to transfer 39% to third party.                         

OVERRIDING ROYALTIES. Isramco holds Overriding Royalties in certain oil and gas 
assets. Additionally, Isramco is entitled to receive from certain participant in
the Med Yavne lease overriding royalties equal to 2% of each such participant's 
rights to any oil/gas produced within those leases. The table below sets forth  
the Overriding Royalties held by Isramco:                                       

From the Limited Partnership, on the first 10% of the Limited Partnership's     
share of the following leases                                                   

                      Before Payout               After Payout

Med Yavne Lease (1)                 1%                         13%              

Michal & Matan Licenses                                                         
from Isramco Negev 2, Limited Partnership                       5%              

(1) A 30 year lease covering an area of approximately 13,100 acres (including   
the area of the gas discovery) was granted in June 2000.                        

FINANCING ACTIVITIES                                                            

TRANSACTION WITH FIVE STATES.                                                   

Isramco funded $7.7 million of the purchase price for the Five States           
transaction from working capital and the balance from a combination of          
commercial bank loans and loans from related parties. The loans are discussed   
below.                                                                          

Isramco obtained loans in the total principle amount of $42 million from Naphtha
Israel Petroleum Corp. Ltd., the parent company (including through its wholly   
owned subsidiary IOC-Israel Oil Company Ltd) ("Naphtha") with terms and         
conditions as below:                                                            

Pursuant to a Loan Agreement dated as of February 27, 2007 (the "Loan           
Agreement"), Isramco obtained $18.5 million. The outstanding principal amount of
the loan accrues interest at per annum rate equal to the London Inter-bank      
Offered Rate (LIBOR) plus 5.5%, not to exceed 11% per annum. Interest is payable
at the end of each loan year. Principal plus any accrued and unpaid interest are
due and payable on February 26, 2014. Interest after the maturity date accrues  
at the per annum rate of LIBOR plus 12% until paid in full. At any time, Isramco
is entitled to prepay the outstanding amount of the loan without penalty or     
prepayment. To secure its obligations that may be incurred under the Loan       
Agreement, Isramco agreed to grant to Naphtha a security interest in certain    
specified properties held by Jay Petroleum, its wholly owned subsidiary. Naphtha
can accelerate the loan and exercise its rights under the collateral upon the   
occurrence any one or more of the following events of default: (i) Isramco's    
failure to secure the indebtedness as provided for in the agreement, pay any    
amount that may become due in connection with the loan within five (5) days of  
the due date (whether by extension, renewal, acceleration, maturity or          
otherwise) or fail to make any payment due under any hedge agreement entered    
into in connection with the transaction, (ii) Isramco's material breach of any  
of the representations or warranties made in the loan agreement or security     
instruments or any writing furnished pursuant thereto, (iii) Isramco's failure  
to observe any undertaking contained in transaction documents if such failure   
continues for 30 calendar days after notice, (iv) Isramco's insolvency or       
liquidation or a bankruptcy event or(v) Isramco's criminal indictment or        
conviction under any law pursuant to which such indictment or conviction can    
lead to a forfeiture by Isramco of any of the properties securing the loan. Mr. 
Jackob Maimon, Isramco's president and director is a director of Naphtha and Mr.
Haim Tsuff, Isramco's Chief Executive Officer and Chairman is a controlling     
shareholder of Naphtha. The proceeds of $13.6 million from the selling of the   
branch's assets were used to repay part of loan (see "closure of the branch").  

Pursuant to a Loan Agreement dated as of February 27, 2007 (the "Second Loan    
Agreement") Isramco obtained a loan from Naphtha, in the principal amount of    
$11.5 million, repayable at the end of seven years. Interest accrues at a per   
annum rate of LIBOR plus 6%. At any time Isramco can make prepayments without   
premium or penalty .The Second Loan is not secured. The other terms of the      
Second Loan Agreement are identical to the terms of the Loan Agreement. Pursuant
to a Loan Agreement dated as of February 27, 2007 (the "Third Loan Agreement ") 
Isramco obtained a loan from Naphtha, in the principal amount of $12            

4 

10-K
9th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 9th
million, repayable at the end of five years. Interest accrues at a per annum    
rate of LIBOR plus 6%. At any time Isramco can make prepayments without premium 
or penalty. The Third Loan is not secured. The other terms of the Third Loan    
Agreement are identical to the terms of the Loan Agreement.                     

Pursuant to a Loan Agreement dated as of February 26, 2007 Isramco obtained a   
loan from J.O.E.L Jerusalem Oil Exploration Ltd, a related party ("JOEL"), in   
the principal amount of $7 million, repayable at the end of 3 months (that was  
extended until July 11, 2007). Interest accrues at a per annum rate of 5.36%. On
July 2007 the Company and J.OEL reached an agreement to revise the period of the
Loan to seven years and the interest rate to LIBOR plus 6%. Mr. Jackob Maimon,  
Isramco's president and director is a director of JOEL and Mr. Haim Tsuff,      
Isramco's Chief Executive Officer and Chairman is a controlling shareholder of  
JOEL.                                                                           

Pursuant to a Credit Agreement, dated as of March 2, 2007 (the "Credit          
Agreement") between Isramco Energy and Wells Fargo Bank NA, as administrative   
agent, Isramco Energy obtained a $35.3 million credit line from Wells Fargo.    
Amounts outstanding under the credit line are payable by March 1, 2011. Interest
on amounts outstanding accrue at a per annum rate equal to LIBOR plus 2%. An    
Event of Default under the Credit Agreement shall be deemed to have occurred in 
the event of any one or more of the following: (a) Isramco Energy shall default 
in the payment or prepayment when due of any principal of or interest on any    
loan, or any reimbursement obligation for a disbursement made under any letter  
of credit, or any fees or other amount payable by it under the Credit Agreement 
or any of the documents entered into in connection therewith (the "Credit       
Agreement Documents"); (b) Isramco Energy or any of its subsidiaries shall      
default in the payment when due of any principal of or interest on any of its   
other debt, or any event specified in any note, agreement, indenture or other   
document evidencing or relating to any such debt shall occur if the effect of   
such event is to cause, or (with the giving of any notice or the lapse of time  
or both) to permit the holder or holders of such debt (or a trustee or agent on 
behalf of such holder or holders) to cause, such debt to become due prior to its
stated maturity; (c) Any representation, warranty or certification made or      
deemed made pursuant to the Credit Agreement or any other Credit Agreement      
Document, or any certificate furnished pursuant to the provisions thereof, shall
prove to be have been false or misleading as of the time made or furnished in   
any material respect; (d) Isramco Energy shall (i) default in the performance of
any of its obligations under the Credit Agreement (including the obligation to  
provide audited financial statements on an annual basis and the obligation to   
report any default, but excluding other affirmative covenants) or (ii) default  
in the performance of any of the affirmative covenants under the Credit         
Agreement (excluding the obligation to provide audited financial statements on  
an annual basis and the obligation to report any default) or in the performance 
of its obligations under any other Credit Agreement Document (other than payment
obligations, which are governed by clause (a) above) and such default shall     
continue unremedied for a period of thirty (30) days after the earlier to occur 
of (A) Isramco Energy receiving notice thereof or (B) Isramco Energy otherwise  
becoming aware of such default; (e) Isramco or any of Isramco Energy's          
subsidiaries shall default in the performance of any of their respective        
obligations under the guaranty agreements entered into pursuant to the Credit   
Agreement (other than the payment of amounts due, which shall have no grace     
period) and such default shall continue unremedied for a period of thirty (30)  
days after the earlier to occur of (i) Isramco receiving notice thereof or (ii) 
Isramco, Isramco Energy or any of its subsidiaries otherwise becoming aware of  
such default; (f) Isramco Energy shall admit in writing its inability to, or    
begenerally unable to, pay its debts as such debts become due; (g) Isramco      
Energy shall (i) apply for or consent to the appointment of, or the taking of   
possession by, a receiver, custodian, trustee or liquidator of itself or all or 
a substantial part of its property, (ii) make a general assignment for the      
benefit of creditors, (iii) commence a voluntary case under the Federal         
Bankruptcy Code (as now or hereafter in effect), (iv) file a petition seeking to
take advantage of any other law relating to bankruptcy, insolvency,             
reorganization, winding-up, liquidation or composition or readjustment of debts,
(v) fail to controvert in a timely and appropriate manner, or acquiesce in      
writing to, any petition filed against it in an involuntary case under the      
Federal Bankruptcy Code or (vi) take any corporate action for the purpose of    
effecting any of the foregoing; (h) A proceeding or case shall be commenced,    
without the application or consent of Isramco Energy, in any court of competent 
jurisdiction, seeking (i) its liquidation, reorganization, dissolution or       
winding-up, or the composition or readjustment of its debts, (ii) the           
appointment of a trustee, receiver, custodian, liquidator or the like of Isramco
Energy or all or any substantial part of its assets, (iii) similar relief in    
respect of Isramco Energy under any law relating to bankruptcy, insolvency,     
reorganization, winding-up, or composition or adjustment of debts, and such     
proceeding or case shall continue undismissed, or an order, judgment or decree  
approving or ordering any of the foregoing shall be entered and continue        
unstated and in effect, for a period of 60 days, or (iv) an order for relief    
against Isramco Energy shall be entered in an involuntary case under the federal
bankruptcy code; (i) A judgment or judgments for the payment of money in excess 
of $100,000 in the aggregate shall be rendered by a court against Isramco Energy
or any subsidiary and the same shall not be discharged (or provision shall not  
be made for such discharge), or a stay of execution thereof shall not be        
procured by posting of a bond or otherwise, within thirty (30) days from the    
date of entry thereof and Isramco Energy or such subsidiary shall not, within   
said period of 30 days, or such longer period during which execution of the same
shall have been stayed, appeal therefrom and cause the execution thereof to be  
stayed during such appeal; (j) The Credit Agreement Documents after delivery    
thereof shall for any reason, except to the extent permitted by the terms       
thereof, cease to be in full force and effect and valid, binding and enforceable
in accordance with their terms, or cease to create a valid and perfected lien of
the priority                                                                    

5 

10-K
10th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 10th
required thereby on any of the collateral purported to be covered thereby,      
except to the extent permitted by the terms of the Credit Agreement, or Isramco,
Isramco Energy or any of its subsidiaries shall so state in writing; (k) An     
event having a material adverse effect on Isramco Energy shall occur; (l)       
Isramco Energy discontinues its usual business or a change of control occurs;   
(m) Isramco or any of Isramco Energy's subsidiaries takes, suffers or permits to
exist any of the events or conditions referred to in paragraphs (f), (g), (h) or
(i) or if any provision of any guaranty agreement related thereto shall for any 
reason cease to be valid and binding on such guarantor or if such guarantor     
shall so state in writing; (n) Isramco Energy defaults under certain management,
operating and consulting agreements entered into with respect to properties for 
which the lender has a security interest.                                       

In addition to including customary affirmative and negative covenants, the      
Credit Agreement requires Isramco Energy to: (a) maintain a ratio of            
consolidated current assets (as defined in the Credit Agreement) to consolidated
current liabilities (as defined in the Credit Agreement) of no less than 1.0 to 
1.0 at all times; (b) ensure that its leverage ratio is no more than 3.50 to 1.0
as of the end of each fiscal quarter; (c) ensure that its interest coverage     
ratio is no more than 2.50 to 1.0 as of the end of each fiscal quarter; (d)     
ensure that its capital expenditures in any fiscal year do not exceed           
$2.500,000.; ensure that COPAS charges do not exceed $250 per well per month.   
Amounts outstanding under the Credit Agreement are secured by a guarantee from  
Isramco and a pledge by Isramco of the shares of Isramco Energy. During 2007 the
Company repaid $8.3 million.                                                    

TRANSACTION WITH GFB LLC AND TRANS REPUBLIC RESOURCES LTD.                      

For funding the Oil and Gas Properties acquired from GFB LLC and Trans Republic 
Resources Ltd. (see Note 19) the Company obtained, during 2008, loans in the    
total principle amount of $102.9 million as described below:                    

On March 27, 2008 Isramco obtained a loan from JOEL, a related party, in the    
principal amount of $48.9 million, repayable at the end of 7 years. Interest    
accrues at a per annum rate of LIBOR plus 6%. Mr. Jackob Maimon, Isramco's      
president and director is a director of JOEL and Mr. Haim Tsuff, Isramco's Chief
Executive Officer and Chairman is a controlling shareholder of JOEL.            

Pursuant to a Credit Agreement, dated as of March 27, 2008 (the "Credit         
Agreement") between Isramco and the Bank of Nova Scotia ("Scotia"), as          
administrative agent, Isramco obtained a $54 million credit line from Scotia.   
Amounts outstanding under the credit line are payable by March 27, 2012.        
Interest on amounts outstanding accrue at a per annum rate equal to LIBOR plus  
2%. The credit agreement contains covenant that the company needs to comply     
with.                                                                           

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES                                   

Isramco engages in price risk management activities from time to time. These    
activities are intended to manage Isramco's exposure to fluctuations in         
commodity prices for natural gas and crude oil. Isramco utilizes financial      
commodity derivative instruments, primarily price swap contracts, as the means  
to manage this price risk. Isramco accounts for financial commodity derivative  
contracts using the mark-to-market accounting method.                           

As of balance sheet date Isramco held swap contracts for aggregrate volume of   
389,508 barrels of crude oil during 46 months commencing January 2008, and swap 
contracts for volume of 3,014,556 MMBTU of natural gas during 35 months         
commencing January 2008.                                                        

On February 20, 2008 the Company signed additional swap contract with commercial
bank for aggregrate volume of 25,000 barrels of crude oil during 10 months      
commencing January 2011.                                                        

Following the cosigning of the Agreements with GFB and Trans Republic., Isramco 
signed additional swap contracts with Scotia Bank to secure its future oil and  
gas prices as follows:                                                          

Swap contracts for aggregrate volume of 605,016 barrels of crude oil during 48  
months commencing April 2008. Swap contracts for volume of 3,433,348 MMBTU of   
natural gas during 48 months commencing April 2008.                             

Hereunder are the open swap contracts positions as of March 26, 2008:           

6 

10-K
11th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 11th
Swap Contracts
------------------------------------------------------------------------------- 
           Natural Gas                       Crude Oil
           --------------------------------- -------------------------------
                        Weighted                        Weighted
                        Average                          Average
     Volume            Price          Volume           Price
     (MMBTU)          ($/MMBTU)        (BBL)           ($/BBL)
     ---------         --------        -------         ---------
2008         1,782,118         $   8.49        255,000         $   79.12        

2009         1,941,096             8.17        276,648             79.60        

2010         1,785,648             7.88        245,616             78.75        

2011           764,820             8.22        210,307             87.53        

2012           174,222             8.65         31,953             88.20        

CLOSURE OF THE ISRAELI BRANCH OFFICE                                            

On December 31, 2007, Isramco and I.O.C- Israel Oil Company Ltd, an Israeli     
company and related party ("IOC"), entered into an agreement pursuant to which  
the Company sold and transferred to IOC its Israeli based activities and assets 
currently conducted and managed by the Company's Israel branch office (the      
"Branch Office") and its own shares in Isramco Oil&Gas (the general partner of  
Negev 2 LP), for aggregate consideration of approximately $13.6 million.        
Following the sale of these assets, the Company no longer conducts operations in
Israel though it will continue to hold working interests in certain oil and gas 
assets offshore Israel. The decision was made in light of the Company's         
expanding oil and gas operations in the United States of America and            
management's decision that it is the Company's best interests to focus on the   
oil and gas operations in the United States of America and terminate activities 
in Israel which, prior to the sale transaction reported hereunder, comprised a  
relatively insignificant component of the Company's overall operations.         

The principal assets transferred to IOC include participation units in the      
Israeli oil and gas limited partnerships Isramco Negev 2 ("Negev") and INOC Dead
Sea ("Dead Sea"), both of which were held by the Branch Office. The             
participation units of each of Negev and Dead Sea trade on the Tel Aviv Stock   
Exchange. The sale of the units was completed through a private non-market      
transaction with IOC where the sale price of the Negev and Dead Sea units was   
established at, respectively, a 7% and 10% discount to the closing sale price of
these units on the Tel Aviv Stock Exchange on December 30, 2007. The discounts  
were established by an independent appraiser. The Branch Office also transferred
to IOC all operating activities at the Branch Office, including, employees,     
fixed assets, marketable securities and certain rights and liabilities, as well 
as the Company's holdings of Isramco Oil and Gas Ltd. and title to undeveloped  
real estate located in Israel.                                                  

IOC is a wholly-owned subsidiary of Naphtha Israel Petroleum Corp, Ltd.         
("Naphtha"). Naphtha holds 100% of Naphtha Holdings Ltd. , which holds          
approximately 48% of the Company's issued and outstanding stock.                

Since this is a transaction between entities under common control, the Company  
recorded the loss of approximately $3,046 million from the transaction, as a    
reduction of shareholders' equity (additional paid in capital).                 

The proceeds of the sale were used by the Company to pay down part of certain   
loan that Naphtha advanced to the Company in March 2007 for purposes of enabling
the Company to complete the acquisition from Five States of certain oil and gas 
properties in the United States.                                                

EMPLOYEES                                                                       

As of March 28, 2008, Isramco had 7 employees at its office in Houston, Texas.  

ITEM 1A. RISK FACTORS                                                           

In addition to the other information contained in this Annual Report on Form    
10-K, investors should consider carefully the following risks factors which may 
not be the only risks we face, as our business and operations may also be       
subject to risks that we do not yet know of, or that we currently believe are   
immaterial. If any of the events or circumstances described below actually      
occurs, our business, financial condition or results of operations could be     
materially and adversely affected and the trading price of our common stock     
could decline.                                                                  

OIL AND GAS DRILLING IS A SPECULATIVE ACTIVITY AND RISKY.                       

Isramco is engaged in the business of oil and natural gas exploration and the   
resulting development of productive oil and gas wells. Isramco's growth will be 
materially dependent upon the success of its future drilling program. Drilling  
for oil and gas involves numerous risks, including the risk that no commercially
productive oil or natural gas reservoirs will be encountered. The cost of       
drilling, completing and operating wells is substantial and uncertain, and      
drilling operations may be curtailed, delayed or cancelled as a result of a     
variety of factors beyond Isramco's control, including unexpected drilling      
conditions, pressure or irregularities in formations, equipment failures or     
accidents, adverse weather conditions, compliance with governmental requirements
and shortages or delays in the availability of drilling rigs or crews and the   
delivery of equipment. Although Isramco believes that its use of 3-D seismic    
data and other advanced                                                         

7 

10-K
12th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 12th
technology should increase the probability of success of its wells and should   
reduce average finding costs through elimination of prospects that might        
otherwise be drilled solely on the basis of 2-D seismic data and other          
traditional methods, drilling remains an inexact and speculative activity. In   
addition, the use of 3-D seismic data and such technologies requires greater    
pre-drilling expenditures than traditional drilling strategies and Isramco could
incur losses as a result of such expenditures. Isramco's future drilling        
activities may not be successful and, if unsuccessful, such failure could have  
an adverse effect on Isramco's future results of operations and financial       
condition. Although Isramco may discuss drilling prospects that have been       
identified or budgeted for, Isramco may ultimately not lease or drill these     
prospects within the expected time frame, or at all. Isramco may identify       
prospects through a number of methods, some of which do not include             
interpretation of 3-D or other seismic data. The drilling and results for these 
prospects may be particularly uncertain. The final determination with respect to
the drilling of any scheduled or budgeted wells will be dependent on a number of
factors, including (i) the results of exploration efforts and the acquisition,  
review and analysis of the seismic data, (ii) the availability of sufficient    
capital resources to Isramco and the other participants for the drilling of the 
prospects, (iii) the approval of the prospects by other participants after      
additional data has been compiled, (iv) economic and industry conditions at the 
time of drilling, including prevailing and anticipated prices for oil and       
natural gas and the availability of drilling rigs and crews, (v) Isramco's      
financial resources and results (vi) the availability of leases and permits on  
reasonable terms for the prospects and (vii) the payment of royalties to        
lessors. There can be no assurance that these projects can be successfully      
developed or that the wells discussed will, if drilled, encounter reservoirs of 
commercially productive oil or natural gas. There are numerous uncertainties in 
estimating quantities of proved reserves, including many factors beyond         
Isramco's control.                                                              

THE OIL AND NATURAL GAS RESERVE DATA INCLUDED IN THIS REPORT ARE ONLY ESTIMATES 
AND THAT MAY TURN OUT TO BE INACCURATE.                                         

There are numerous uncertainties inherent in estimating oil and natural gas     
reserves and their estimated values. The reserve data in this report represent  
only estimates that may prove to be inaccurate because of these uncertainties.  
Estimates of economically recoverable oil and natural gas reserves depend upon a
number of variable factors, such as historical production from the area compared
with production from other producing areas and assumptions concerning effects of
regulations by governmental agencies, future oil and natural gas prices, future 
operating costs, severance and excise taxes, development costs and workover and 
remedial costs, some or all of these assumptions may in fact vary considerably  
from actual results. For these reasons, estimates of the economically           
recoverable quantities of oil and natural gas attributable to any particular    
group of properties, classifications of such reserves based on risk of recovery,
and estimates of the future net cash flows expected therefrom prepared by       
different engineers or by the same engineers but at different times may vary    
substantially. Accordingly, reserve estimates may be subject to downward or     
upward adjustment. Actual production, revenue and expenditures with respect to  
Isramco's reserves will likely vary from estimates, and such variances may be   
material.                                                                       

THERE IS A POSSIBILITY THAT ISRAMCO WILL LOSE THE LEASES TO ITS OIL AND GAS     
PROPERTIES.                                                                     

Isramco's oil and gas revenues are generated through leases to the oil and gas  
properties or, in the case of Israeli based properties, licenses that, subject  
to certain conditions, may result in leases being granted. The leases are       
subject to certain obligations and are renewable at the discretion of various   
governmental authorities, as such, Isramco may not be able to fulfill its       
obligations under the leases which may result in the modification or            
cancellation of such leases, or such leases may not be renewed or may be renewed
on terms different from the current leases. The modification or cancellation of 
Isramco's leases may have a material impact on Isramco's revenues.              

COMPETITION IN THE INDUSTRY MAY IMPAIR ISRAMCO'S ABILITY TO EXPLORE, DEVELOP AND
COMMERCIALIZE ITS OIL AND GAS PROPERTIES.                                       

The oil and natural gas industry is very competitive. Competition is            
particularly intense in the acquisition of prospective oil and natural gas      
properties and oil and gas reserves. Isramco competes with a substantial number 
of other companies having larger technical staffs and greater financial and     
operational resources. Many such companies not only engage in the acquisition,  
exploration, development and production of oil and natural gas reserves, but    
also carry on refining operations, electricity generation and the marketing of  
refined products. Isramco also competes with major and independent oil and gas  
companies in the marketing and sale of oil and natural gas, and the oil and     
natural gas industry in general competes with other industries supplying energy 
and fuel to industrial, commercial and individual consumers. Isramco competes   
with other oil and natural gas companies in attempting to secure drilling rigs  
and other equipment necessary for drilling and completion of wells. Such        
equipment may be in short supply from time to time.                             

ISRAMCO'S BUSINESS MAY BE AFFECTED BY OIL AND GAS PRICE VOLATILITY.             

Historically, natural gas and oil prices have been volatile. These prices rise  
and fall based on changes in                                                    

8 

10-K
13th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 13th
market demand and changes in the political, regulatory and economic climate and 
other factors that affect commodities markets that are generally outside of     
Isramco's control. Some of Isramco's projections and estimates are based on     
assumptions as to the future prices of natural gas and crude oil. These price   
assumptions are used for planning purposes. Isramco expects that its assumptions
will change over time and that actual prices in the future may differ from its  
estimates. Any substantial or extended decline in the actual prices of natural  
gas and/or crude oil may have a material adverse effect on Isramco's financial  
position and results of operations (including reduced cash flow and borrowing   
capacity), the quantities of natural gas and crude oil reserves that it can     
economically produce and the quantity of estimated proved reserves that may be  
attributed to its properties                                                    

OUR HEDGING ACTIVITIES MAY PREVENT US FROM BENEFITING FROM PRICE INCREASES AND  
MAY EXPOSE US TO OTHER RISKS.                                                   

From time to time, we use derivative instruments (primarily price swaps) to     
hedge the impact of market fluctuations of natural gas and crude oil prices on  
our net income and cash flow. To the extent that we engage in hedging           
activities, we may be prevented from realizing the benefits of price increases  
above the levels of the hedges.                                                 

ISRAMCO HAS NO MEANS TO MARKET ITS OIL AND GAS PRODUCTION WITHOUT THE ASSISTANCE
OF THIRD PARTIES.                                                               

The marketability of Isramco's production depends upon the proximity of its     
reserves to, and the capacity of, facilities and third party services, including
oil and natural gas gathering systems, pipelines, trucking or terminal          
facilities, and processing facilities. The unavailability or lack of capacity of
such services and facilities could impair or delay the production of new wells  
or the delay or discontinuance of development plans for properties. A shut-in or
delay or discontinuance could adversely affect Isramco's financial condition. In
addition, regulation of oil and natural gas production transportation in the    
United States or in other countries may affect its ability to produce and market
its oil and natural gas on a profitable basis.                                  

THE UNAVAILABILITY OR INCREASED COST OF DRILLING RIGS, EQUIPMENT, SUPPLIES,     
PERSONNEL AND OILFIELD SERVICES COULD ADVERSELY AFFECT ISRAMCO'S ABILITY TO     
EXECUTE ON A TIMELY BASIS ON ITS DEVELOPMENT PLANS WITHIN ITS BUDGET.           

Shortages or an increase in cost of drilling rigs, equipment, supplies or       
personnel could delay or adversely affect Isramco's operations, which could have
a material adverse effect on its business, financial condition and results of   
operations. In periods of increased drilling activity, Isramco may experience   
increases in associated costs, including those related to drilling rigs,        
equipment, supplies and personnel and the services and products of other vendors
to the industry. Increased drilling activity in the Texas area also decreases   
the availability of rigs and associated equipment. These costs may increase     
further and necessary equipment and services may not be available to us at      
economical prices.                                                              

ISRAMCO'S OPERATIONS MAY BE IMPACTED BY CERTAIN RISKS COMMON IN THE INDUSTRY.   

Isramco's exploration and drilling operations are subject to various risks      
common in the industry, including catering, explosions, fires and uncontrollable
flows of oil, gas or well fluids. The drilling operations are also subject to   
the risk that no commercially productive natural gas or oil reserves will be    
encountered. The cost of drilling, completing and operating wells is often      
uncertain, and drilling operations may be curtailed, delayed or canceled as a   
result of a variety of factors, including drilling conditions, pressure or      
irregularities in formations, equipment failures or accidents and adverse       
weather conditions.                                                             

In accordance with industry practice, Isramco maintains insurance against some, 
but not all, of the risks described above. Isramco cannot provide assurance that
its insurance will be adequate to cover losses or liabilities. Also, it cannot  
predict the continued availability of insurance at premium levels that justify  
its purchase.                                                                   

GOVERNMENT REGULATION AND ABILITY FOR ENVIRONMENTAL MATTERS MAY ADVERSELY AFFECT
ISRAMCO'S BUSINESS AND RESULTS OF OPERATIONS.                                   

Oil and natural gas operations are subject to various federal, state and local  
government regulations, which may be changed from time to time. Matters subject 
to regulation include discharge permits for drilling operations, drilling bonds,
reports concerning operations, the spacing of wells, unitization and pooling of 
properties and taxation. From time to time, regulatory agencies have imposed    
price controls and limitations on production by restricting the rate of flow of 
oil and natural gas wells below actual production capacity in order to conserve 
supplies of oil and natural gas. There are federal, state and local laws and    
regulations primarily relating to protection of human health and the environment
applicable to the development, production, handling, storage, transportation and
disposal of oil and natural gas, by-products thereof and other substances and   
materials produced or used in connection with oil and natural gas operations. In
addition, Isramco may be liable for environmental damages caused by previous    
owners of property it purchases or leases. As a result, Isramco may incur       
substantial liabilities to third parties or governmental entities. Isramco      

9 

10-K
14th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 14th
is also subject to changing and extensive tax laws, the effects of which cannot 
be predicted. The implementation of new, or the modification of existing, laws  
or regulations could have a material adverse effect on Isramco's business.      

ISRAMCO MAY BE UNABLE TO IDENTIFY LIABILITIES ASSOCIATED WITH THE PROPERTIES    
THAT IT ACQUIRES OR OBTAIN PROTECTION FROM SELLER AGAINST THEM.                 

The acquisition of properties requires Isramco to assess a number of factors,   
including recoverable reserves, development and operating costs and potential   
environmental and other liabilities. Such assessments are inexact and inherently
uncertain. In connection with the assessments, Isramco performs a review of the 
subject properties, but such a review will not reveal all existing or potential 
problems. In the course of our due diligence, we may not inspect every well,    
platform or pipeline. Isramco cannot necessarily observe structural and         
environmental problems, such as pipeline corrosion, when an inspection is made. 
Isramco may not be able to obtain contractual indemnities from the seller for   
liabilities that it created. Isramco may be required to assume the risk of the  
physical condition of the properties in addition to the risk that the properties
may not perform in accordance with its expectations.                            

MEMBERS OF ISRAMCO'S MANAGEMENT TEAM OWE A SIGNIFICANT AMOUNT OF COMMON STOCK,  
GIVING THEM INFLUENCE OR CONTROL IN CORPORATE TRANSACTIONS AND OTHER MATTERS,   
AND THE INTERESTS OF THESE INDIVIDUALS COULD DIFFER FROM THOSE OTHER            
SHAREHOLDERS.                                                                   

Members of Isramco's management team beneficially own approximately 51.3% of    
Isramco's outstanding shares of common stock as of March 28, 2008. As a result, 
these shareholders are in a position to significantly influence or control the  
outcome of matters requiring a shareholder vote, including the election of      
directors, the adoption of an amendment to our articles of incorporation or     
bylaws and the approval of mergers and other significant corporate transactions.

RAPID GROWTH MAY PLACE SIGNIFICANT DEMANDS AND RESOURCES.                       

Isramco experienced rapid growth in operations occasioned by the purchase of    
approximately 650 producing oil and gas wells from Five States, approximately   
590 producing oil and gas wells from GFB and Trans Republic and expects that    
significant expansion of its operations will continue. The rapid growth has     
placed, and the anticipated future growth will continue to place, a significant 
demand on Isramco's managerial, operational and financial resources due to:     

        o       the need to manage relationships with various strategic partners
and other third parties;                        
        o       difficulties in hiring and retaining skilled personnel necessary
to support our business;                        
 o       the need to train and manage a growing employee base; and
    o       pressures for the continued development of our financial and
information management systems.                 

If Isramco has not made adequate allowances for the costs and risks associated  
with this expansion or if its systems, procedures or controls are not adequate  
to support its operations, its business could be adversely impacted.            

ISRAMCO'S STOCK PRICE IS VOLATILE AND COULD CONTINUE TO BE VOLATILE.            

Investor interest in Isramco's common stock may not lead to the development of  
an active or liquid trading market. The market price of Isramco's common stock  
has fluctuated in the past and is likely to continue to be volatile and subject 
to wide fluctuations. In addition, the stock market has experienced extreme     
price and volume fluctuations. The stock prices and trading volumes for         
Isramco's stock has fluctuated widely and may continue to so for reasons that   
may be unrelated to business or results of operations. General economic, market 
and political conditions could also materially and adversely affect the market  
price of Isramco's common stock and investors may be unable to resell their     
shares of common stock at or above their purchase price.                        

ITEM 1B. UNRESOLVED STAFF COMMENTS                                              

None                                                                            

ITEM 2. PROPERTIES                                                              

OIL AND GAS EXPLORATION AND PRODUCTION - PROPERTIES AND RESERVES                

10

10-K
15th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 15th
RESERVE INFORMATION. For estimates of Isramco's net proved reserves of natural  
gas, crude oil and natural gas liquids, see Supplemental Information to         
Consolidated Financial Statements.                                              

There are numerous uncertainties inherent in estimating quantities of proved    
reserves and in projecting future rates of production and timing of development 
expenditures, including many factors beyond the control of the producer. The    
reserve data set forth in Supplemental Information to Consolidated Financial    
Statements represent only estimates.                                            

Reserve engineering is a subjective process of estimating underground           
accumulations of natural gas, crude oil and natural gas liquids that cannot be  
measured in an exact manner. The accuracy of any reserve estimate is a function 
of the amount and quality of available data and of engineering and geological   
interpretation and judgment. As a result, estimates of different engineers      
normally vary. In addition, results of drilling, testing and production         
subsequent to the date of an estimate may justify revision of such estimate     
(upward or downward). Accordingly, reserve estimates are often different from   
the quantities ultimately recovered. The meaningfulness of such estimates is    
highly dependent upon the accuracy of the assumptions upon which they were      
based. For related discussion, see ITEM 1A. Risk factors.                       

ITEM 3. LEGAL PROCEEDING                                                        

From time to time, Isramco is involved in disputes and other legal actions      
arising in the ordinary course of business. In management's opinion, none of    
these other disputes and legal actions is expected to have a material impact on 
Isramco's consolidated financial position or results of operations.             

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                     

During the fourth quarter of the fiscal year covered by this report, no matter  
was submitted to a vote of security holders of Isramco.                         

 PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS   

The number of record holders of Isramco's Common Stock on March 31, 2008 was    
approximately 396, not including an undetermined number of persons who hold     
their stock in street name.                                                     

Our common stock is listed on the Nasdaq Capital Market under the symbol "ISRL".
The following table sets forth for the periods indicated, the reported high and 
low closing prices for our common stock.                                        

11

10-K
16th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 16th
                    COMMON STOCK
2006                                 HIGH                  LOW                  
March 31                          $     15.33           $     12.22             
June 30                           $     17.98           $     16.06             
September 30                      $     18.55           $     16.40             
December 31                       $     31.66           $     21.25             

2007                                                                            
March 31                          $     33.16           $     32.66             
June 30                           $     42.91           $     42.73             
September 30                      $     45.89           $     37.27             
December 31                       $     47.47           $     47.37             

Isramco has not declared or paid any cash dividends on its Common Stock. Isramco
does not anticipate paying any cash dividends on its Common Stock in the        
foreseeable future. Isramco intends to retain all earnings for use in its       
business operations and in expansion.                                           

ITEM 6. SELECTED FINANCIAL DATA (CONSOLIDATED)                                  

The data presented below with respect to Isramco should be read in conjunction  
with the Consolidated Financial Statements and related Notes thereto of Isramco 
included elsewhere in this Report and Item 7-- "Management's Discussion and     
Analysis of Financial Condition and Results of Operations." (in Thousands)      

                                                        [Enlarge/Download Table]


---------------------------------------------------------------------------------------------------------------------- 
YEAR ENDED DECEMBER 31                                      2007             2006             2005             2004    
---------------------------------------------------------------------------------------------------------------------- 
                                                                                                                       
Statement of Income Data:                                                                                              
Total Revenues                                          $    22,756      $     5,562      $     5,895      $     5,448 
Oil and Gas Sales                                            20,827            2,167            3,319            3,174 
Total Operating Expenses                                     21,183            4,777            6,428            4,816 
Lease Operating Expenses, Transportation and Taxes            7,500            1,119            1,458            1,149 
Impairment of Oil&Gas properties                              3,203              668              759              268 
Interest Expenses (Income), net                               6,344             (154)            (293)             636 
Loss (gain) from Swap Transactions                            8,638           (2,604)             641             --   
Income (Loss) from Continuing Operations                     (6,411)           6,569             (253)           1,424 
(Loss) from Discontinuing Operations                           --             (2,727)            (879)            (431)
                                                        -------------------------------------------------------------- 
Net Income (Loss)                                       $    (6,411)     $     3,842      $    (1,132)     $       993 
                                                        ============================================================== 

Basic and Diluted Earnings (Loss) Per Common Share-                                                                    
    Basic and Diluted:                                                                                                 
         Continuing Operations                          $     (2.36)     $      2.42      $     (0.09)     $      0.54 
         Discontinuing Operations                              --              (1.01)           (0.33)           (0.16)
                                                        -------------------------------------------------------------- 
         Total                                          $     (2.36)     $      1.41      $     (0.42)     $      0.38 
                                                        ============================================================== 

Weighted Average Number of                                                                                             
Common Shares Outstanding - Basic and Diluted             2,717,691        2,717,691        2,709,355        2,639,853 
                                                        ============================================================== 

---------------------------------------------------------------------------------------------------------------------- 
AS OF DECEMBER 31                                           2007             2006             2005                     
---------------------------------------------------------------------------------------------------------------------- 
Balance Sheet Data:                                                                                                    

Total assets                                            $   110,708      $    62,073      $    38,615                  
Total liabilities                                            85,237           27,329           10,122                  
Long-term obligations                                        73,964            4,768            3,242                  
Shareholders' equity                                         25,471           34,744           28,493                  
                                                        -------------------------------------------------------------- 

12

10-K
17th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 17th
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS                                                                      

THE FOLLOWING COMMENTARY SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED    
FINANCIAL STATEMENTS AND RELATED NOTES CONTAINED ELSEWHERE IN THIS FORM 10-K.   
THE DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND       
UNCERTAINTIES. THESE STATEMENTS RELATE TO FUTURE EVENTS OR OUR FUTURE FINANCIAL 
PERFORMANCE. IN SOME CASES, YOU CAN IDENTIFY THESE FORWARD-LOOKING STATEMENTS BY
TERMINOLOGY SUCH AS "MAY," "WILL," "SHOULD," "EXPECT," "PLAN," "ANTICIPATE,"    
"BELIEVE," "ESTIMATE," "PREDICT," "POTENTIAL," "INTEND," OR "CONTINUE," AND     
SIMILAR EXPRESSIONS. THESE STATEMENTS ARE ONLY PREDICTIONS. OUR ACTUAL RESULTS  
MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS
AS A RESULT OF A VARIETY OF FACTORS, INCLUDING, BUT NOT LIMITED TO, THOSE SET   
FORTH UNDER "RISK FACTORS" AND ELSEWHERE IN THIS FORM 10-K.                     

OVERVIEW                                                                        

Isramco, Inc., a Delaware corporation, is active in the exploration of oil and  
gas in the United States. Isramco acts as an operator of certain leases and     
licenses and also holds participation interests in certain other interests.     

CRITICAL ACCOUNTING POLICIES                                                    

Estimation of oil and gas reserves is important to the effective management of  
Isramco. They are integral to making investment decisions about oil and gas     
properties such as whether development should proceed or enhanced recovery      
methods should be undertaken. Oil and gas reserve quantities are also used as   
the basis of calculating the unit-of-production rates for depreciation and      
evaluating for impairment. Oil and gas reserves are divided between proved and  
unproved reserves. Proved reserves are the estimated quantities of crude oil,   
natural gas and natural gas liquids that geological and engineering data        
demonstrate with reasonable certainty to be recoverable in future years from    
known reservoirs under existing economic and operating conditions; i.e., prices 
and costs as of the date the estimate is made. Unproved reserves are those with 
less than reasonable certainty of recoverability and are classified as either   
probable or possible.                                                           

The estimation of proved reserves is an ongoing process based on rigorous       
technical evaluations and extrapolations of well information such as flow rates 
and reservoir pressure declines. Although Isramco is reasonably certain that    
proved reserves will be produced, the timing and amount recovered can be        
affected by a number of factors including completion of development projects,   
reservoir performance, regulatory approvals and significant changes in long-term
oil and gas price levels.                                                       

The calculation of unit-of-production depreciation is a critical accounting     
estimate that measures the depreciation of upstream assets. It is the ratio of  
(1) actual volumes produced to (2) total proved developed reserves (those proved
reserves recoverable through existing wells with existing equipment and         
operating methods) applied to the (3) asset cost. The volumes produced and asset
costs are known and, while proved developed reserves have a high probability of 
recoverability, they are based on estimates that are subject to some            
variability.                                                                    

Isramco accounts for impairments under the provisions of SFAS No. 144,          
"Accounting for the Impairment or Disposal of Long-Lived Assets." When          
circumstances indicate that an asset may be impaired, Isramco compares expected 
undiscounted future cash flows at a producing field level to the unamortized    
capitalized cost of the asset. If the future undiscounted cash flows, based on  
Isramco and third party's estimate of future crude oil and natural gas prices,  
operating costs, anticipated production from proved reserves and other relevant 
data, are lower than the unamortized capitalized cost, the capitalized cost is  
reduced to fair value. Fair value is calculated by discounting the future cash  
flows at an appropriate risk-adjusted discount rate.                            

Isramco records a valuation allowance to reduce its deferred tax assets to the  
amount that is more likely than not to be realized. While Isramco has considered
future taxable income and ongoing prudent and feasible tax planning strategies  
in assessing the need for the valuation allowance, in the event that Isramco    
were to determine that it would be able to realize its deferred tax assets in   
the future in excess of its net recorded amount, an adjustment to the deferred  
tax asset would increase net income in the period such determination was made.  

Isramco does not participate in, nor has it created, any off-balance sheet      
special purpose entities or other off-balance sheet financing.                  

13

10-K
18th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 18th
Isramco records a liability for asset retirement obligation at fair value in the
period in which it is incurred and a corresponding increase in the carrying     
amount of the related long live assets. At least annually, the Company          
reassesses the obligation to determine whether a change in the estimated        
obligation is necessary. The Company evaluates whether there are indicators that
suggest the estimated cash flows underlying the obligation have materially      
changed. Should those indicators suggest the estimated obligation may have      
materially changed the Company will accordingly update its assessment.          

LIQUIDITY AND CAPITAL RESOURCES                                                 

Isramco finances its operations primarily from cash generated by operations.    
Isramco's operating activities provided (used) net cash of $(662,000) and       
$7,233,000 for the years ended December 31, 2007 and 2006, respectively. The    
availability of cash generated by operations could be affected by other business
risks discussed in the "Risk Factors" section of this annual report.            

Working capital (current assets minus current liabilities) was $(170,000) and   
$5,752,000 at December 31, 2007 and 2006, respectively. The decrease in working 
capital is primarily attributable to the current maturities of long-term debt   
and derivative liability.                                                       

Net cash used in investing activities in fiscal 2007 was $(63,656,000) compared 
to $(24,041,000) in fiscal 2006. The increase in net cash used in investing     
activities in 2007 is primarily attributable to the purchase of oil and gas     
wells through the acquisition of Five States assets.                            

Capital expenditures for property and equipment were $86,123,000 in fiscal 2007 
and $9,737,000 in fiscal 2006, respectively. Capital expenditures in 2007 and   
2006 were primarily attributable to the drilling of oil and gas wells in the    
United States.                                                                  

RESULTS OF OPERATION                                                            

YEAR ENDED DECEMBER 31, 2007 COMPARED TO YEAR ENDED DECEMBER 31, 2006           

Isramco reported net loss from continuing operations of $6,411,000 in 2007 (loss
of $2.36 per share) compared to net income from continuing operations of        
$6,569,000 (gain of $2.42 per share) in 2006. The decrease in the net income in 
2007 compared to 2006 is primarily attributable to: (i) an increase in net loss 
on derivative contracts of $8,638,000 compare to a net gain of $2,604,000 in    
2006 (ii) an impairment of $928,000 as results of the sale of the land in Israel
(iii) increase of $2,535,000 of impairment of oil and gas assets due to low     
production of gas wells drilled to the Barnett Shale (iv) an increase in        
interest expenses of $6,344,000 compare to interest income of $154,000 in 2006  
(v) compensation for legal settlement of $2,536,000 that recorded in 2006 , all 
of which partially offset by increasing of oil and gas operating income,        
realized gain on sale of investment in high -tech company ($1,700,000) and      
income tax benefit ($5,192,000).                                                

Set forth below is a break-down of revenues results.                            

                           UNITED STATES

                           OIL AND GAS VOLUME AND REVENUES

---------------------------------------------------------------------------     
YEAR ENDED DECEMBER 31                 2007                   2006              
---------------------------------------------------------------------------     

VOLUME                                                                          
Oil Sold (MBbl)                        96.7                      13             

Plant Product(MBbl)                   100.5                       -             

14

10-K
19th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 19th
Gas Sold (MMCF)                     1,550.8                     213             

VALUE                                                                           

Oil Sales (M$)                        6,874                     796             

Plant Product(M$)                     3,923                       -             

Gas Sales (M$)                       10,030                   1,371             

AVERAGE UNIT PRICE                                                              

Oil ($/Bbl) (*)                        71.1                   59.14             

Gas ($/MCF) (**)                       6.46                    6.42             

(*) Bbl - Barrel Equivalent to 42 U.S. Gallons                                  
(**) MCF - 1,000 Cubic Feet                                                     

OIL AND GAS EXPLORATION COSTS                                                   

In 2007, Isramco incurred $292,000 in exploration costs mainly incurred for 3D  
seismic survey covered Jay's acres in Wise County, compared to $125,000 in 2006,
mainly incurred for geological and geophysical consulting relating to the       
operation in United States.                                                     

OPERATOR'S FEES                                                                 

In 2007 Isramco earned $ $18,000 in operator fees compared to $69,000 in 2006.  

OIL AND GAS REVENUES                                                            

In 2007 and 2006 Isramco had oil and gas revenues of $20,827,000 and $2,167,000 
respectively. The increase is primarily attributable to the purchase of oil and 
gas wells through the acquisition of Five States assets, partially offset by a  
decline in production from the Company's older wells and shutdown of certain    
production in one of the fields due to unanticipated pipeline maintenance.      

LEASE OPERATING EXPENSES AND SEVERANCE TAXES                                    

Lease operating expenses and severance taxes were incurred primarily in         
connection with oil and gas fields in the United States. Oil and gas lease      
operating expenses and severance taxes were $7,500,000 and $1,119,000,000 for   
2007 and 2006, respectively. The increase is primarily attributable to the      
purchase of oil and gas wells through the acquisition of Five States assets.    

INTEREST EXPENSES                                                               

During 2007, total debt increased $50,209,000 to $67,720,000. The increase is   
primarily attributable to loans that were taken to finance the Five States      
acquisition (see Note 8 to Consolidated Financial Statements).                  

Interest expenses during the year ended December 31, 2007 were $6,344,000       
compared to interest income of $154,000 for the year ended December 31, 2006.   
The increase in interest expenses in 2007 is primarily attributable to interest 
on loans that were taken to finance the Five States acquisition while the income
in 2006 is primarily attributable to earned on interest bearing on marketable   
securities held by the Company.                                                 

GAIN ON MARKETABLE SECURITIES                                                   

In 2007, Isramco recognized net realized and unrealized gain on marketable      
securities of $52,000 compared to net realized and unrealized gain on marketable
securities of $1,177,000 in 2006.                                               

Increases or decreases in the gains and losses from marketable securities are   
dependent on the market prices in general and the composition of the portfolio  
of Isramco.                                                                     

GENERAL AND ADMINISTRATIVE EXPENSES                                             

In 2007 Isramco incurred $2,902,000 in general and administrative expenses      
compared to $2,339,000 (including operator expenses) in 2006. The Increase is   
primarily due to the Five States acquisition which increased the volume of the  
activities and as a result the indirect expenses such as auditor's fee, wages,  
consultants and rent.                                                           

15

10-K
20th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 20th
EQUITY IN EARNING OF UNCONSOLIDATED AFFILIATES                                  

Isramco's equity in earnings of unconsolidated affiliates for 2007 was          
$1,201,000 compared to $2,570,000 for 2006. The decrease is primarily           
attributable to the decrease in the gain of marketable securities held by the   
Limited Partnerships Isramco Negev 2 and I.O.C Dead Sea LP, affiliates of       
Isramco.                                                                        

DEPRECIATION, DEPLETION AMORTIZATION (DD&A) AND IMPAIRMENT                      

Depreciation, Depletion &Amortization of the cost of proved oil and gas         
properties is calculated using the unit-of-production method. Isramco's DD&A    
rate and expense are the composite of numerous individual field calculations.   
There are several factors that can impact Isramco's composite DD&A rate and     
expense, such as field production profiles, drilling or acquisition of new      
wells, disposition of existing wells, reserve revisions (upward or downward)    
primarily related to well performance, and impairments. Changes to these factors
may cause Isramco's composite DD&A rate and expense to fluctuate from year to   
year.                                                                           

During 2007, Isramco recorded depreciation, depletion and amortization expenses 
of $6,139,000 compared to $455,000 in 2006. The main reason for the increase is 
the increase of the Company's oil and gas assets in United States due to the    
acquisition of Five States assets.                                              

Impairments include amortization of unproved leases, as well as impairments     
under SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived    
Assets," which requires an entity to compute impairments to the carrying value  
of long-lived assets based on estimate future cash flow. Impairments of         
$3,203,000 in 2007 were $2,535,000 higher than 2006. The increase in the        
impairment on 2007 is mainly due to the low volume of gas produced in the wells 
that the Company participated on the Barnett in Parker County.                  

REALIZED GAIN ON SALE OF INVESTMENT AND CAPITAL GAIN                            

In April 2007, IsramTecc ,a wholly owned subsidiary of the Company ,sold part of
its equity interests in High -Tech company ,for aggregate consideration of      
$1,700,000 (net of commission). As a result of the transaction, the Company     
recorded a one-time non-recurring net gain of $1,621,000.                       

NET LOSS ON DERIVATIVE CONTRACTS                                                

From time to time, Isramco enters into derivative commodity instruments to hedge
its exposure to price fluctuations on anticipated oil and natural gas           
production. Under price swaps, the Company is required to make payments to, or  
receive payments from, the counterparties based upon the differential between a 
specified fixed price and a price related to those quoted on the New York       
Mercantile Exchange for each respective period. The Company elected not to      
designate any positions as cash flow hedges for accounting purposes for the     
years ended December 31, 2007, 2006 and 2005. Accordingly, the Company records  
the net change in the mark-to-market valuation of these derivative contracts in 
the consolidated statement of operations as a component of other income and     
expenses on the consolidated statements of operations. See Note 7 to            
Consolidated Financial Statements.                                              

The Company recorded a net derivative loss of $8.6 million in 2007.             

YEAR ENDED DECEMBER 31, 2006 COMPARED TO YEAR ENDED DECEMBER 31, 2005           

Isramco reported income from continuing operations of $6,569,000 (gain of $2.42 
per share) in 2006 compared to income from continuing operation of $253,000     
(loss of $0.09 per share) in 2005. The increase in the net income in 2006       
compared to 2005 is primarily attributable to: (i) an increase in the gain of   
marketable securities, (ii) an increase in the net income of investees, (iii) an
increase in other income due to recording of non-recurring one time receipt of  
$2,565,000 for the settlement of certain lawsuit that were initiated by Isramco 
and income related to mark-to market of swap contracts on oil and gas prices.   

Set forth below is a break-down of these results.                               

 UNITED STATES

 OIL AND GAS VOLUME AND REVENUES

2006     2005         
Oil Volume Sold (MBbl)         13       16                                      

16

10-K
21st Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 21st
Gas Volume Sold (MMCF)        213      355                                      

Oil Sales (M$)                796      806                                      

Gas Sales (M$)              1,371    2,513                                      

Average Unit Price                                                              

Oil ($/Bbl) *               59.14    51.25                                      
Gas ($/MCF) **               6.42     7.11                                      

* Bbl - Barrel Equivalent to 42 U.S. Gallons                                    

** MCF - 1,000 CUBIC FEET                                                       

OIL AND GAS EXPLORATION COSTS                                                   

In 2006, Isramco incurred $125,000 in exploration costs mainly for geological   
and geophysical consulting relating to the operation in United States, compared 
to $110,000 in 2005, which was mainly related to well drilled in Israel which   
was plugged and abandoned.                                                      

OPERATOR'S FEES                                                                 

In 2006 Isramco earned $69,000 in operator fees compared to $977,000 in 2005.   
The decrease is mainly due to the drilling of the Gad 1 well, offshore Israel,  
in 2005.                                                                        

OIL AND GAS REVENUES                                                            

In 2006 and 2005 Isramco had oil and gas revenues of $2,167,000 and $3,319,000, 
respectively. The decrease is primarily attributable to the decline in oil and  
gas production and decrease in the gas price.                                   

LEASE OPERATING EXPENSES AND SEVERANCE TAXES                                    

Lease operating expenses and severance taxes were incurred primarily in         
connection with oil and gas fields in the United States. Oil and gas lease      
operating expenses and severance taxes were $1,119,000 and $1,458,000 for 2006  
and 2005, respectively. The decline is primarily due to the decline in oil and  
gas revenues caused by a decline in production.                                 

INTEREST INCOME                                                                 

Interest income during the year ended December 31, 2006 was $154,000 compared to
$293,000 for the year ended December 31, 2005. The decrease in interest income  
is primarily attributable to interest on loan $17,000,000 received from related 
party.                                                                          

GAIN ON MARKETABLE SECURITIES                                                   

In 2006, Isramco recognized net realized and unrealized gain on marketable      
securities of $1,177,000 compared to net realized and unrealized gain on        
marketable securities of $551,000 in 2005.                                      

Increases or decreases in the gains and losses from marketable securities are   
dependent on the market prices in general and the composition of the portfolio  
of Isramco.                                                                     

OPERATOR EXPENSES                                                               

In 2006 Isramco expended $ 330,000 for operator expenses compared to $767,000 in
2005.The decrease is primarily attributable to decrease in Isramco's exploration
activities.                                                                     

GENERAL AND ADMINISTRATIVE EXPENSES                                             

In 2006 Isramco incurred $2,009,000 in general and administrative expenses      
compared to $2,298,000 in 2005. The decrease in mainly due to a decrease in     
legal consultant expenses and due to the lower bonus payments to executives in  
2006                                                                            

EQUITY IN NET INCOME OF INVESTEE                                                

Isramco's equity in the net income of investees for 2006 was $2,570,000 compared
to its equity in net income                                                     

17

10-K
22nd Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 22nd
of investees of $661,000 for 2005. The increase is primarily attributable to the
increase in the gain of marketable securities held by the Limited Partnerships  
Isramco Negev 2 and I.O.C Dead Sea LP, affiliates of Isramco.                   

DEPRECIATION, DEPLETION AMORTIZATION AND IMPAIRMENT                             

Depreciation depletion and amortization expenses are connected to the producing 
wells in the United States.                                                     

During 2006 Isramco recorded depreciation depletion and amortization expenses   
$455,000 compared to $1,011,000 in 2005. The main reasons for the decrease are  
due to decrease in oil and gas production volumes in 2006 and impairment charges
recorded in 2005.                                                               

During 2006 and 2005, Isramco recorded impairment charges of 668,000 and        
$759,000, respectively relating to oil and gas assets in the United States.     

DISCONTINUED OPERATION                                                          

Isramco recorded in 2006 a loss of $2,727,000 on discontinued operation of the  
Magic 1 Cruise Line Corp. compared to a loss of $879,000 in 2005. The increase  
of net and operating loss of the vessel discontinued activity in 2006 compared  
to 2005 is attributable mainly to a one time impairment of cost of vessel in    
total of $ 2.2 million and increase of maintenance expenses, net of capital gain
from the sale of the activity of $0.4 million. As result of the sale of the     
vessel, the company recorded a one time capital gain of $ 384,000.              

OTHER INCOME                                                                    

Other Income in 2006 was $39,000 compared to $117,000 in 2005.                  

GAIN FROM SWAP TRANSATION                                                       

Isramco recorded in 2006 net gain of $2,604, 000 related to market to market of 
swap contracts on oil and gas prices, compared to net loss of $641,000 in 2005. 

COMPENSATION FOR LEGAL SETTLEMENT                                               

In January 2006, the Company entered into a settlement agreement and mutual     
release with the defendant parties named therein relating to the lawsuit        
initiated by the Company against the defendants in February 2004 in the Superior
Court of California, County of Los Angeles, alleging breach of contract and tort
claims in connection with an agreement between the Company and the defendants to
jointly purchase and develop certain parcels of real estate outside Los Angeles.
The agreement provides for the settlement of the action with no finding or      
admission of fault on the part of any party and, pursuant thereto, certain of   
the defendants paid to the Company $2,500,000 as reimbursement for costs and    
expenses incurred by the Company in connection with its pursuit of the real     
estate investment opportunity that was the subject of the action. Under the     
agreement, the Company and the defendants mutually released one another from any
claims or causes of actions arising out of or relating to the action, any claim 
that could have been asserted in the action, and any and all claims and/or      
allegations relating to the real estate (and the development thereof) that was  
the subject of the action.                                                      

(ii) In February 2006, the Company entered into a settlement agreement and      
mutual release with the defendant parties named therein relating to the lawsuit 
initiated by the Company against the defendants in 2004 in the District Court of
Harris County, Texas, alleging a tort claim in connection with an agreement     
between the Company and a third party pursuant to which the Company purchased   
all of the outstanding capital stock of a company that owns oil and gas assets  
in Illinois. Under the agreement the defendants paid the Company $550,000 and   
the Company filed a motion to dismiss its claims against the defendants with    
prejudice.                                                                      

As a result of the payment received under the settlements agreement, the Company
recorded a net gain of $2,536,000 (after payment of legal fees and other        
expenses) during 2006.                                                          

INCOME TAXES                                                                    

Isramco recorded income tax expense of $726,000 for the year ended December 31, 
2006 as compared to $40,000 for the year ended December 31, 2005. The primary   
difference from the statutory tax expense and the actual tax expense for 2006   
results from intangible drilling costs incurred during 2006 that are fully      
deductible for tax purposes and are depleted from book purposes. This is        
partially offset by the foreign income tax expense incurred for the foreign     
operations.                                                                     

18

10-K
23rd Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 23rd
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS                                       

We discuss recently adopted and issued accounting standards in Item 8.          
Consolidated Financial Statements and Supplementary Data-Note 1, "Summary of    
Significant Accounting Policies."                                               

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK             

Isramco is exposed to market risk, including adverse changes in commodity       
prices.                                                                         

Isramco produces and sells natural gas and crude oil. As a result, Isramco's    
financial results can be significantly affected if these commodity prices       
fluctuate widely in response to changing market forces.                         

Isramco uses swap contracts to manage the risk on commodity prices. Isramco's   
positions are monitored and managed on a daily basis to ensure compliance with  
Isramco's risk management policy. The swap contracts are entered into           
principally with a major financial institution. All derivatives are recorded at 
fair value on the consolidated balance sheet with resulting gains and losses    
reflected in income. Fair values are derived principally from market quotes and 
other independent third-party quotes. Changes in the price of natural gas or    
crude oil would change the liability of the derivatives contracts.              

As of December 31, 2007, Isramco had swap contracts for volume of 399,108       
barrels of crude oil during 46 months commencing January 2008 and swap contracts
for volume of 3,014,556 MMBTU of natural gas during 35 months commencing January
2008.                                                                           

On February 20, 2008 the Company signed additional swap contracts with          
commercial bank for volume of 25,000 barrels of crude oil during 10 months      
commencing January 2011.                                                        

Following the cosigning of the Agreements with GFB and Trans Republic., Isramco 
signed additional swap contracts with Scotia Bank to secure its future oil and  
gas prices as follows:                                                          

Swap contracts for volume of 605,016 barrels of crude oil during 48 months      
commencing April. Swap contracts for volume of l 3,433,348 MMBTU of natural gas 
during 48 months commencing April 2008.                                         

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                             

The information called for by this Item 8 is included following the "Index to   
Financial Statements" contained in this Annual Report on Form 10-K.             

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND         
FINANCIAL DISCLOSURE                                                            

None                                                                            

ITEM 9A (T). CONTROLS AND PROCEDURES                                            

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.                               

Disclosure controls and procedures are controls and other procedures of a       
registrant designed to ensure that information required to be disclosed by the  
registrant in the reports that it files or submits under the Exchange Act is    
properly recorded, processed, summarized, and reported, within the time periods 
specified in the Securities and Exchange Commission's ("SEC") rules and forms.  
Disclosure controls and procedures include processes to accumulate and evaluate 
relevant information and communicate such information to a registrant's         
management, including its Chief Executive Officer and Chief Financial Officer,  
as appropriate, to allow for timely decisions regarding required disclosures.   

We evaluated the effectiveness of the design and operation of our disclosure    
controls and procedures as of December 31, 2007, as required by Rule 13a-15 of  
the Exchange Act. As described below, under "Management's Report on Internal    
Control Over Financial Reporting," material weaknesses were identified in our   
internal control over financial reporting as of December 31, 2007, relating     
primarily to the shortage of support and resources in our accounting. Based on  
the evaluation described above, our Chief Executive Officer and Chief Financial 
Officer have concluded that, as of December 31, 2007, our disclosure controls   
and procedures were not effective to ensure (i) that information required to be 
disclosed by us in the reports we file or submit under the Exchange Act is      
recorded, processed, summarized, and reported, within the time periods specified
in the SEC's rules and forms, and (ii) information required to be disclosed by  
us in our reports that we file or submit under the Exchange Act is accumulated  
and communicated to our management,                                             

19

10-K
24th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 24th
including our Chief Executive Officer and Chief Financial Officer, as           
appropriate, to allow timely decisions regarding required disclosure.           

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING; CHANGES IN    
INTERNAL CONTROLS OVER FINANCIAL REPORTING.                                     

Management's Report on Internal Control Over Financial Reporting                

Our management is responsible for establishing and maintaining adequate internal
control over financial reporting. Our internal control over financial reporting 
is a process designed to provide reasonable assurance regarding the reliability 
of financial reporting and the preparation of our financial statements for      
external reporting purposes in accordance with generally accepted accounting    
principles.                                                                     

Internal control over financial reporting cannot provide absolute assurance of  
achieving financial reporting objectives because of its inherent limitations.   
Internal control over financial reporting is a process that involves human      
diligence and compliance and is subject to lapses in judgment and breakdowns    
resulting from human failures. Internal control over financial reporting also   
can be circumvented by collusion or improper management override. Because of    
such limitations, there is a risk that material misstatements may not be        
prevented or detected on a timely basis by internal control over financial      
reporting. However, these inherent limitations are known features of the        
financial reporting process. Therefore, it is possible to design into the       
process safeguards to reduce, though not eliminate, this risk.                  

A "material weakness" in internal control over financial reporting (as defined  
in Auditing Standard No. 2 of the Public Company Accounting Oversight Board) is 
a significant deficiency, or combination of significant deficiencies, that      
results in more than a remote likelihood that a material misstatement of the    
annual or interim financial statements will not be prevented or detected. A     
"significant deficiency" is a control deficiency, or combination of control     
deficiencies, that adversely affects a company's ability to initiate, authorize,
record, process, or report external financial data reliably in accordance with  
generally accepted accounting principles, such that there is more than a remote 
likelihood that a misstatement of the company's annual or interim financial     
statements that is more than inconsequential will not be prevented or detected. 

Management assessed the effectiveness of the Company's internal control over    
financial reporting as of December 31, 2007, the end of the fiscal period       
covered by this report, but management was unable complete its assessment before
March 28, 2007, the day on which this annual report on Form 10-KSB is being     
filed. Accordingly, management has identified its inability to conclude in a    
timely manner the necessary assessment and testing procedures as a material     
weakness. Management's assessment process did not conclude in sufficient time   
prior to the filing of this annual report on Form 10-KSB primarily due to due to
a number of factors, including: (i) our failure to prepare and plan for a timely
completion of management's assessment, including adding the resources necessary 
to do so; and (ii) our failure to ensure that our accounting department was     
adequately staffed and sufficiently trained to meet deadlines.                  

Management assessed the effectiveness of our internal control over financial    
reporting as of December 31, 2007, using the criteria set forth by the Committee
of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal     
Control--Integrated Framework. In assessing the effectiveness of our internal   
control over financial reporting, management identified the following additional
material weaknesses in internal control over financial reporting as of December 
31, 2007:                                                                       

      o       DEFICIENCIES IN THE COMPANY'S CONTROL ENVIRONMENT. Our control
           environment did not sufficiently promote effective internal
             control over financial reporting throughout the organization.
               Specifically, we had a shortage of support and resources in our
        accounting department, which resulted in inadequate: (i)
              documentation and communication of our accounting policies and
               procedures; and (ii) internal audit processes of our accounting
policies and procedures.                        

As a result of the material weaknesses described above, our management concluded
that we did not maintain effective internal control over financial reporting as 
of December 31, 2007, based on the criteria established by COSO.                

Management believes that our rapid growth since the acquisition of in March 2007
approximately 650 oil & gas wells also contributed to the environment in which  
the material weaknesses described above resulted. The March 2007 transaction,   
whereby our activities and revenues grew by a factor of almost 1,000%, required 
that we fundamentally re-organize the Company and its operations. In this       
connection, we sold our Israeli based businesses to concentrate exclusively on  
our oil and gas exploration activities in the United States, retained qualified 
personnel to oversee our expansion as well as other significant revisions. In   
February 2008, we also announced that we intend to purchase additional 590      
operating gas wells and the closing of the new acquisition was on March 27,     
2008. The efforts and resources that we invested in completing the above        

20

10-K
25th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 25th
described transaction and reorganizing our operations adversely affected the    
time and other resources that we were able in investing in our internal control 
compliance efforts. We retained Deloitte & Touche, a registered accounting firm,
to assist in our internal control compliance efforts, including establishing new
internal audit procedures appropriate for a rapidly growing business and        
selection of appropriate accounting controls software.                          

Remediation Initiatives                                                         

During 2008, we plan to implement a number of remediation measures to address   
the material weaknesses described above. The Company's remediation plans        
include:                                                                        

1.      We plan to hire additional personnel to assist us with  
       documenting and communicating our accounting policies and procedures to
  ensure the proper and consistent application of those policies and
     procedures throughout the Company. Recruitment for this positions has
     begun and we actually hired two accountants in the last months and we
       are planning to hire more accountants and other professional staff. The
       selection process is expected to be completed during the second quarter
of 2008.                                                        

2.      We plan to implement formal processes requiring periodic
     self-assessments, independent tests, and reporting of our personnel's
adherence to our accounting policies and procedures.            

  3.      We plan to (i) require additional training for our current
     accounting personnel; (ii) to hire additional accounting personnel to
enable the allocation of job functions among a larger group of  
     accounting staff;; and (iii) to consider restructuring our accounting
department, each to increase the likelihood that our accounting 
    personnel will have the resources, experience, skills, and knowledge
necessary to effectively perform the accounting system functions
assigned to them.                                               

        4.      We plan to absorb a new accounting system with automatic control
       checkpoints for day-to-day business processes. The selection process of
    the new accounting software is expected to be completed during April
     2008 and the absorption process is expected be finished by July 2008.

Management recognizes that many of these enhancements require continual         
monitoring and evaluation for effectiveness. The development of these actions is
an iterative process and will evolve as the Company continues to evaluate and   
improve our internal controls over financial reporting.                         

Management will review progress on these activities on a consistent and ongoing 
basis at the Chief Executive Officer and Chief Financial Officer level in       
conjunction with our Audit Committee. We also plan to take additional steps to  
elevate Company awareness about and communication of these important issues     
through formal channels such as Company meetings, departmental meetings, and    
training.                                                                       

Changes in Internal Controls Over Financial Reporting                           

Other than as described above, no material change in our internal control over  
financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange 
Act of 1934) occurred during the fourth quarter of fiscal 2007 that has         
materially affected, or is reasonably likely to materially affect, our internal 
control over financial reporting. Management and the Audit Committee of the     
Company's Board of Directors have begun to develop remedial measures to address 
the internal control deficiencies identified above. The Company will monitor the
effectiveness of planned actions and will make any other changes and take such  
other actions as management or the Audit Committee determines to be appropriate.

PART III

The information called for by items 10, 11, 12 13 and 14 will be contained in   
the Company's definitive proxy statement which the Company intends to file      
within 120 days after the end of the Company's fiscal year ended December 31,   
2007 and such information is incorporated herein by reference.                  

GLOSSARY                                                                        

"Grant Agreement" shall mean the agreement between the Company and the          
Government of Israel pursuant to which the Government of Israel has provided    
assistance to the Company in connection with its investment in the Negev 2      
Venture by providing a grant of 44.34(cent) for each U.S. dollar ($1.00)        
invested and expended by the Company in oil and gas activities in Israel within 
the framework of the Negev 2 Venture. The Government financing provided for     
under the Grant is repayable only from funds emanating from commercial          
production in any payout area and then, only to the extent of 30% of the        
recipient's share of the net revenue from said payout area, as and when         
received. The Grant Agreement entitles the Government of                        

21

10-K
26th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 26th
Israel, to receive a 12.5% royalty on oil sales, as well as an overriding       
royalty of 6.5% of the Company's share in the petroleum produced and saved after
payout. If there is no                                                          

commercial discovery of oil, the Company will not be required to repay the grant
monies. A grant agreement was also entered into between the Government of Israel
and HEI, Donesco, L.P.S. and Mazal Oil.                                         

"Joint Operating Agreement" shall mean the Joint Operating Agreement of the     
Negev 2 Venture which was signed as of the 30th day of June, 1988, between the  
participants in the Negev 2 Venture, as amended or as shall be amended from time
to time.                                                                        

"Joint Venture Agreement" shall mean the Joint Venture Agreement of the Negev 2 
Venture which was signed as of the 30th of June, 1988 between the participants  
in the Negev 2 Venture, as amended from time to time.                           

"Limited Partnership" shall mean Isramco-Negev 2 Limited Partnership, a Limited 
Partnership founded pursuant to a Limited Partnership Agreement made on the 2nd 
and 3rd days of March, 1989 (as amended on September 7, 1989, July 28, 1991,    
March 5, 1992 and June 11, 1992) between the Trustee on part as Limited Partner 
and Isramco Oil and Gas Ltd., as General Partner on the other part.             

"Limited Partnership Agreement" shall mean the Limited Partnership Agreement    
made the 2nd and 3rd days of March, 1989 (as amended September 7, 1989, July 28,
1991, March 5, 1992 and June 11, 1992), between Isramco Oil and Gas Ltd., as    
General Partner, and Isramco Management (1988) Ltd. as the Limited Partner.     

"Negev 2 Venture Agreements" shall mean the Joint Venture Agreement, the Joint  
Operating Agreement, the Voting Agreement and every agreement into which the    
parties to said agreements have entered, in connection with the Negev 2 Venture.

"Overriding Royalty" shall mean a percentage interest over and above the base   
royalty and is free of all costs of exploration and production, which costs are 
borne by the Grantor of the Overriding Royalty Interest and which is related to 
a particular Petroleum License.                                                 

"Payout" shall mean the defined point at which one party has recovered its prior
costs.                                                                          

"Petroleum" shall mean any petroleum fluid, whether liquid or gaseous, and      
includes oil, natural gas, natural gasoline, condensates and related fluid      
hydrocarbons, and also asphalt and other solid petroleum hydrocarbons when      
dissolved in and producible with fluid petroleum.                               

"Petroleum Exploration" shall mean test drilling; any other operation or search 
for petroleum, including geological, geophysical, geochemical and similar       
investigations and tests; and, drilling solely for obtaining geological         
information.                                                                    

"Petroleum Production" shall mean the production of petroleum from a petroleum  
field and all operations incidental thereto, including handling and treatment   
thereof and conveyance thereof to tankers, a pipe line or a refinery in or in   
the vicinity of the field.                                                      

"Preliminary Permit", "Preferential Right to Obtain a License", "License" shall 
have the meaning(s) set forth in the Petroleum Law of Israel.                   

"Trust Agreement" shall mean the Trust Agreement made on the 3rd day of March,  
1989 (as amended September 7, 1989, July 28, 1991, March 5, 1992 and June 11,   
1992) for the Trust Company of Kesselman and Kesselman.                         

"Working Interest" shall mean an interest in a Petroleum Asset granting the     
holder thereof the right to participate pro rata in exploiting the Petroleum    
Asset for petroleum exploration, development and petroleum production, subject  
to its pro rata participation in the expenses involved therein after acquiring  
the Working Interest.                                                           

"Israel Petroleum Law"                                                          

The Company's business in Israel is subject to regulation by the State of Israel
pursuant to the Petroleum Law, 1952. The administration and implementation of   
the Petroleum Law is vested in the Minister of National Infrastructure (the     
"Minister") and an Advisory Council.                                            

The following includes brief statements of certain provisions of the Petroleum  
Law in effect at the date of this Prospectus. Reference is made to the copy of  
the Petroleum Law filed as an exhibit to the Registration Statement referred to 
under "Additional Information" and the description which follows is qualified in

22

10-K
27th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 27th
its entirety by such reference.                                                 

The holder of a preliminary permit is entitled to carry out petroleum           
exploration, but not test drilling or petroleum production, within the permit   
areas. The Commissioner determines the term of a preliminary permit and it may  
not exceed eighteen (18) months. The Minister may grant the holder a priority   
right to receive licenses in the permit areas, and for the duration of such     
priority right no other party will be granted a license or lease in such areas. 

Drilling for petroleum is permitted pursuant to a license issued by the         
Commissioner. The term of a license is for three (3) years, subject to extension
under certain circumstances for an additional period up to four (4) years. A    
license holder is required to commence test drilling within two (2) years from  
the grant of a license (or earlier if required by the terms of the license) and 
not to interrupt operations between test drillings for more than four (4)       
months. If any well drilled by the Company is determined to be a commercial     
discovery prior to expiration of the license, the Company will be entitled to   
receive a Petroleum Lease granting it the exclusive right to explore for and    
produce petroleum in the lease area. The term of a lease is for thirty (30)     
years, subject to renewal for an additional term of twenty (20) years.          

The Company, as a lessee, will be required to pay the State of Israel the       
royalty prescribed by the Petroleum Law which is presently, and at all times    
since 1952 has been, 12.5% of the petroleum produced from the leased area and   
saved, excluding the quantity of petroleum used in operating the leased area.   

The Minister may require a lessee to supply at the market price such quantity of
petroleum as, in the Minister's opinion, is required for domestic consumption,  
subject to certain limitations.                                                 

As a lessee, the Company will also be required to commence drilling of a        
development well within six (6) months from the date on which the lease is      
granted and, thereafter, with due diligence to define the petroleum field,      
develop the leased area, produce petroleum therefore and seek markets for and   
market such petroleum.                                                          

23

10-K
28th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 28th
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K        
(a) Exhibits                                                                    

3.1     Articles of Incorporation of Registrant with all amendments filed as an 
Exhibit to the S-l Registration Statement, File No. 2-83574.    
3.2     Amendment to Certificate of Incorporation filed March 17, 1993, filed as
  an Exhibit with the S-l Registration Statement, File No. 33-57482.
3.3     By-laws of Registrant with all amendments, filed as an Exhibit to the   
S-l Registration Statement, File No. 2-83570.                   
4.1     Promissory Note dated as of February 27, 2007, issued to NAPHTHA ISRAEL 
       PETROLEUM CORP., LTD. in the principal amount of $18,500,000., filed as
an Exhibit to the 10-Q for the quarter ended March 31, 2007 and 
incorporated herein by reference.                               
4.2     Promissory Note dated as of February 27, 2007, issued to NAPHTHA ISRAEL 
       PETROLEUM CORP., LTD. in the principal amount of $11,500,000., filed as
an Exhibit to the 10-Q for the quarter ended March 31, 2007 and 
incorporated herein by reference.                               
4.3     Promissory Note dated as of February 27, 2007, issued to and I.O.C.     
       ISRAEL OIL COMPANY, LTD. in the principal amount of $12,000,000., filed
  as an Exhibit to the 10-Q for the quarter ended March 31, 2007 and
incorporated herein by reference.                               
4.4     Promissory Note dated as of February 27, 2007, issued to and J.O.E.L    
       JERUSALEM OIL EXPLORATION, LTD. in the principal amount of $7,000,000.,
        filed as an Exhibit to the 10-Q for the quarter ended March 31, 2007 and
incorporated herein by reference.                               
10.1    Oil Marketing Agreement, filed as Exhibit with the S-l Registration     
Statement, File No. 2-83574.                                    
10.2    Joint Venture Agreement and Joint Operating Agreement dated June 30,    
       1988 by and among HEI Oil and Gas Limited Partnership, JOEL - Jerusalem
        Oil Exploration Ltd., Delek Oil Exploration Ltd., Delek, The Israel Fuel
   Corporation Ltd., the Company, Southern Shipping and Energy (U.K.),
        Naphtha, Israel Petroleum Company Ltd., Oil Exploration of Pat Ltd., LPS
    Israel Oil Inc., Donesco Venture Fund One, a Limited Partnership and
        Mazaloil Inc. filed as an Exhibit to Form 8-K for the month of September
1988.                                                           
10.3    Grant Agreement with the Government of Israel, undated, between the     
      Company and the Government of Israel on behalf of the State of Israel,
      filed as an Exhibit to Form 10-Q for the Company for the period ending
September 30, 1988 and incorporated herein by reference.        
10.4    Translated from Hebrew, Indemnity Agreement between the Company and     
       Isramco Management (1988) Ltd. dated March _, 1989, filed as an Exhibit
  to Form 8-K for the month of March 1989 and incorporated herein by
reference.                                                      
10.5    Amendment Agreement to Grant Agreement between the Company and the      
Government of Israel, filed as an Exhibit to this Post-effective
      Amendment No. 8 to Form S-l Registration Statement. File No. 2- 83574.
10.6    Translated from Hebrew, Limited Partnership Agreement between Isramco   
        Oil and Gas Ltd. and Isramco Management (1988) Ltd. dated March 2, 1989,
filed as an Exhibit to Form 8-K for the month of March 1989 and 
incorporated herein by reference.                               
10.7    Translated from Hebrew, Trust Agreement between Isramco Management      
        (1988) Ltd. and Kesselman and Kesselman dated March 3, 1989, filed as an
       Exhibit to Form 8-K for the month of March 1989 and incorporated herein
by reference.                                                   
10.8    Translated from Hebrew, Indemnity Agreement between the Company and     
       Isramco Management (1988) Ltd. dated March _, 1989, filed as an Exhibit
  to Form 8-K for the month of March 1989 and incorporated herein by
reference.                                                      
10.9    Equalization of Rights Agreement between Isramco-Negev 2 Limited        
      Partnership and Delek Oil Exploration Ltd. and Delek - The Israel Fuel
 Corporation Ltd, filed as an Exhibit to Form 8-K for the month of
January 1993 dated January 21, 1993 and incorporated herein by  
reference.                                                      
10.10   Option Agreement between Isramco Resources Inc. and Delek Oil           
      Exploration Ltd. and Delek - The Israel Fuel Corporation Ltd. filed as
      an Exhibit to Form 8-K for the month of January 1993 dated January 21,

24

10-K
29th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 29th
1993 and incorporated herein by reference.                      
10.11   Agreement by and among Naphtha Congo Ltd., Equital Ltd. and the Company 
      dated September 4, 1997, filed as an Exhibit to Form 8-K for the month
of September, 1997 and incorporated herein by reference.        
10.12   Amendment to Consulting Agreement between Goodrich Global L.T.D. B.V.I. 
       and the Company dated December _, 1997, filed as an Exhibit to Form 8-K
     for the month of December, 1997 and incorporated herein by reference.
10.13   Consulting Agreement between Romulas Investment Ltd. and the Company    
      dated August _, 1997, filed as an Exhibit to Form 8-K for the month of
 September, 1997 and incorporated herein by reference, assigned by
        Romulas Investment Ltd. on December 31, 1997 to Remarkable Holdings Ltd.
10.14   Inventory Services Management Agreement dated December 1997 between the 
Company and Equital Ltd. filed herewith as Exhibit 10.70.       
10.15   Consulting Agreement dated as of November 1, 1999 between the Company   
and Worldtech, Inc.                                             
10.16   Agreement dated June 12, 2002 between the Company and Mati Properties   
        and Construction Ltd. and Boaz Avrahami, filed as an Exhibit to the Form
10-Q for the quarter ended June 30, 2002.                       

10.17   Share Purchase and Sale Agreement dated as of December 31, 2006 between 
     Isramco Inc. and Chesny Estates Ltd., filed as an Exhibit to the Form
      10-K for the year ended December 31, 2007., filed as an Exhibit to the
    10-Q for the quarter ended March 31, 2007 and incorporated herein by
reference.                                                      

10.18   Addendum Agreement dated as of February 12, 2007 between Isramco Inc.   
      and Chesny Estates., filed as an Exhibit to the Form 10-K for the year
 ended December 31, 2007., filed as an Exhibit to the 10-Q for the
  quarter ended March 31, 2007 and incorporated herein by reference.

10.19   Purchase and Sale Agreement, dated as of February 16, 2007, among Five  
       States Energy Company, L.L.C. and each of the other parties listed as a
      party "Seller" on the signature pages thereof and ISRAMCO, Inc., filed
  as an Exhibit to the 10-Q for the quarter ended March 31, 2007 and
      incorporated herein by reference., filed as an Exhibit to the 10-Q for
      the quarter ended March 31, 2007 and incorporated herein by reference.

10.20   LOAN AGREEMENT, dated as of February 27, 2007, between ISRAMCO, INC.,   
    and NAPHTHA ISRAEL PETROLEUM CORP., LTD., filed as an Exhibit to the
    10-Q for the quarter ended March 31, 2007 and incorporated herein by
       reference., filed as an Exhibit to the 10-Q for the quarter ended March
31, 2007 and incorporated herein by reference.                  

10.21   LOAN AGREEMENT, dated as of February 27, 2007, between ISRAMCO, INC.,   
    and NAPHTHA ISRAEL PETROLEUM CORP., LTD., filed as an Exhibit to the
    10-Q for the quarter ended March 31, 2007 and incorporated herein by
reference.                                                      
10.22   LOAN AGREEMENT, dated as of February 27, 2007, Between ISRAMCO, INC.,   
        and I.O.C. ISRAEL OIL COMPANY, LTD., filed as an Exhibit to the 10-Q for
      the quarter ended March 31, 2007 and incorporated herein by reference.
10.23   LOAN AGREEMENT, dated as of February 26, 2007, between ISRAMCO, INC.,   
       and J.O.E.L JERUSALEM OIL EXPLORATION, LTD., filed as an Exhibit to the
    10-Q for the quarter ended March 31, 2007 and incorporated herein by
reference.                                                      
10.24   CREDIT AGREEMENT dated as of March 2, 2007 among ISRAMCO ENERGY,        
        L.L.C.,; each of the lenders that is a signatory hereto or which becomes
   a signatory hereto; and WELLS FARGO BANK, N. A., a national banking
       association, as agent for the Lenders., filed as an Exhibit to the 10-Q
for the quarter ended March 31, 2007 and incorporated herein by 
reference.                                                      
10.25   GUARANTY AGREEMENT, dated as of March 2, 2007 by ISRAMCO, Inc. in favor 
       of Wells Fargo Bank, N.A., as administrative agent (the "ADMINISTRATIVE
AGENT") for the lenders that are or become parties to the Credit

25

10-K
30th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 30th
        Agreement referred to in Item 10.6., filed as an Exhibit to the 10-Q for
      the quarter ended March 31, 2007 and incorporated herein by reference.
10.26   PLEDGE AGREEMENT, dated as of March 2, 2007 by Isramco, Inc. in favor of
  Wells Fargo Bank, N.A., as administrative agent for itself and the
 lenders (the "LENDERS") which are parties to the Credit Agreement
   referred to in Item Note 4, filed as an Exhibit to the 10-Q for the
  quarter ended March 31, 2007 and incorporated herein by reference.
10.27   Employment Agreement dated as of September 1, 2007 between Isramco Inc. 
      and Edy Francis, filed as an Exhibit to the 10-Q for the quarter ended
September 30, 2007 and incorporated herein by reference         
14.1    Code of Ethics, filed as an Exhibit to Form 10-K for the year ended     
December 31, 2003.                                              
31      Certification of Chief Executive and Principal Financial Officer        
pursuant to Section 302 of Sarbanes-Oxley Act *                 
32      Certification of Chief Executive and Principal Financial Officer        
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley act of 2002. *                            
99.1    Financial Statements of Isramco Negev 2 Limited Partnership as of       
December 31, 2006 *                                             

26

10-K
31st Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 31st
SIGNATURES

        In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by  
the undersigned, thereunto duly authorized.                                     

/S/ HAIM TSUFF              
HAIM TSUFF,                 
CHAIRMAN OF THE BOARD,      
CHIEF EXECUTIVE OFFICER     
 (PRINCIPAL EXECUTIVE OFFICER)

DATE: MARCH 31, 2008                                                            

/S/ EDY FRANCIS           
EDY FRANCIS,              
CHIEF FINANCIAL OFFICER   
       (AND PRINCIPAL FINANCIAL OFFICER)

DATE: MARCH 31, 2008                                                            

In accordance with the Securities Exchange Act of 1934, the registrant has duly 
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the capacities and on the dates indicated.                       

SIGNATURE                    TITLE                   DATE                       

/S/ JACKOB MAIMON       PRESIDENT, DIRECTOR     MARCH 31, 2008                  
--------------------                                                            
JACKOB MAIMON                                                                   

/S/ MAX PRIDGEON        DIRECTOR                MARCH 31, 2008                  
--------------------                                                            
MAX PRIDGEON                                                                    

/S/FRANS SLUITER        DIRECTOR                MARCH 31, 2008                  
--------------------                                                            
FRANS SLUITER                                                                   

/S/ MICHELLE CINNAMON   DIRECTOR                MARCH 31, 2008                  
--------------------                                                            
MICHELLE CINNAMON                                                               

27

10-K
32nd Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 32nd
INDEX TO FINANCIAL STATEMENTS                                                   

                                                                        Page
                                                                        ----

Report of Independent Registered Public Accounting Firm                    F-1  

Consolidated Balance Sheets at December 31, 2007 and 2006                  F-2  

Consolidated Statements of Operations for the years ended December 31,          
2007, 2006 and 2005                                                        F-3  

Consolidated Statements of Changes in Shareholders' Equity                      
for the years ended December 31, 2007, 2006 and 2005                       F-4  

Consolidated Statements of Cash Flows for the years ended December 31,          
2007, 2006 and 2005                                                        F-5  

Notes to Consolidated Financial Statements                                 F-6  

28

10-K
33rd Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 33rd
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors                                                       
Isramco, Inc.                                                                   
Houston, Texas                                                                  

We have audited the accompanying consolidated balance sheets of Isramco, Inc. as
of December 31, 2007 and 2006, and the related consolidated statements of       
operations, changes in shareholders' equity, and cash flows for each of the     
three years ended December 31, 2007. These consolidated financial statements are
the responsibility of Isramco's management. Our responsibility is to express an 
opinion on these consolidated financial statements based on our audits.         

We conducted our audit in accordance with the standards of the Public Company   
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance about whether the financial 
statements are free of material misstatement. The Company is not required to    
have, nor were we engaged to perform, an audit of its internal control over     
financial reporting. Our audit included consideration of internal control over  
financial reporting as a basis for designing audit procedures that are          
appropriate in the circumstances, but not for the purpose of expressing an      
opinion on the effectiveness of the Company's internal control over financial   
reporting. Accordingly, we express no such opinion. An audit also includes      
examining, on a test basis, evidence supporting the amounts and disclosures in  
the financial statements, assessing the accounting principles used and          
significant estimates made by management, as well as evaluating the overall     
financial statement presentation. We believe that our audit provides a          
reasonable basis for our opinion.                                               

In our opinion, the financial statements referred to above present fairly, in   
all material respects, the consolidated financial position of Isramco, Inc., as 
of December 31, 2007 and 2006, and the consolidated results of its operations   
and its cash flows for each of the three years ended December 31, 2007, in      
conformity with accounting principles generally accepted in the United States of
America.                                                                        

/s/ MALONE & BAILEY, PC                                                         

www.malone-bailey.com                                                           
Houston, Texas                                                                  

March 31, 2008                                                                  

F-1 

10-K
34th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 34th
                                                        [Enlarge/Download Table]


                                                ISRAMCO INC.                                            
                                        CONSOLIDATED BALANCE SHEETS                                     
                             (In thousands, except share and per share amounts)                         

------------------------------------------------------------------------------------------------------- 
AS OF DECEMBER 31                                                                2007           2006    
------------------------------------------------------------------------------------------------------- 

                                                            ASSETS                                      
                                                                                                        
Current Assets:                                                                                         
          Cash and cash equivalents                                            $   1,212      $     573 
          Accounts receivable                                                      6,595            403 
          Restricted and designated cash                                           1,501         17,000 
          Deferred Income Taxes                                                    1,047           --   
          Marketable securities, at market                                          --            3,130 
          Derivative asset                                                          --            1,718 
          Prepaid expenses and other                                                 748          3,339 
          Accounts receivable - sale of Magic 1                                     --            2,150 
                                                                               ---------      --------- 
                  Total Current Assets                                            11,103         28,313 
                                                                               ---------      --------- 

Property and Equipment, at cost - successful efforts method:                                            
          Proved properties                                                       93,626         16,850 
          Unproved properties                                                     15,314           --   
          Other                                                                       81          2,212 
                                                                               ---------      --------- 
                  Total Property and Equipment                                   109,021         19,062 
          Accumulated depreciation, depletion and amortization                   (16,338)        (6,525)
                                                                               ---------      --------- 
                  Net Property and Equipment                                      92,683         12,537 
                                                                               ---------      --------- 

Marketable securities, at market                                                   6,809          5,759 
Investment in affiliates                                                            --           15,302 
Other                                                                                113            162 
                                                                               ---------      --------- 
Total assets                                                                   $ 110,708      $  62,073 
                                                                               =========      ========= 

                                      LIABILITIES AND SHAREHOLDERS' EQUITY                              
Current liabilities:                                                                                    
          Accounts payable and accrued expenses                                $   4,259      $   5,050 
          Current maturities of long-term debt and bank overdraft                  3,706            347 
          Derivative liability                                                     3,081           --   
          Short term loan from related party                                        --           17,164 
          Other current liability                                                    227           --   
                                                                               ---------      --------- 
                 Total current liabilities                                        11,273         22,561 
                                                                               ---------      --------- 

Long-term debt                                                                    24,000           --   
Long-term debt - related party                                                    40,014           --   

Other Long-term Liabilities:                                                                            
          Asset retirement obligations                                             2,670            356 
          Derivative liability - non-current                                       6,325           --   
          Deferred income taxes                                                      955          4,412 
                                                                               ---------      --------- 
                  Total other long-term liabilities                                9,950          4,768 
                                                                               ---------      --------- 

Commitments and contingencies (Note 14)                                                                 

Shareholders' equity:                                                                                   
          Common stock $0.0l par value; authorized 7,500,000 shares;                                    
                  issued 2,746,958 shares; outstanding 2,717,691 shares               27             27 
          Additional paid-in capital                                              23,194         26,240 
          Retained earnings                                                       (1,012)         5,399 
          Accumulated other comprehensive income                                   3,426          3,242 
          Treasury stock, 29,267 shares at cost                                     (164)          (164)
                                                                               ---------      --------- 
                  Total shareholders' equity                                      25,471         34,744 
                                                                               ---------      --------- 

Total liabilities and shareholders' equity                                     $ 110,708      $  62,073 
                                                                               =========      ========= 
See notes to the consolidated financial statements.                                                     

                                      F-2                                                               

10-K
35th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 35th
                                                        [Enlarge/Download Table]


                                  ISRAMCO INC.                                                           
                      CONSOLIDATED STATEMENTS OF OPERATIONS                                              
               (in thousands, except share and per share amounts)                                        

-------------------------------------------------------------------------------------------------------- 

YEAR ENDED DECEMBER 31                                          2007           2006             2005     
-------------------------------------------------------------------------------------------------------- 
                                                                                                         
REVENUES                                                                                                 
   Oil and gas sales                                       $    20,827      $     2,167      $     3,319 
   Operator fees from related party                                 18               69              977 
   Office services to affiliate and other                                                                
       To related parties                                          480              480              476 
       To others                                                   230              276              462 
   Equity in earnings of unconsolidated affiliates               1,201            2,570              661 
                                                           -----------      -----------      ----------- 
          Total revenues                                        22,756            5,562            5,895 
                                                           -----------      -----------      ----------- 

OPERATING EXPENSES                                                                                       
   Lease operating expense, transportation and taxes             7,500            1,119            1,458 
   Depreciation, depletion and amortization                      6,139              455            1,011 
   Impairment of oil and gas assets                              3,203              668              759 
   Impairment of other properties                                  928             --               --   
   Accretion expense                                               219               71               25 
   Exploration costs                                               292              125              110 
   Operator expense                                               --                330              767 
   General and administrative                                                                            
       To related parties                                          226              227              503 
       To others                                                 2,676            1,782            1,795 
                                                           -----------      -----------      ----------- 
          Total operating expenses                              21,183            4,777            6,428 
                                                           -----------      -----------      ----------- 
OPERATING INCOME (LOSS)                                          1,573              785             (533)

OTHER EXPENSES (INCOME)                                                                                  
   Interest expenses (income), net                               6,344             (154)            (293)
   Unrealized gain on marketable securities                        (52)          (1,177)            (551)
   Realized gain on sale of investment and other                (1,754)             (39)            (117)
   Net loss (gain) on derivative contracts                       8,638           (2,604)             641 
   Compensation for legal settlement                              --             (2,536)            --   
                                                           -----------      -----------      ----------- 
          Total other expenses (income)                         13,176           (6,510)            (320)
                                                           -----------      -----------      ----------- 

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME                                                   
   TAXES                                                       (11,603)           7,295             (213)
INCOME TAX BENEFIT (EXPENSE)                                     5,192             (726)             (40)
                                                           -----------      -----------      ----------- 

INCOME (LOSS) FROM CONTINUING OPERATIONS                        (6,411)           6,569             (253)
LOSS FROM DISCONTINUED OPERATION                                  --             (3,111)            (879)
GAIN FROM DISPOSAL OF DISCONTINUED OPERATION                      --                384             --   
                                                           -----------      -----------      ----------- 
NET INCOME (LOSS)                                          $    (6,411)     $     3,842      $    (1,132)
                                                           ===========      ===========      =========== 

EARNINGS (LOSS) PER SHARE - BASIC AND DILUTED:                                                           
   Continuing operations                                   $     (2.36)     $      2.42      $     (0.09)
   Discontinued operations                                        --              (1.01)           (0.33)
                                                           -----------      -----------      ----------- 
          Total                                            $     (2.36)     $      1.41      $     (0.42)

Weighted average number of shares outstanding-basic                                                      
                                                             2,717,691        2,717,691        2,709,355 
                                                           ===========      ===========      =========== 
Weighted average number of shares outstanding -diluted                                                   
                                                             2,717,691        2,717,691        2,709,355 
                                                           ===========      ===========      =========== 

See notes to the consolidated financial statements.                                                      

                           F-3

10-K
36th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 36th
                                                        [Enlarge/Download Table]


                                                            ISRAMCO INC.                                                            
                                     CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY                                     
                                         FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005                                       

                                                COMMON STOCK                                                                        
                                          --------------------------                                                                
                                                                    ADDITIONAL    ACCUMULATED                              TOTAL    
                                                                                    OTHER                                           
                                            NUMBER                   PAID-IN    COMPREHENSIVE  RETAINED     TREASURY   SHAREHOLDERS'
                                          OF SHARES     AMOUNT       CAPITAL    INCOME (LOSS)  EARNINGS       STOCK      EQUITY     
                                          ----------  ----------    ----------   ----------   ----------    ---------   ----------  
                                                                  $ IN THOUSANDS, EXCEPT SHARE AMOUNTS                              
                                          ------------------------------------------------------------------------------------------
                                                                                                                                    
Balances at December 31, 2004 (Restated)   2,639,853  $       27    $   26,240    $    1,244   $    2,689   $     (164)  $   30,036 

Shares issued for exercise of options         77,838                                                                                
Net loss                                                                                           (1,132)                   (1,132)
Net unrealized gain on available for                                                                                                
 sale marketable securities, net of taxes                                                113                                    113 
Net loss on foreign exchange rate,                                                                                                  
 net of taxes                                                                           (524)                                  (524)
                                                                                                                         ---------- 
Total comprehensive loss                                                                                                     (1,543)
                                          ----------  ----------    ----------    ----------   ----------   ----------   ---------- 
Balances at December 31, 2005              2,717,691          27        26,240           833        1,557         (164)      28,493 

                                                                                                    3,842                     3,842 
Net income                                                                                                                          
Net unrealized gain on available for                                                                                                
 sale marketable securities, net of taxes                                                810                                    810 
Net gain (loss) on foreign exchange rate,                                                                                           
 net of taxes                                                                          1,599                                  1,599 
                                                                                                                         ---------- 
Total comprehensive income                                                                                                    6,251 
                                          ----------  ----------    ----------    ----------   ----------   ----------   ---------- 
                                           2,717,691          27        26,240         3,242        5,399         (164)      34,744 
Balance of December 31, 2006                                                                                                        
Sale of Israeli operations to sister company                            (3,046)                                              (3,046)
Net loss                                                                                           (6,411)                   (6,411)
Net unrealized gain on available for                                                                                                
 sale marketable securities, net of taxes                                                874                                    874 
Net loss on foreign exchange rate,                                                                                                  
 net of taxes                                                                           (690)                                  (690)
                                                                                                                         ---------- 
Total comprehensive loss                                                                                                     (6,227)

                                          ----------  ----------    ----------    ----------   ----------   ----------   ---------- 
Balance of December 31, 2007               2,717,691  $       27    $   23,194    $    3,426   $   (1,012)  $     (164)  $   25,471 
                                          ==========  ==========    ==========    ==========   ==========   ==========   ========== 

See notes to consolidated financial statements.                                                                                     

                                                                 F-4                                                                


10-K
37th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 37th
                                                        [Enlarge/Download Table]


                                                ISRAMCO INC.                                                
                                    CONSOLIDATED STATEMENTS OF CASH FLOWS                                   
                                               (In thousands)                                               

----------------------------------------------------------------------------------------------------------- 
YEAR ENDED DECEMBER 31                                                   2007         2006           2005   
----------------------------------------------------------------------------------------------------------- 
                                                                                                            
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                       
Net income (loss)                                                      $ (6,411)     $  3,842      $ (1,132)

Adjustments to reconcile net income (loss) to net cash provided by                                          
   operating activities:                                                                                    
      Discontinued operations                                              --           2,727           879 
                                                                       --------      --------      -------- 
Income (loss) from continuing operations                                 (6,411)        6,569           253 

      Depreciation, depletion, amortization and impairment               10,270         1,123         1,769 
      Accretion expense                                                     219            71            25 
      Unrealized gain on marketable securities                             (344)       (1,177)         (550)
      Equity in earnings of unconsolidated affiliates                      (741)       (1,316)         (661)
      Changes in deferred taxes                                          (5,488)          271          (355)
      Net unrealized loss (gain) on derivative contracts                 11,352        (1,718)         --   
      Realized gain on sale of investment and                            (1,664)         --            --   

Changes in components of working capital and other assets and                                               
    liabilities                                                                                             
      Accounts receivable                                                (6,192)          202            30 
      Prepaid expenses and other current assets                              92        (1,103)       (1,061)
      Accounts payable and accrued liabilities                           (1,755)        3,271           871 
                                                                       --------      --------      -------- 
Net cash provided by (used in) operating activities                                                         
      Continuing operating                                                 (662)        6,193          (185)
      Discontinuing operating                                              --           1,040         1,741 
                                                                       --------      --------      -------- 
Net cash provided by (used in) operating activities                        (662)        7,233         1,556 

CASH FLOWS FROM INVESTING ACTIVITIES:                                                                       
      Investment in affiliate                                              --          (1,197)         --   
      Addition to property and equipment, net                           (86,123)       (9,737)       (3,686)
      Proceeds from sale of gas properties and equipment                     36          --            --   
      Proceeds from restricted deposit, net                              15,498       (17,000)         --   
      Proceeds from sale of subsidiary - Magic                            2,150          --            --   
      Proceeds from sale of other investment                              2,270          --            --   
      Purchase of marketable securities                                    (740)       (2,056)       (3,353)
      Proceeds from sale of marketable securities                         3,253         5,957         7,315 
                                                                       --------      --------      -------- 
      Continuing operating                                              (63,656)      (24,033)          276 
      Discontinuing operating                                              --              (8)       (1,017)
                                                                       --------      --------      -------- 
Net cash used in investing activities                                   (63,656)      (24,041)         (741)

CASH FLOWS FROM FINANCING ACTIVITIES:                                                                       
      Net proceeds from loans - related parties                          36,716        17,164          --   
      Proceeds from long-term debt                                       35,300          --            --   
      Repayment of long-term debt                                        (8,300)         --            --   
      Borrowings (repayments) of short - term debt, net                   1,241           (22)         (907)
                                                                       --------      --------      -------- 
      Continuing operating                                               64,957        17,142          (907)
      Discontinuing operating                                              --            (961)         (735)
                                                                       --------      --------      -------- 
Net cash provided by (used in) financing activities                      64,957        16,181        (1,642)

                                                                            639          (627)         (827)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                                        
                                                                            573         1,200         2,027 
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                                              
                                                                       --------      --------      -------- 
                                                                       $  1,212      $    573      $  1,200 
CASH AND CASH EQUIVALENTS AT END OF YEAR                                                                    
                                                                       ========      ========      ======== 

See notes to the consolidated financial statements.                                                         

                                                    F-5                                                     

10-K
38th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 38th
ISRAMCO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                              

BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION                           
Isramco Inc. and subsidiaries ("Isramco" or the "Company") are primarily engaged
in the acquisition, development, production and exploration of oil and natural  
gas properties located, mainly in United States of America ("United states").   
The Company operates in one segment, oil and natural gas exploration and        
exploitation. The consolidated financial statements include the accounts of all 
majority-owned, controlled subsidiaries. Investments in unconsolidated          
affiliates, in which Isramco is able to exercise significant influence, are     
accounted for using the equity method. All intercompany accounts and            
transactions have been eliminated. Certain prior year amounts have been         
reclassified to conform to the current year presentation.                       

USE OF ESTIMATES                                                                
The preparation of the Company's consolidated financial statements in conformity
with accounting principles generally accepted in the United States of America   
requires the Company's management to make estimates and assumptions that affect 
the reported amounts of assets and liabilities and disclosure of contingent     
assets and liabilities, if any, at the date of the consolidated financial       
statements and the reported amounts of revenues and expenses during the         
respective reporting periods. These estimates include oil and natural gas       
reserve quantities which form the basis for the calculation of amortization of  
oil and natural gas properties. Management emphasizes that reserve estimates are
inherently imprecise and that estimates of more recent reserve discoveries are  
more imprecise than those for properties with long production histories. Actual 
results may differ from the estimates and assumptions used in the preparation of
the Company's consolidated financial statements.                                

CASH AND CASH EQUIVALENTS.                                                      

Isramco records as cash equivalents all highly liquid short-term investments    
with original maturities of three months or less.                               

ALLOWANCE FOR DOUBTFUL ACCOUNTS                                                 
The Company establishes provisions for losses on accounts receivable if it      
determines that it will not collect all or part of the outstanding balance. The 
Company regularly reviews collectibility and establishes or adjusts the         
allowance as necessary using the specific identification method. There is no    
significant allowance for doubtful accounts as of December 31, 2007 or 2006.    

OIL AND GAS OPERATIONS.                                                         

Isramco accounts for its natural gas and crude oil exploration and production   
activities under the successful efforts method of accounting.                   

Oil and gas lease acquisition costs are capitalized when incurred. Unproved     
properties with individually significant acquisition costs are assessed, at     
least anually, on a lease-by-lease basis, and any impairment in value is        
recognized. Lease rentals are expensed as incurred.                             

Oil and gas exploration costs, other than the costs of drilling exploratory     
wells, are charged to expense as incurred. The costs of drilling exploratory    
wells are capitalized pending determination of whether they have discovered     
proved commercial reserves. Exploratory drilling costs are capitalized when     
drilling is complete if it is determined that there is economic producibility   
supported by either actual production, a conclusive formation test. If proved   
commercial reserves are not discovered, such drilling costs are expensed. In    
some circumstances, it may be uncertain whether proved commercial reserves have 
been found when drilling has been completed. Such exploratory well drilling     
costs may continue to be capitalized if the reserve quantity is sufficient to   
justify its completion as a producing well and sufficient progress in assessing 
the reserves and the economic and operating viability of the project is being   
made. A significant portion of the property costs reflected in the accompanying 
consolidated balance sheets are from acquisitions of proved properties from     
other oil and gas company (see Note 2). Costs to develop proved reserves,       
including the costs of all development wells and related equipment used in the  
production of natural gas and crude oil, are capitalized.                       

Depreciation, depletion and amortization of the cost of proved oil and gas      
properties is calculated using the unit-of-production method. The reserve base  
used to calculate depreciation, depletion and amortization is the sum of proved 
developed reserves and proved undeveloped reserves for leasehold acquisition    
costs and the cost to acquire proved properties. With respect to lease and well 
equipment costs, which include development costs and successful exploration     
drilling costs, the reserve base includes only proved developed reserves.       
Estimated future dismantlement, restoration and abandonment costs, net of       
salvage values, are taken into account.                                         

Assets are grouped in accordance with paragraph 30 of Statement of Financial    
Accounting Standards (SFAS) No. 19, "FINANCIAL ACCOUNTING AND REPORTING BY OIL  
AND GAS PRODUCING COMPANIES." The basis for grouping is a reasonable aggregation
of properties with a common geological structural feature or stratigraphic      
condition, such as a reservoir or field.                                        

F-6 

10-K
39th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 39th
Amortization rates are updated to reflect: 1) the addition of capital costs, 2) 
reserve revisions (upwards or downwards) and additions, 3) property acquisitions
and/or property dispositions and 4) impairments.                                

Isramco accounts for impairments under the provisions of SFAS No. 144,          
"ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS." When          
circumstances indicate that an asset may be impaired, Isramco compares expected 
undiscounted future cash flows at a producing field level to the unamortized    
capitalized cost of the asset. If the future undiscounted cash flows, based on  
Company and third party 's estimate of future crude oil and natural gas prices, 
operating costs, anticipated production from proved reserves and other relevant 
data, are lower than the unamortized capitalized cost, the capitalized cost is  
reduced to fair value. Fair value is calculated by discounting the future cash  
flows at an appropriate risk-adjusted discount rate.                            

In 2007, 2006 and 2005, The Company reported impairment charge of $3,203        
thousand, $668 thousand and $759 thousand, respectively, relating to its proved 
properties.                                                                     

PROPERTY, PLANT AND EQUIPMENT OTHER THAN OIL AND NATURAL GAS PROPERTIES         

Other operating property and equipment are stated at the lower of cost or fair  
market value. Provision for depreciation and amortization is calculated using   
the straight-line method over the estimated useful lives of the respective      
assets. The cost of normal maintenance and repairs is charged to operating      
expense as incurred. Material expenditures, which increase the life of an asset,
are capitalized and depreciated over the estimated remaining useful life of the 
asset. The cost of properties sold, or otherwise disposed of, and the related   
accumulated depreciation or amortization are removed from the accounts and any  
gains or losses are reflected in current operations. On December 31, 2007 we    
sold undeveloped real estate located in Israel to related party (for further    
information see Note 5 "closure of the Israeli branch office").                 

In 2007, The Company reported impairment charge of $928 thousand to undeveloped 
real estate located in Israel.                                                  

In 2006, The Company reported impairment charge of $2,200 thousand to the vessel
included in discontinued operation.                                             

MARKETABLE SECURITIES                                                           

Statement of Financial Accounting Standard No. 115 (SFAS No. 115),"ACCOUNTING   
FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES", requires Isramco to     
classify its debt and equity securities in one of three categories: trading,    
available-for-sale and held-to-maturity. Trading securities are bought and held 
principally for the purposes of selling them in the near term. Held-to-maturity 
securities are those securities in which Isramco has both the ability and intent
to hold the security until maturity. All other securities not included in       
trading or held-to-maturity are classified as available-for-sale.               

Trading and available-for-sale securities are recorded at fair market value.    
Isramco holds no held-to-maturity securities. Unrealized holding gains and      
losses on trading securities are included in earnings. Unrealized holding gains 
or losses, net of the related tax effects, on available-for-sale securities are 
excluded from earnings and are reported net of applicable taxes as accumulated  
other comprehensive income, a separate component of shareholders' equity, until 
realized.                                                                       

ASSET RETIREMENT OBLIGATION                                                     

In August 2001, the FASB issued SFAS No. 143, ACCOUNTING FOR ASSET RETIREMENT   
OBLIGATIONS (SFAS 143). SFAS 143 requires that the fair value of an asset       
retirement cost, and corresponding liability, should be recorded as part of the 
cost of the related long-lived asset and subsequently allocated to expense using
a systematic and rational method. Upon adoption, the Company recorded an asset  
retirement obligation to reflect the Company's legal obligations related to     
future plugging and abandonment of its oil and natural gas wells. The Company   
estimated the expected cash flow associated with the obligation and discounted  
the amount using a credit-adjusted, risk-free interest rate. At least annually, 
the Company reassesses the obligation to determine whether a change in the      
estimated obligation is necessary. The Company evaluates whether there are      
indicators that suggest the estimated cash flows underlying the obligation have 
materially changed. Should those indicators suggest the estimated obligation may
have materially changed the Company will accordingly update its assessment.     
Additional retirement obligations increase the liability associated with new oil
and natural gas wells as these obligations are incurred.                        

CONCENTRATIONS OF CREDIT RISK                                                   

The Company through its wholly-owned subsidiary Jay Management LLC ("Jay        
Management") operates a substantial portion of its oil and natural gas          
properties. As the operator of a property, the Company makes full payments for  
costs associated with the property and seeks reimbursement from the other       
working interest owners in the property for their share of those costs. The     
Company's joint interest partners consist primarily of independent oil and      
natural gas producers. If the oil and natural gas exploration and production    
industry in general were adversely affected, the ability of the Company's joint 
interest partners to reimburse the Company could be adversely affected.         

F-7 

10-K
40th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 40th
The purchasers of the Company's oil and natural gas production consist primarily
of independent marketers, major oil and natural gas companies and gas pipeline  
companies. The Company has not experienced any significant losses from          
uncollectible accounts. The Company does not believe the loss of any one of its 
purchasers would materially affect the Company's ability to sell the oil and    
natural gas it produces. The Company believes other purchasers are available in 
the Company's areas of operations.                                              

REVENUE RECOGNITION                                                             

Revenues from the sale of oil and natural gas are recognized when the products  
are sold to a purchaser at a fixed or determinable price, delivery has occurred 
and title has transferred, and collectibility of the revenue is reasonably      
assured. The Company follows the entitlement method of accounting for recording 
oil and gas revenues under that method, any revenues received in excess of the  
Company's share is treated as a liability. If revenues received are less than   
Company's share, the deficiency is recorded as an asset. The Company's imbalance
position was not significant in terms of volumes or values at December 31, 2007 
and 2006.                                                                       

PRICE RISK MANAGEMENT ACTIVITIES                                                

The Company follows Financial Accounting Standards Board (FASB) Statement of    
Financial Accounting Standards (SFAS) No. 133, ACCOUNTING FOR DERIVATIVE        
INSTRUMENTS AND HEDGING Activities, as amended by SFAS No. 138, ACCOUNTING FOR  
CERTAIN DERIVATIVE INSTRUMENTS AND CERTAIN HEDGING ACTIVITIES, AN AMENDMENT OF  
FASB STATEMENT NO. 133 and as amended by SFAS No. 149, AMENDMENT OF STATEMENT   
NO. 133 ON DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. From time to time, the
Company may hedge a portion of its forecasted oil and natural gas production.   
Derivative contracts entered into by the Company have consisted of transactions 
in which the Company hedges the variability of cash flow related to a forecasted
transaction. The Company has elected to not designate any of its positions for  
hedge accounting for the years ended December 31, 2007, 2006 and 2005.          
Accordingly, the Company records the net change in the mark-to-market valuation 
on its derivative contracts in current earnings as a component of other income  
and expenses on the consolidated statements of operations.                      

In 2007, 2006 and 2005, The Company recorded gain (loss) of $(8.6) million, $2.6
million and $(0.67) million, respectively, related to its derivative            
instruments. Fair values are derided principally from market quoted and other   
independent third-party quotes.                                                 

INCOME TAXES                                                                    

Uncertainty in July 2006, the FASB issued Financial Interpretation (FIN) 48,    
Accounting for In created a single model to address Income Taxes--an            
Interpretation of FASB 109 (FIN 48). FIN 48 created a single model to address   
accounting for the uncertainty in income tax positions and prescribes a minimum 
recognition threshold a tax position must meet before recognition in the        
financial statements.                                                           

The evaluation of a tax position in accordance with FIN 48 is a two-step        
process. The first step is a recognition process to determine whether it is more
likely than not that a tax position will be sustained upon examination,         
including resolution of any related appeals or litigation processes, based on   
the technical merits of the position. In evaluating whether a tax position has  
met the more likely than not recognition threshold, it is presumed that the     
position will be examined by the appropriate taxing authority with full         
knowledge of all relevant information. The second step is a measurement process 
whereby a tax position that meets the more likely than not recognition threshold
is calculated to determine the amount of benefit/expense to recognize in the    
financial statements. The tax position is measured at the largest amount of     
benefit/expense that is more likely than not of being realized upon ultimate    
settlement.                                                                     

The Company adopted the provisions of FIN 48 effective January 1, 2007 which did
not have a material impact on the Company's operating results, financial        
position or cash flows. The Company did not record a cumulative effect          
adjustment related to the adoption of FIN 48.                                   

TRANSLATION OF FOREIGN CURRENCIES                                               

Foreign currency is translated in accordance with Statement of Financial        
Accounting Standards No. 52, which provides the criteria for determining the    
functional currency for entities operating in foreign countries. Isramco has    
determined its functional currency is the United States (U.S.) dollar since all 
of its contracts are in U.S. dollars. Adjustments resulting from the process of 
translating foreign functional currency financial statements into U.S. dollars  
are included in accumulated other comprehensive income in stockholders' equity. 
Foreign currency transaction gains and losses are included in current income.   
The functional currency of our Israeli subsidiaries is the New Israeli Shekel.  

EARNINGS PER SHARE                                                              

Isramco follows SFAS No. 128, Earnings per Share, for computing and presenting  
earnings per share, which requires, among other things, dual presentation of    
basic and diluted loss per share on the face of the statement of operations.    
Basic EPS is computed by dividing income available to common shareholders by the
weighted average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other         
contracts to issue common shares were exercised or converted into common shares 
or resulted in the issuance of common shares that then shared in the earnings of
the entity. For the year ended December 31, 2005, Isramco's stock options were  
anti-dilutive.                                                                  

F-8 

10-K
41st Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 41st
ENVIRONMENTAL                                                                   

Isramco is subject to extensive federal, state, local and foreign environmental 
laws and regulations. These laws, which are constantly changing, regulate the   
discharge of materials into the environment and may require Isramco to remove or
mitigate the environmental effects of the disposal or release of petroleum or   
chemical substances at various sites. Liabilities for expenditures of no capital
nature are recorded when environmental assessment and/or remediation is         
probable, and the costs can be reasonably estimated. No significant amounts for 
environmental liabilities were recorded at December 31, 2007 and 2006.          

STOCK-BASED COMPENSATION                                                        

In January 2006, the Company adopted SFAS No. 123(R), SHARE-BASED PAYMENT (SFAS 
123(R)). SFAS 123(R) revises SFAS No. 123, ACCOUNTING FOR STOCK-BASED           
COMPENSATION (SFAS 123), and focuses on accounting for share-based payments for 
services provided by employee to employer. The statement requires companies to  
expense the fair value of employee stock options and other equity-based         
compensation at the grant date. The statement does not require a certain type of
valuation model, and either a binomial or Black-Scholes model may be used. The  
Company used the modified prospective application method as detailed in SFAS    
123(R).                                                                         

Prior to adopting SFAS 123(R), the Company adopted SFAS No. 123, ACCOUNTING FOR 
STOCK-BASED COMPENSATION (SFAS 123) prospectively, using the fair value         
recognition method to all employee and director awards granted, modified or     
settled after January 1, 2003. Prior to the adoption, the Company elected to    
follow Accounting Principles Board (APB) Opinion No. 25, ACCOUNTING FOR STOCK   
ISSUED TO EMPLOYEES (APB 25) and related interpretations in accounting for its  
employee stock options. There were no costs accounted for under APB 25 during   
the years ended December 31, 2007, 2006 and 2005.                               

RECENTLY ISSUED ACCOUNTING STANDARDS AND DEVELOPMENTS                           

In February 2007, the FASB issued SFAS 159, THE FAIR VALUE OPTION FOR FINANCIAL 
ASSETS AND FINANCIAL LIABILITIES INCLUDING AN AMENDMENT OF FASB STATEMENT NO.   
115 (SFAS 159), which permits entities to choose to measure many financial      
instruments and certain other items at fair value (the Fair Value Option).      
Election of the Fair Value Option is made on an instrument-by-instrument basis  
and is irrevocable. At the adoption date, unrealized gains and losses on        
financial assets and liabilities for which the Fair Value Option has been       
elected would be reported as a cumulative adjustment to beginning retained      
earnings. If the Company elects the Fair Value Option for certain financial     
assets and liabilities, the Company will report unrealized gains and losses due 
to changes in fair value in earnings at each subsequent reporting date. The     
provisions of SFAS 159 are effective January 1, 2008. The Company is currently  
assessing the impact, if any, that the adoption of this pronouncement will have 
on the Company's operating results, financial position or cash flows.           

In September 2006, the FASB issued SFAS No. 157, "FAIR VALUE MEASUREMENTS." SFAS
No. 157 provides a definition of fair value and provides a framework for        
measuring fair value. The standard also requires additional disclosures on the  
use of fair value in measuring assets and liabilities. SFAS No. 157 establishes 
a fair value hierarchy and requires disclosure of fair value measurements within
that hierarchy. In February 2008, the FASB issued a Staff Position on SFAS No.  
157, FASB Staff Position No. FAS 157-2, "EFFECTIVE DATE OF FASB STATEMENT NO.   
157," (FSP 157-2). FSP 157-2 delays the effective date of SFAS No. 157 for all  
nonrecurring fair value measurements of nonfinancial assets and nonfinancial    
liabilities until fiscal years beginning after November 15, 2008, except as     
provided by FSP 157-2. SFAS No. 157 is effective for fiscal years beginning     
after November 15, 2007 and interim periods within those years. FSP 157-2       
requires an entity that does not adopt SFAS No. 157 in its entirety to disclose,
at each reporting date until fully adopted, that it has only partially adopted  
SFAS No. 157 and the categories of assets and liabilities recorded or disclosed 
at fair value to which SFAS No. 157 has not been applied. The adoption of SFAS  
No. 157 is not expected to have a material impact on the Company's financial    
statements, but will result in additional disclosures related to the use of fair
values in the financial statements.                                             

During July 2006, the FASB issued FASB Interpretation (FIN) No. 48, "ACCOUNTING 
FOR UNCERTAINTY IN INCOME TAXES - AN INTERPRETATION OF FASB STATEMENT NO. 109." 
FIN No. 48 addresses the accounting for uncertainty in income taxes recognized  
in an enterprise's financial statements in accordance with SFAS No. 109,        
"Accounting for Income Taxes." FIN No. 48 prescribes specific criteria for the  
financial statement recognition and measurement of the tax effects of a position
taken or expected to be taken in a tax return. This interpretation also provides
guidance on derecognition of previously recognized tax benefits, classification 
of tax liabilities on the balance sheet, recording interest and penalties on tax
underpayments, accounting in interim periods and disclosure requirements. FIN   
No. 48 is effective for fiscal periods beginning after December 15, 2006.       

The Company adopted the provisions of FIN 48 effective January 1, 2007 which did
not have a material impact on the Company's operating results, financial        
position or cash flows. The Company did not record a cumulative effect          
adjustment related to the adoption of FIN 48.                                   

F-8 

10-K
42nd Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 42nd
2.       ACQUISITIONS                                                           

TRANSACTION WITH FIVE STATES                                                    

On March 2, 2007, Isramco purchased certain oil and gas properties located in   
Texas and New Mexico from Five States Energy Company, LLC for an aggregate      
preliminary purchase price of $92 million (before adjustments as defined in the 
agreement). Although the acquisition was closed on March 2, 2007, the effective 
dated of the purchase was determined to be October 1, 2006 (the "Effective      
Date"). Accordingly, the Company is entitled to the net revenues, less direct   
operating expenses, of the acquired properties from the Effective Date through  
the Acquisition Date. This will result in an adjustment to the preliminary      
purchase price. These financial statements reflect the assets acquired and      
operations related to those assets from the Acquisition Date through December   
31, 2007. According to an engineering report prepared by an independent         
consulting company relating to the properties purchased, the estimated proved   
developed producing reserves are 1,447,161 net barrels of oil and 20,078,174 net
MMCF's of natural gas and 1,305,705 net of liquid products. Isramco funded $7.7 
million of the Purchase Price from working capital and the balance from a       
combination of commercial bank loans and loans from related parties (for further
information see Note 8 "Long-Term Debt"). Additionally, pursuant to an agreement
between Sigma Energy Corporation ("Sigma"), an unrelated party that originated  
the transaction with Five States, Isramco and IEN, IEN paid to Sigma on March 2,
2007, the amount of $300 thousand and after Payout (as defined in the Agreement 
with Sigma), IEN undertook to assign to Sigma a direct ownership interests of   
3.75% of the interests acquired by IEN under the Purchase Agreement             

The following table summarizes the preliminary estimated fair values of assets  
that Isramco acquired and the liabilities assumed in connection with the        
acquisition of the Five States properties (in thousands):                       

-------------------------------------------------------                         
AS OF DECEMBER 31                                2007                           
-------------------------------------------------------                         

Oil and gas properties (after adjustments)     $ 88,304                         
Asset retirement obligation                      (2,020)                        

                      --------
Net asset acquired                             $ 86,284                         
                      ========

The following pro forma information assumes the acquisition of the Five States  
properties occurred as of January 1, 2006. The pro forma results are not        
necessarily indicative of what actually would have occurred had the acquisition 
been in effect for the period presented. (in thousands, except for share data)  

------------------------------------------------------------------------        
YEAR ENDED DECEMBER 31,  2007                   AS REPORTED     PRO FORMA       
------------------------------------------------------------------------        

Revenues                                        $   22,756      $ 25,949        

Net loss                                        $   (6,411)     $ (6,181)       

Income (loss) per share - basic and diluted                                     
Continuing                                 $    (2.36)     $  (2.27)  
operations                                                                      
Discontinued                                                          
operations                                            --            --          
                                        ----------      --------
                                         $    (2.36)     $  (2.27)
Total                                                                           
                                        ==========      ========

------------------------------------------------------------------------        
YEAR ENDED DECEMBER 31,  2006                   AS REPORTED     PRO FORMA       
------------------------------------------------------------------------        

Revenues                                        $   5,562      $   27,925       

Net income                                      $   3,842      $    4,750       

Income (loss) per share - basic and diluted                                     
Continuing                                 $    2.42      $     2.75  
operations                                                                      
Discontinued                               $   (1.01)     $     (1.01)
operations                                                                      
                                         ---------      ----------
Total                                           $    1.41      $     1.74       
                                         =========      ==========

------------------------------------------------------------------------        
YEAR ENDED DECEMBER 31,  2005                   AS REPORTED     PRO FORMA       
------------------------------------------------------------------------        

Revenues                                        $   5,895      $   28,485       

Net                                             $  (1,132)     $     (909)      
loss                                                                            

Income (loss) per share - basic and diluted                                     
Continuing                                 $   (0.09)     $    (0.00) 
operations                                                                      
Discontinued                                   (0.33)          (0.33) 
operations                                                                      
                                         ---------      ----------
                                          $   (0.42)     $    (0.33)
Total                                                                           
                                         =========      ==========

F-9 

10-K
43rd Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 43rd
3.      TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES                        

Until December 31, 2007, we acted as operator for joint ventures with related   
parties in Israel engaged in the exploration of oil and gas for which it        
receives operating fees equal to the largest of 6% of the actual direct costs or
minimum monthly fees of $6,000.                                                 

In December 2003, we entered into a consulting agreement with Doron Avraham, at 
that time the Vice President of the Isramco. Pursuant to this agreement, we     
agreed to pay the consultant the sum of $15 thousand per month plus expenses in 
consideration of the services that he provides to Isramco. The consulting       
agreement expired in November 2007.                                             

We paid Israel Oil Company ("I.O.C") $226 thousand and, $235 thousand for the   
years ended December 31, 2007 and 2006, respectively, for rent and office,      
secretarial and computer services. I.O.C is fully owned by Naphtha Israel       
Petroleum Corp. Naphtha is the sole shareholder of Naphtha Holdings, Ltd., which
is the record holder of 48.4% of our outstanding common stock and which may be  
deemed to be controlled by Haim Tsuff, the Chairman of the Board of Directors   
and Chief Executive Officer of Isramco.In addition, We paid Israel Oil Company  
Ltd $120 thousand consulting fee for Isramco's projects in the U.S.             

Isramco Oil and Gas Ltd. ("IOG"), a wholly-owned subsidiary of Isramco (on      
December 31, 2007 we sold IOG to related party, for further information see Note
5 "closure of the Israeli branch office") was the general partner of            
Isramco-Negev 2 Limited Partnership, from which we received management fees and 
expense reimbursements of approximately $480 thousand for each of the years     
ended December 31, 2007, 2006, and 2005.                                        

In May 1996, we entered into a consulting agreement with Goodrich Global L.T.D. 
B.V.I., a company owned and controlled by Haim Tsuff, the Chairman of the Board 
of Directors and Chief Executive Officer of Isramco. Pursuant to this consulting
agreement, we pay the consultant $144 thousand per annum in installments of $12 
thousand per month plus expenses in consideration of the services that Mr. Tsuff
provides to Isramco. In April 1997, the consulting fees payable under the       
agreement was increased to $240 thousand per annum in installments of $20       
thousand per month. The term of the consulting agreement expires in May 2008. In
the event that we terminate the agreement, the consultant will be entitled to   
receive a lump sum severance payment equal to the balance of the unpaid         
consulting fees due for the remaining term of the agreement.                    

In November 1999, we entered into a consulting agreement with Worldtech Inc., a 
Mauritus company of which Jackob Maimon, the President. Jackob Maimon is a      
director of Isramco. Pursuant to this consulting agreement, we pay the          
consultant $240 thousand per annum in installments of $20 thousand per month    
plus expenses in consideration of the services that he provides to Isramco. The 
agreement expires in May 2008. In the event that we terminate the agreement, ,  
the consultant shall be entitled to receive a lump sum severance payment equal  
to the balance of the unpaid consulting fees due for the remaining term of the  
agreement.                                                                      

In December 2006, we awarded bonuses of $ 150 thousand to our President.        

In December 2005, we awarded bonuses of $150 thousand to our Chief Executive    
Officer and Chairman of the Boards of Directors, $150 thousand to our President 
and $75 thousand to our Vice President.                                         

4.      INVESTMENTS IN AFFILIATE                                                

Isramco Oil and Gas Ltd. ("IOG"), a wholly-owned subsidiary of Isramco, was the 
general partner of the Isramco Negev 2 Limited Partnership (the "Limited        
Partnership"). The daily management of the Limited Partnership is under the     
control of the general partner; however, matters involving the rights of the    
Limited Partnership unit holders are subject to supervision of a supervisor,    
appointed to supervise the Limited Partnership activities, and in some instances
the approval of the Limited Partnership unit holders. Through IOG, we own a     
0.05% interest in the Limited Partnership, which is accounted for by the equity 
method of accounting.                                                           

On December 31, 2007 Isramco sold IOG including the participation unit in       
Isramco Negev 2 LP to related party (for further information see Note 5 "closure
of the Israeli branch office"). As of December 31, 2006, Isramco owned          
345,309,522 units or 8.17% of the issued Limited Partnership units of the       
Limited Partnership, Isramco Negev 2. Summarized financial information of       
Isramco Negev 2 Limited Partnership is as follows (in thousands):               

F-10

10-K
44th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 44th
BALANCE SHEET                                                                   

-----------------------------------------                                       
AS OF DECEMBER 31                 2006                                          
-----------------------------------------                                       

Current Assets                   $134,628                                       
Other Assets                        3,277                                       

--------      
Total Assets                     $137,905                                       
========      

Current Liabilities              $    996                                       
Equity                            136,909                                       

--------      
Total Liabilities and equity     $137,905                                       
========      

STATEMENT OF OPERATIONS                                                         

------------------------------------------------------------------              
YEAR ENDED DECEMBER 31,            2007       2006         2005                 
------------------------------------------------------------------              

Income                           $3,778     $ 14,819     $ 15,509               
Expenses                          1,094        1,001       (7,267)              

                  --------------------------------
Net income                       $2,684     $ 13,818     $  8,242               
                  ================================

On December 31, 2007 Isramco sold the participation unit in IOC Dead Sea 2 LP to
related party (for further information see Note 5 "closure of the Israeli branch
office"). As of December 31, 2006, Isramco owned 7,877,248 of units (24.97%% of 
the issued Partnership units) of the I.N.O.C Dead Sea Limited Partnership.      
Summarized financial information of I.N.O.C. Dead Sea Limited Partnership is as 
follows (in thousands):                                                         

BALANCE SHEET                                                                   

-----------------------------------------                                       
AS OF DECEMBER 31                 2006                                          
-----------------------------------------                                       

Current Assets                   $17,004                                        
Other Assets                        --                                          

-------       
Total Assets                     $17,004                                        
=======       

Current Liabilities              $    67                                        
Equity                            16,937                                        

-------       
Total Liabilities and Equity     $17,004                                        
========      

STATEMENT OF OPERATIONS                                                         

------------------------------------------------------------------              
YEAR ENDED DECEMBER 31,            2007       2006         2005                 
------------------------------------------------------------------              

Income                           $ 4,222     $ 3,091      $ 1,495               
Expenses                         $   293        (280)        (262)              

                  --------------------------------
Net income                       $ 3,929     $ 2,811      $ 1,233               
                  ================================

F-11

10-K
45th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 45th
5.      CLOSURE OF THE ISRAELI BRANCH OFFICE                                    

On December 31, 2007, Isramco and I.O.C- Israel Oil Company Ltd, an Israeli     
company and related party ("IOC"), entered into an agreement pursuant to which  
the Company sold and transferred to IOC its Israeli based activities and assets 
currently conducted and managed by the Company's Israel branch office (the      
"Branch Office") and its own shares in Isramco Oil&Gas (the general partner of  
Negev 2 LP), for aggregate consideration of approximately $13.6 million.        
Following the sale of these assets, the Company no longer conducts operations in
Israel though it will continue to hold working interests in certain oil and gas 
assets offshore Israel. The decision was taken in light of the Company's        
expanding oil and gas operations in the United States of America and            
management's decision that it is the Company's best interests to focus on the   
oil and gas operations in the United States of America and terminate activities 
in Israel which, prior to the sale transaction reported hereunder, comprised a  
relatively insignificant component of the Company's overall operations.         

The principal assets transferred to IOC include participation units in the      
Israeli oil and gas limited partnerships Isramco Negev 2 ("Negev") and INOC Dead
Sea ("Dead Sea"), both of which were held by the Branch Office. The             
participation units of each of Negev and Dead Sea trade on the Tel Aviv Stock   
Exchange. The sale of the units was completed through a private non-market      
transaction with IOC where the sale price of the Negev and Dead Sea units was   
established at, respectively, a 7% and 10% discount to the closing sale price of
these units on the Tel Aviv Stock Exchange on December 30, 2007. The discounts  
were established by an independent appraiser. The Branch Office also transferred
to IOC all operating activities at the Branch Office, including, employees,     
fixed assets, marketable securities and certain rights and liabilities, as well 
as the Company's holdings of Isramco Oil and Gas Ltd. and title to undeveloped  
real estate located in Israel.                                                  

IOC is a wholly-owned subsidiary of Naphtha Israel Petroleum Corp, Ltd.         
("Naphtha"). Naphtha holds 100% of Naphtha Holdings Ltd., which holds           
approximately 48% of the Company's issued and outstanding stock.                

Since this is a transaction between entities under common control, the Company  
recorded the loss of approximately $3,046 million from the transaction, as a    
reduction of shareholders' equity (additional paid in capital).                 

The proceeds of the sale were used by the Company to pay down part of our loan  
with Naphtha.                                                                   

6.      MARKETABLE SECURITIES                                                   

As of December 31 2006, we had net unrealized gains on marketable securities of 
$1,054 thousand. Sales of marketable securities resulted in realized gains of   
$52 thousand, $1,177 thousand and $551 thousand for the years ended December 31,
2007, 2006 and 2005, respectively.                                              

Trading securities, which are primarily traded on the Tel-Aviv Stock Exchange,  
consists of the following (in thousands):                                       

                                                        [Enlarge/Download Table]


------------------------------------------------------------------------------------------------------------
AS OF DECEMBER 31                                  2007                                   2006              
------------------------------------------------------------------------------------------------------------
                                                                                                            
                                             COST          MARKET VALUE          COST           MARKET VALUE
                                         -------------------------------------------------------------------
Debentures and Convertible Debentures         --                    --         $      495         $    1,560
Equity securities                             --                    --              1,407              1,375
Investment Trust Funds                        --                    --                174                195
                                         -------------------------------------------------------------------
                                         $    --            $       --              2,076         $    3,130
                                         -------------------------------------------------------------------

Available-for-sale  securities,  which are primarily  traded on the Tel-Aviv  Stock  Exchange and on the OTC
Bulletin Board, consist of the following (in thousands):                                                    

------------------------------------------------------------------------------------------------------------
AS OF DECEMBER 31                                  2007                                   2006              
------------------------------------------------------------------------------------------------------------

                                             COST          MARKET VALUE          COST           MARKET VALUE
                                         -------------------------------------------------------------------
                                         $   1,619          $      6,809       $    1,894         $    5,759
                                         -------------------------------------------------------------------


F-12

10-K
46th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 46th
7.      DERIVATIVE AND HEDGING ACTIVITIES                                       

From time to time, the Company enters into derivative commodity instruments to  
hedge its exposure to price fluctuations on anticipated oil and natural gas     
production. Under price swaps, the Company is required to make payments to, or  
receive payments from, the counterparties based upon the differential between a 
specified fixed price and a price related to those quoted on the New York       
Mercantile Exchange for each respective period. The Company elected not to      
designate any positions as cash flow hedges for accounting purposes for the     
years ended December 31, 2007, 2006 and 2005. Accordingly, the Company records  
the net change in the mark-to-market valuation of these derivative contracts in 
the consolidated statement of operations as a component of other income and     
expenses on the consolidated statements of operations.                          

As of December 31, 2007, the Company had a $9.4 million derivative liability,   
$3.1 million of which was classified as current. The Company recorded a net     
derivative loss of $8.6 million ($11.3 million unrealized loss and a $2.7       
million net gain for cash received on settled contracts) for the year ended     
December 31, 2007.                                                              

As of December 31, 2006, the Company had a $1.7 million derivative asset, all of
which was classified as current. The Company recorded a net derivative gain of  
$2.6 million for the year ended December 31, 2007.                              

For the year ended December 31, 2005 the Company recorded a net derivative loss 
of $0.6 million                                                                 

                                                        [Enlarge/Download Table]


-------------------------------------------------------------------------------------------------
AS OF DECEMBER 31, 2007                          Swap Contracts                                  
-------------------------------------------------------------------------------------------------
                               Natural Gas                               Crude Oil               
                  -------------------------------------- ----------------------------------------

                                             Weighted                                   Weighted 
                             Price range      Average                  Price range      Average  
                   Volume                      Price       Volume                        Price   
                   (MMBTU)    ($/MMBTU)      ($/MMBTU)     (Bbl)        ($/MMBTU)       ($/Bbl)  
                  ------------------------------------   ----------------------------------------
                                                                                                 
2008               93,876      8.2-8.365       8.22       10,516       64.15-68.46       65.2    

2009               85,874        7.77          7.77        9,796       63.9-67.86        64.71   

2010               79,286        7.49          7.49        8,147       63.3-63.8         63.63   

2011                                                       4,800       82.1-83.42        68.97   

On February 20, 2008 the Company signed additional swap contract with commercial
bank to sell 25,000 barrels of crude oil during 10 months commencing January    
2011.                                                                           

Following the cosigning of the Agreements with GFB and Trans Republic (for      
further information See Note 19 "subsequent events"), Isramco signed additional 
swap contracts with Scotia Bank to secure its future oil and gas prices. 4 swap 
contracts to for volume of 605,016 barrels of crude oil during 48 months        
commencing April 2008. Swap contracts for volume of 3,433,348 MMBTU of natural  
gas during 48 months commencing April 2008.                                     

8.      LONG-TERM DEBT                                                          

Long-Term Debt as December 31 consisted of the following (in thousands):        

-------------------------------------------------------------------------       

                                                2007      2006
-------------------------------------------------------------------------       

Libor + 2% Bank Revolving Credit Facility due 2011      27,000         --       

Libor + 6% Related party Debt due 2012                  13,128         --       

Libor + 5.5% Related party Debt due 2014                 6,788         --       

Libor + 6% Related party Debt due 2014                  20,098         --       
                                                ------------------

                                                 67,014         --

Less: Current Portion of Long-Term Debt                 (3,000)        --       
                                                ------------------

 Total                                           64,014         --
                                                ==================

F-13

10-K
47th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 47th
For funding the Oil and Gas Properties acquired from Five States in 2007 (see   
Note 2) the Company obtained loans in the total principle amount of $84.3       
million as described below:                                                     

Isramco obtained loans in the total principle amount of $42 million from Naphtha
Israel Petroleum Corp. Ltd., the parent company (including through its wholly   
owned subsidiary IOC-Israel Oil Company Ltd) ("Naphtha") with terms and         
conditions as below:                                                            

On February 27, 2007 (the "Loan Agreement"), Isramco obtained $18.5 million. The
outstanding principal amount of the loan accrues interest at per annum rate     
equal to the London Inter-bank Offered Rate (LIBOR) plus 5.5%, not to exceed 11%
per annum. Interest is payable at the end of each loan year. Principal plus any 
accrued and unpaid interest are due and payable on February 26, 2014. Interest  
after the maturity date accrues at the per annum rate of LIBOR plus 12% until   
paid in full. At any time, Isramco is entitled to prepay the outstanding amount 
of the loan without penalty or prepayment. To secure its obligations that may be
incurred under the Loan Agreement, Isramco agreed to grant to Naphtha a security
interest in certain specified properties held by Jay Petroleum, its wholly owned
subsidiary. Naphtha can accelerate the loan and exercise its rights under the   
collateral upon the occurrence any one or more of the following events of       
default: (i) Isramco's failure to secure the indebtedness as provided for in the
agreement, pay any amount that may become due in connection with the loan within
five (5) days of the due date (whether by extension, renewal, acceleration,     
maturity or otherwise) or fail to make any payment due under any hedge agreement
entered into in connection with the transaction, (ii) Isramco's material breach 
of any of the representations or warranties made in the loan agreement or       
security instruments or any writing furnished pursuant thereto, (iii) Isramco's 
failure to observe any undertaking contained in transaction documents if such   
failure continues for 30 calendar days after notice, (iv) Isramco's insolvency  
or liquidation or a bankruptcy event or(v) Isramco's criminal indictment or     
conviction under any law pursuant to which such indictment or conviction can    
lead to a forfeiture by Isramco of any of the properties securing the loan. Mr. 
Jackob Maimon, Isramco's president and director is a director of Naphtha and Mr.
Haim Tsuff, Isramco's Chief Executive Officer and Chairman is a controlling     
shareholder of Naphtha. During 2007 the Company repaid $13.6 million as part of 
the proceeds received from the selling of the Israeli activities (for further   
information see Note 5 "closure of the Israeli office").                        

On February 27, 2007 (the "Second Loan Agreement") Isramco obtained a loan from 
Naphtha, in the principal amount of $11.5 million, repayable at the end of seven
years. Interest accrues at a per annum rate of LIBOR plus 6%. At any time       
Isramco can make prepayments without premium or penalty .The Second Loan is not 
secured. The other terms of the Second Loan Agreement are identical to the terms
of the Loan Agreement.                                                          

On February 27, 2007 (the "Third Loan Agreement ") Isramco obtained a loan from 
Naphtha, in the principal amount of $12 million, repayable at the end of five   
years. Interest accrues at a per annum rate of LIBOR plus 6%. At any time       
Isramco can make prepayments without premium or penalty. The Third Loan is not  
secured. The other terms of the Third Loan Agreement are identical to the terms 
of the Loan Agreement.                                                          

On February 26, 2007 Isramco obtained a loan from J.O.E.L Jerusalem Oil         
Exploration Ltd, a related party ("JOEL"), in the principal amount of $ 7       
million, repayable at the end of 3 months (that was extended until July 11,     
2007). Interest accrues at a per annum rate of 5.36%. On July 2007 the Company  
and J.OEL reach an agreement to revise the period of the Loan to seven years and
the interest rate to LIBOR plus 6%. Mr. Jackob Maimon, Isramco's president and  
director is a director of JOEL and Mr. Haim Tsuff, Isramco's Chief Executive    
Officer and Chairman is a controlling shareholder of JOEL.                      

In 2007 the Company recorded interest expenses of $4,728,000 in relating to the 
loans from related party.                                                       

Pursuant to a Credit Agreement, dated as of March 2, 2007 (the "Credit          
Agreement") between Isramco Energy and Wells Fargo Bank NA, as administrative   
agent, Isramco Energy obtained a $35.3 million credit line from Wells Fargo.    
Amounts outstanding under the credit line are payable by March 1, 2011. Interest
on amounts outstanding accrue at a per annum rate equal to LIBOR plus 2%. The   
Credit Agreement contains covenant that the Company needs to comply with.       
Amounts outstanding under the Credit Agreement are secured by a guarantee from  
Isramco and a pledge by Isramco of the shares of Isramco Energy.                

F-14

10-K
48th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 48th
9.      INCOME TAXES                                                            

The principal components of Isramco's deferred tax assets and liabilities as of 
December 31 were as follows (in thousands):                                     

----------------------------------------------------------------------------    
                                                       2007       2006
----------------------------------------------------------------------------    

DEFERRED CURRENT TAX ASSETS:                                                    
Commodity hedging contracts                            $ 1,047      --  
----------------------------------------------------------------------------    
Deferred current tax assets                                $ 1,047      --      
============================================================================    

DEFERRED NONCURRENT TAX LIABILITIES:                                            
 Book-tax differences in property basis                 $  (860)  $(1,369)
 Book-tax differences in investment in partnerships        --      (3,048)
 Book-tax differences in marketable securities           (1,764)   (1,467)
Commodity hedging contracts                            $ 2,151   $  --  
Losses carry-forward                                      --       1,072
Other                                                     (482)      400

----------------------------------------------------------------------------    
Net long-term deferred tax liabilities                     $  (955)  $(4,412)   
============================================================================    

The principal components of Isramco's Income Tax Provision for the years        
indicated below were as follows (in thousands):                                 

--------------------------------------------------------------------            
                     2007          2006           2005
--------------------------------------------------------------------            

CURRENT INCOME TAX:                                                             
Federal                           --         $  (167)      $  --            
Foreign                            741           400           370          
State                             --             150            25          
                     -----------------------------------
Total current income tax       $   741       $   383       $   395          
                     -----------------------------------

DEFERRED INCOME TAX                                                             
Federal                        $(5,933)      $   343       $  (355)         
Foreign                           --            --            --            
State                             --            --            --            
                     -----------------------------------
Total deferred income tax      $(5,933)      $   343       $  (355)         
                     -----------------------------------
PROVISION FOR INCOME TAX         $(5,192)      $   726       $    40            
                     ===================================

The domestic and non-U.S. components of income (loss) before income taxes and a 
reconciliation of the income tax provision (benefit) to theoretical income tax  
computed by applying the U.S. federal statutory tax rate are as follows:        

--------------------------------------------------------------------            
                        2007          2006          2005
--------------------------------------------------------------------            
Computed at U.S. statutory         -35.00%       35.00%       -35.00%           
rates                                                                           
State income taxes, net of                                                      
federal benefit                      2.10%        2.10%         2.30%           
Income tax on sale of foreign                                                   
operation                          -10.00%         --            --             
Foreign income taxes                   --         9.60%        33.90%           
Accretion expense                      --       -35.20%          --             
Other                               -1.86%        0.20%         2.50%           
                     -----------------------------------
EFFECTIVE INCOME TAX RATE          -44.76%       11.70%         3.70%           
                     ===================================

F-15

10-K
49th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 49th
10.     EARNINGS PER SHARE                                                      

The following table sets forth the computation of Net Income Per Share Available
to Common Stockholders for the years ended December 31 (in thousands, except per
share data):                                                                    

                                                        [Enlarge/Download Table]


--------------------------------------------------------------------------------------------------------------------- 
                                                                    2007                   2006                 2005  
--------------------------------------------------------------------------------------------------------------------- 
                                                                                                                      
Numerator for Basic and Diluted Earnings per Share -              $    (6,411)     $       6,569         $      (253) 
     Net Income (loss) from continuing operations                 $    (6,411)     $       3,842         $    (1,132) 
     Net Income (loss)                                                                                                

Denominator for Basic Earnings per Share -                                                                            
     Weighted Average Shares                                        2,717,691          2,717,691           2,709,355  
                                                                 ---------------------------------------------------  
     Potential Dilutive Common Shares -                             2,717,691          2,717,691           2,709,355  
     Adjusted Weighted Average Shares                                                                                 

Net Income Per Share Available to Common Stockholders -                                                               
     Basic and Diluted                                                                                                

     Continuing operations                                        $       (2.36)     $        2.42        $     (0.09)
     Discontinuing operations                                                -               (1.01)             (0.33)
                                                                 ---------------------------------------------------- 
     Total                                                        $       (2.36)     $        1.41        $     (0.42)
                                                                  =================================================== 

11.     STOCK OPTIONS                                                           

As of December 31, 2007, 20,050 shares of common stock were reserved for        
issuance under the 1993 Plan. Options granted under the 1993 Plan may be either 
incentive stock options under the Internal Revenue Code or options which do not 
qualify as incentive stock options. Options granted under the 1993 Plan may be  
exercised for a period of up to ten years from the grant date. The exercise     
price for an incentive stock option may not be less than 100% of the fair market
value of Isramco's common stock on the date of grant. All the options granted   
under the 1993 Plan to date were fully vested on the date of grant. The         
administrator of the 1993 Plan may set the exercise price for a nonqualified    
stock option at less than 100% of the fair market value of Isramco's common     
stock on the date of grant.                                                     

No stock options were granted during 2007, 2006 and 2005. Shares of common stock
reserved for future issuance under the 1993 plan are 20,050 shares. There are no
granted stock options outstanding under the 1993 Plan as of balance sheet date. 

12.     SUPPLEMENTAL CASH FLOW INFORMATION                                      

Cash paid for interest and income taxes was as follows for the years ended      
December 31 (in thousands):                                                     

------------------------------------------------------------------              
             2007              2006           2005
------------------------------------------------------------------              

            $3,284            $  217        $  205
Interest                                                                        
            $  174            $   76        $   65
Income taxes                                                                    

The consolidated statements of cash flows exclude the following non-cash        
transactions:                                                                   

o       Property and equipment of $700 thousand included in accounts payable    

o       Sale of assets, liabilities and rights for $13.6 million offset against 
loan from related party                                         

13.      CONCENTRATIONS OF CREDIT RISK                                          

Financial instruments, which potentially expose Isramco to concentrations of    
credit risk, consist primarily of trade accounts receivable. Isramco's customer 
base includes several of the major United States oil and gas operating and      
production companies. Although Isramco is directly affected by the well-being of
the oil and gas production industry, management does not believe a significant  
credit risk existed as of December 31, 2007.                                    

F-16

10-K
50th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 50th
Isramco maintains deposits in banks, which may exceed the amount of federal     
deposit insurance available. Management periodically assesses the financial     
condition of the institutions and believes that any possible deposit loss is    
minimal.                                                                        

A significant portion of Isramco's cash and cash equivalents is invested in     
marketable securities. Substantially all marketable securities owned by Isramco 
are held by banks in Israel and Switzerland.                                    

14.     COMMITMENTS AND CONTINGENCIES                                           

Commitments                                                                     

Isramco has several non-cancelable leases, however, the aggregate commitment is 
not material                                                                    

Contingencies                                                                   

From time to time, the Company may be a plaintiff or defendant in a pending or  
threatened legal proceeding arising in the normal course of its business. All   
known liabilities are accrued based on the Company's best estimate of the       
potential loss. In the opinion of management, Isramco's ultimate liability, if  
any, in these pending actions is not expected to have a material adverse effect 
on the financial position, operating results or liquidity of Isramco.           

15.     ASSET RETIREMENT OBLIGATION                                             

If a reasonable estimate of the fair value of an obligation to perform site     
reclamation, dismantle facilities or plug and abandon wells can be made, the    
Company records a liability (an asset retirement obligation or ARO) on the      
consolidated balance sheet and capitalizes the asset retirement cost in oil and 
natural gas properties in the period in which the retirement obligation is      
incurred. In general, the amount of an ARO and the costs capitalized will be    
equal to the estimated future cost to satisfy the abandonment obligation using  
current prices that are escalated by an assumed inflation factor up to the      
estimated settlement date, which is then discounted back to the date that the   
abandonment obligation was incurred using an assumed cost of funds for the      
company. After recording these amounts, the ARO is accreted to its future       
estimated value using the same assumed cost of funds and the additional         
capitalized costs are depreciated on a unit-of-production basis.                

The following table presents the reconciliation of the beginning and ending     
aggregate carrying amount legal obligations associated with the retirement of   
oil and gas properties at December 31 (in thousands):                           

                                                        [Enlarge/Download Table]


--------------------------------------------------------------------------------------------------------- 
                                                                           2007                 2006      
--------------------------------------------------------------------------------------------------------- 
                                                                                                          
Liability for asset retirement obligation at  the beginning of                                            
the year                                                                   $         356    $         343 

     Liabilities Incurred                                                          2,050                8 
     Liabilities Settled                                                              --               -- 
     Accretion                                                                       219               71 
     Revisions                                                                        45              (66)
                                                                           ------------------------------ 
                                                                           $       2,670    $         356 
                                                                           ------------------------------ 
Liability for asset retirement obligation at  the end of the year                                         

F-17

10-K
51st Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 51st
16.     GEOGRAPHICAL SEGMENT INFORMATION                                        

Isramco's operations for 2007 involve one industry segment - the exploration,   
development production and transportation of oil and natural gas and holding and
leasing its cruise line vessel. Prior to 2007, Isramco operated in two industry 
segments - oil and gas activities and leasing its cruise line vessel. Its       
current oil and gas activities are concentrated in the United States and Israel 
(on December 31, 2007 the Company sold the majority of the Company's Israeli    
based activities and assets, for further information see Note 5 "closure of the 
Israeli branch") . Operating outside the United States subjects Isramco to      
inherent risks such as a loss of revenues, property and equipment from such     
hazards as exploration, nationalization, war, terrorism and other political     
risks, risks of increased taxes and governmental royalties, renegotiation of    
contracts with government entities and change in laws and policies governing    
operations of foreign-based companies.                                          

Isramco's oil and gas business is subject to operating risks associated with the
exploration, and production of oil and gas, including blowouts, pollution and   
acts of nature that could result in damage to oil and gas wells, production     
facilities of formations. In additions, oil and gas prices have fluctuated      
substantially in recent years as a result of events, which were outside of      
Isramco's control.                                                              

                                                        [Enlarge/Download Table]


-------------------------------------------------------------------------------------------------- 
                                                                                         TOTAL     
GEOGRAPHIC SEGMENTS (IN THOUSANDS)                   UNITED STATES       ISRAEL       OIL AND GAS  
-------------------------------------------------------------------------------------------------- 
                                                                                                   
2007                                                                                               
Sales and other operating revenues                       $  20,916       $   1,840       $  22,756 
Costs and operating expenses                                19,796           1,387          21,183 
                                                         ----------------------------------------- 
Operating profit (loss)                                  $   1,120       $     453       $   1,573 

Interest income                                                                               (434)
 Interest expense                                                                            6,778 
Gain on marketable securities and net gain in                                                      
     investee                                                                                  (52)
Realized gain on sale of investment and                                                            
     capital gain                                                                           (1,754)
Loss from swap transaction                                                                   8,638 
Income benefit                                                                              (5,192)
                                                         ----------------------------------------- 
Net loss before discontinued operation                                                      (6,411)
Loss on discontinued operation                                                                --   
                                                         ----------------------------------------- 
Net loss                                                                                    (6,411)
                                                         ========================================= 

Identifiable assets at December 31, 2007                 $  99,955       $    --         $  99,955 
Cash and corporate assets                                                                   10,753 
                                                                                         --------- 
Total assets at December 31, 2007                                                        $ 110,708 

                                                                                              2006 
Sales and other operating revenues                       $   2,167       $     825       $   2,992 
Costs and operating expenses                                 2,290             251           2,541 
                                                         ----------------------------------------- 
Operating profit (loss)                                       (123)            574             451 

Interest income and other                                                                      448 
Net gain in investee and gain on marketable                                                  3,747 
Securities                                                                                         
General corporate expenses                                                                  (1,964)
Internet expense                                                                              (294)
Compensation for legal settlement                                                            2,536 
Gain from swap transaction                                                                   2,604 
Other income                                                                                    39 
Income taxes                                                                                  (726)
                                                         ----------------------------------------- 
Net income before discontinued operation                                                     6,569 
Loss on discontinued operation                                                              (2,727)
                                                         ----------------------------------------- 
Net income                                                                               $   3,842 
                                                         ========================================= 
Identifiable assets at December 31, 2006                 $  10,560       $      66       $  10,626 
Cash and corporate assets                                                                   51,447 

                                      F-18                                                         

10-K
52nd Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 52nd
                                                                                         --------- 
Total assets at December 31, 2006                                                        $  62,073 
Sales and other operating revenues                       $   3,140       $   1,550       $   4,690 
Costs and operating expenses                                (3,075)           (787)         (3,862)
                                                         ----------------------------------------- 
Operating profit (loss)                                         65             763             828 

Interest income                                                                                294 
Gain on marketable securities and net gain in                                                1,212 
     investee                                                                                      
General corporate expenses                                                                  (2,045)
Other income (expense)                                                                        (524)
Compensation for legal settlement                                                               -- 
Gain from swap transaction                                                                    (641)
Income taxes                                                                                   (40)
                                                         ----------------------------------------- 
Net loss before discontinued operation                                                        (253)
Loss on discontinued operation                                                                (879)
                                                         ----------------------------------------- 
Net loss                                                                                 $  (1,132)
                                                         ========================================= 

Identifiable assets at December 31, 2005                 $   5,236       $      68       $   5,304 
Cash and corporate assets                                                                   33,311 
                                                                                         --------- 
Total assets at December 31, 2005                                                        $  38,615 

F-19

10-K
53rd Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 53rd
17.     COMMON STOCK                                                            

In March 2005, Isramco issued 38,919 shares of its common stock to each of Haim 
Tsuff, Chairman of the Board of Directors and Chief Executive Officer of        
Isramco, and Jackob Maimon, President of Isramco. The shares were issued upon   
the exercise of options to purchase 69,995 shares common stock at an exercise   
price of $4.28 per share granted to each of Mr. Tsuff and Mr. Maimon on March   
25, 2000. The options were exercised pursuant to "cashless" exercise provisions 
under which the number of shares of common stock issued upon exercise was       
reduced by the number of shares, valued at the closing price of the common stock
on the Nasdaq Small Cap Market on the trading day immediately prior to exercise,
equal to the aggregate exercise price of the option.                            

18.     DISCONTINUED OPERATION                                                  

In March 2004, Isramco purchased a luxury cruise liner for aggregate            
consideration of $8.05 million. Isramco, through its wholly owned subsidiary,   
Magic 1 Cruise Line Corp., a British Virgin Island corporation ("Magic I        
Corp."), leased the vessel to European based tour operator from April 2005      
through October 2005 and from April 6, 2006 through November 5, 2006. In        
December 2006, Isramco sold all of the outstanding share capital of Magic 1     
Corp. to an unrelated third party for total consideration of approximately $2.15
million The sale included the assumption by the purchaser of a loan in the      
principal amount of $3.3 million. Following the sale, Isramco is no longer      
engaged in the business of cruise line vessel                                   

RESULTS OF OPERATION FROM DISCONTINUED OPERATION FOR THE YEAR ENDED DECEMBER 31,
(in thousands except for share information)                                     

------------------------------------------------------------------------------- 
                                              2006              2005
------------------------------------------------------------------------------- 

REVENUES                                           $     1,712          $ 1,520 
                                                  ----------------------------
EXPENSES :                                                                      
   Interest expense                                       622              389
   Cost of revenue from vessel                          1,418            1,051
   Depreciation                                           945            1,128
   General and administrative                               7               15
   Impairment of vessel                                 2,200                -
                                                  ----------------------------
TOTAL EXPENSES                                           5,192            2,583 
                                                  ----------------------------

LOSS BEFORE INCOME TAXES                                 3,480            1,063 
INCOME TAXES                                                 -                - 
                                                   -----------------------------
NET LOSS FROM VESSEL ACTIVITY                            3,480            1,063 
                                                   -----------------------------
   Interest expenses to parent company                    369              184
   Capital gain from sale of activity                     384                -
                                                   -----------------------------
NET LOSS FROM DISCONTINUED OPERATION               $     2,727           $  879 
                                                   =============================

F-20

10-K
54th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 54th
19.     SUBSEQUENT EVENTS                                                       

TRANSACTION WITH GFB LLC AND TRANS REPUBLIC RESOURCES LTD                       

On February 15, 2008, Jay Petroleum, entered into Purchase and Sale Agreements  
(the "Agreements") with GFB Acquisition - I, L.P. ("GFB") and Trans Republic    
Resources, Ltd. ("Trans Republic," and, together with GFB, the "Sellers")       
pursuant to which Jay Petroleum agreed to purchase the Sellers' interests in    
certain oil and gas properties located in Texas, New Mexico and Oklahoma for an 
aggregate purchase price of approximately $102 million (the "Purchase Price").  
The transaction includes mainly operated oil and gas properties in approximately
40 fields (approximately 490 Leases) in East Texas, Texas Gulf Coast, Permian,  
Anadarko and San Juan Basins. Significant fields are the Alabama Ferry Field in 
East Texas, the Bagley Field in West Texas and New Mexico, and the Esperson Dome
Field on the Texas Gulf Coast. Net daily production from the properties is      
approximately 600 Barrels of oil and 3.6 MMCF. Based on a third party Consulting
firm that has performed a reserve report as of January 1, 2008, total net proved
developed producing reserves are approximately 3.26 million barrels of oil and  
18 BCF of natural gas. Contemporaneously with the execution of the Agreements,  
the Company paid to GFB a deposit of approximately $10 million (the "Deposit"). 
The final Purchase Price is subject to adjustment, as specified in the Purchase 
Agreement. The closing of the transaction was on March 27, 2008.                

For funding the Oil and Gas Properties acquired from GFB LLC and Trans Republic 
Resources Ltd. (see Note 19) the Company obtained, during 2008, loans in the    
total principle amount of $102.9 million as described below:                    

On March 27, 2008 Isramco obtained a loan from JOEL, a related party, in the    
principal amount of $48.9 million, repayable at the end of 7 years. Interest    
accrues at a per annum rate of LIBOR plus 6%. Mr. Jackob Maimon, Isramco's      
president and director is a director of JOEL and Mr. Haim Tsuff, Isramco's Chief
Executive Officer and Chairman is a controlling shareholder of JOEL.            

Pursuant to a Credit Agreement, dated as of March 27, 2008 (the "Credit         
Agreement") between Isramco and the Bank of Nova Scotia ("Scotia"), as          
administrative agent, Isramco obtained a $54 million a line of credit. Amounts  
outstanding under the credit line are payable by March 27, 2012. Interest on    
amounts outstanding accrue at a per annum rate equal to LIBOR plus 2%.          

Simultaneously to the cosigning of the agreement, the Company entered to 4 crude
oil swap contracts agreements and 4 natural gas price swap contracts with the   
commercial bank to sell 605,016 barrels of crude oil during 48 months commencing
April 1, 2008 and 3,433,348 MMBTU of natural gas during 48 months commencing    
April 1, 2008, which constitute 74% out of the forecasted production for        
2008-2011 and 18% out of the forecasted production for 2012.                    

Hereunder are the open swap contracts positions as of March 26, 2008:           

-----------------------------------------------------------------------------   

    Swap Contracts
-----------------------------------------------------------------------------   
  Natural Gas                          Crude Oil
  -----------------------------------     --------------------------------

                               Weighted                             Weighted
             Price range      Average              Price range     Average
  Volume                      Price       Volume                   Price
   (MMBTU)   ($/MMBTU)       ($/MMBTU)     (Bbl)    ($/MMBTU)      ($/Bbl)
  -----------------------------------     --------------------------------

2008 1,782,118 8.20-8.85         $  8.49     255,006  4.15-92.75    $  79.12    

2009 1,941,096 7.77-8.63            8.17     276,648  63.90-90.60      79.60    

2010 1,785,648 7.49-8.32            7.88     245,616  63.30-88.75      78.75    

2011              764,820           8.22     210,307  82.10-88.55      87.53    

2012              174,222           8.65      31,953     88.20         88.20    

F-21

10-K
55th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 55th
20.     SUPPLEMENTARY OIL AND GAS INFORMATION (UNAUDITED)                       

The following supplemental information regarding the oil and gas activities of  
Isramco for 2007, 2006 and 2005 is presented pursuant to the disclosure         
requirements promulgated by the Securities and Exchange Commission and SFAS No. 
69, "Disclosures About Oil and Gas Producing Activities." Capitalized costs     
relating to oil and gas activities and costs incurred in oil and gas property   
acquisition, exploration and development activities for each year are shown     
below.                                                                          

CAPITALIZED COST OF OIL AND GAS PRODUCING ACTIVITIES (IN THOUSANDS)             

                                                        [Enlarge/Download Table]


--------------------------------------------------------------------------------------------------- 
As of December 31                                                     2007              2006        
--------------------------------------------------------------------------------------------------- 
                                                                  UNITED STATES     UNITED STATES   
                                                                ----------------- ----------------- 
                                                                                                    
Unproved properties not being amortized                         $          15,314 $              -- 
Proved property being amortized                                            93,626            16,850 
Accumulated depreciation, depletion amortization and impairment           (16,291)           (5,610)
                                                                ----------------- ----------------- 
Net capitalized costs                                                      92,649            11,240 
                                                                ================= ================= 


COSTS INCURRED IN OIL AND GAS PROPERTY ACQUISITION, EXPLORATION, AND DEVELOPMENT
ACTIVITIES (IN THOUSANDS)                                                       

---------------------------------------------------------------------------     
As of December 31                            2007        2006        2005       
---------------------------------------------------------------------------     
                                         UNITED STATES
                                       -------------------------------
Property acquisition costs--proved and                                          
unproved properties                    $ 86,284    $ 1,609     $ 2,557
Exploration costs                           $    269        125         110     
Development costs                           $  2,691    $ 4,652     $   582     

OIL AND GAS RESERVES                                                            

Oil and gas proved reserves cannot be measured exactly. The engineers           
interpreting the available data, as well as price and other economic factor base
reserve estimates on many factors related to reservoir performance, which       
require evaluation. The reliability of these estimates at any point in time     
depends on both the quality and quantity of the technical and economic data, the
production performance of the reservoirs as well as extensive engineering       
judgment. Consequently, reserve estimates are subject to revision, as additional
data become available during the producing life of a reservoir. When a          
commercial reservoir is discovered, proven reserves are initially determined    
based on limited data from the first well or wells. Subsequent data may better  
define the extent of the reservoir and additional production performance, well  
tests and engineering studies will likely improve the reliability of the reserve
estimate. The evolution of technology may also result in the application of     
improved recovery techniques such as supplemental or enhanced recovery projects,
or both, which have the potential to increase reserves beyond those envisioned  
during the early years of a reservoir's producing life.                         

The following table represents Isramco's net interest in estimated quantities of
proved developed and undeveloped reserves of crude oil, condensate, natural gas 
liquids and natural gas and changes in such quantities at December 31, 2007,    
2006 and 2005, and for the years then ended. Net proved reserves are the        
estimated quantities of crude oil and natural gas which geological and          
engineering data demonstrate with reasonable certainty to be recoverable in     
future years from known reservoirs under existing economic and operating        
conditions. Proved developed reserves are proved reserve volumes that can be    
expected to be recovered through existing wells with existing equipment and     
operating methods. Proved undeveloped reserves are proved reserve volumes that  
are expected to be recovered from new wells on undrilled acreage or from        
existing wells where a significant expenditure is required for recompilation.   
All of Isramco's proved reserves are in the United States. Isramco's oil and gas
reserves are priced at $7.465 and $95.95 per barrel per Mcf, respectively, at   
December 31, 2007                                                               

F-22

10-K
56th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 56th
                                                        [Enlarge/Download Table]


------------------------------------------------------------------------------------- 
                                        OIL BBLS          GAS MCF           NGL BBLS  
------------------------------------------------------------------------------------- 
                                                                                      
December 31, 2004                         140,080         2,011,440              --   

Revisions of previous estimates           (20,269)         (118,402)             --   
Acquisition of minerals in place            1,280           106,670              --   
Sales of minerals in place                   --                --                --   
Production                                (15,723)         (355,008)             --   
December 31, 2005                         105,368         1,644,700              --   
                                                                                 --   
Revisions of previous estimates            24,071           (59,066)             --   
Acquisition of minerals in place             --                --                --   
Sales of minerals in place                   --                --                --   
Production                                (13,464)         (213,634)             --   
December 31, 2006                         115,975         1,372,000              --   

Revisions of previous estimates           358,044         1,455,617           838,595 
Acquisition of minerals in place        1,625,855        24,075,738         1,425,600 
Sales of minerals in place                   --                --                --   
Production                                (96,793)       (1,550,789)         (100,534)
                                      -----------       -----------       ----------- 
December 31, 2007                       2,003,081        25,352,566         2,163,661 
                                      =============================================== 

F-23

10-K
57th Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 57th
                                                        [Enlarge/Download Table]


Isramco's proved developed reserves are as follows:                                                                  

                                     DEVELOPED                                           UNDEVELOPED                 
---------------------------------------------------------------------------------------------------------------------
                      OIL BBLS         GAS MCF      NGL BBLS            OIL BBLS            GAS MCF        NGL BBLS  
                    -------------------------------------------------------------------------------------------------
                                                                                                                     
December 31, 2007    1,808,317       23,338,079       1,873,949          194,764           2,014,487          289,711
December 31, 2006     115,975         1,372,000           -               5,876             618,700              -   
December 31, 2005     105,368         1,644,700           -              20,652             484,101              -   
December 31, 2004     140,080         2,011,440           -              32,880             334,100              -   

STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOW                         

The standardized measure of discounted future net cash flows relating to        
Isramco's proved oil and gas reserves is calculated and presented in accordance 
with Statement of Financial Accounting Standards No. 69. Accordingly, future    
cash inflows were determined by applying year-end oil and gas prices to         
Isramco's estimated share of the future production from proved oil and gas      
reserves.                                                                       

Future production and development costs were computed by applying year-end costs
to future years. Applying year-end statutory tax rates to the estimated net     
future cash flows derived future income taxes. A prescribed 10% discount factor 
was applied to the future net cash flows.                                       

In Isramco's opinion, this standardized measure is not a representative measure 
of fair market value. The standardized measure is intended only to assist       
financial statement users in making comparisons among companies.                

                        2007               2006               2005
                       -------------      ------------      ------------
Future cash inflows        $ 450,981,415      $ 18,208,000      $ 27,812,000    
Future development                                                              
costs                         (3,502,500)         (866,000)         (894,000)   
Future production                                                               
costs                       (178,384,211)       (7,170,000)       (8,045,000)   
                       -------------      ------------      ------------
Future net cash flows        269,094,704        10,172,000        18,873,000    
Future income tax                                                               
expenses                    (63,983,746)        (2,976,000)       (6,458,000)   
Annual 10% discount                                                             
rate                       (108,345,218)        (2,875,000)       (4,927,000)   
                       -------------      ------------      ------------
Standardized measure       $  96,765,740      $  4,321,000      $  7,488,000    
discounted future net      =============      ============      ============    
cash flows                                                                      

The principal sources of change in the standardized measure of discounted future
net cash flows for the years ended December 31, 2007, 2006 and 2005 were as     
follows:                                                                        

                             2007               2006                2005
                            ------------       ------------       ------------
Beginning of the year        $  4,321,000       $  7,488,000       $  6,001,810 
Sales and transfers of oil                                                      
and gas produced, net of                                                    
  production costs            (13,267,315)        (1,048,000)        (1,861,000)
Net changes in prices and                                                       
 production costs              6,084,956         (5,629,000)        10,962,000
Net changes in income taxes     (8,075,637)         4,961,000            220,000
Changes in estimated future                                                     
development costs, net of                                                   
current development costs    (3,395,813)              --                 -- 
Acquisition of minerals in                                                      
place                        95,870,804            992,000               -- 
Revision of previous                                                            
 estimates                    23,413,049         (1,716,000)         1,000,000
Change of discount                794,008          1,395,000            943,000 
Change in production rate                                                       
  and other                    (8,979,313)        (2,123,000)        (9,740,577)
                            ------------       ------------       ------------
End of year                  $ 96,765,740       $  4,321,000       $  7,488,000 
                            ============       ============       ============

F-24

10-K
Last Page of 58
TOC
1st
Previous
Next
↓Bottom
Just 58th
                                                        [Enlarge/Download Table]


UNAUDITED QUARTERLY FINANCIAL INFORMATION                                                          
 (In Thousands, Except Per Share Data)                                                             

---------------------------------------------------------------------------------------------------
       QUARTER ENDED                             MARCH 31     JUNE 30     SEPTEMBER 30  DECEMBER 31
---------------------------------------------------------------------------------------------------
                                                                                                   
2007                                                                                               
    Total Revenues                                $ 3,122      $ 7,215      $ 5,355      $ 7,064   
    Net Income (loss) before taxes                $(2,807)     $ 1,936      $  (970)     $(9,762)  
    Net income (loss) from discontinued operation    --           --           --           --     
    Net Income                                    $(1,766)     $ 1,198      $  (647)     $(5,196)  

    Earnings (loss) per Common Share                                                               
      -Basic and Diluted                          $ (0.65)     $  0.44      $ (0.24)     $ (1.91)  

2006                                                                                               
    Total Revenues                                $ 1,576      $ 1,708      $ 1,081      $ 1,197   
    Net Income (loss) before taxes                $ 2,650      $ 1,337      $   225      $ 3,083   
    Net income (loss) from discontinued operation                                                  
                                                  $(2,500)     $   231      $   458      $  (916)  
    Net Income                                    $   394      $ 1,066      $   582      $ 1,800   

    Earnings (loss) per Common Share                                                               
      -Basic and Diluted                          $  0.14      $  0.39      $  0.21      $  0.67   

2005                                                                                               
    Total Revenues                                $ 1,845      $   963      $ 2,105      $    982  
    Net Income (loss) before taxes                $   989      $  (953)     $ 1,152      $ (1,401) 
    Net income (loss) from discontinued operation                                                  
                                                     --        $  (201)     $   190      $  (529)  
    Net Income                                    $   304      $  (596)     $   992      $(1,832)  

    Earnings (loss) per Common Share                                                               
      -Basic and Diluted                          $  0.11      $ (0.22)     $  0.36      $ (0.67)  


F-25

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K’ Filing		Date		First		Last			Other Filings
		2/26/14		8		47
		3/27/12		10		54
		3/1/11		9		47
		11/15/08		41
		4/1/08		6		54
Filed on:		3/31/08		1		33			10-Q
		3/28/08		11		14
		3/27/08		6		54			8-K,  8-K/A
		3/26/08		10		54
		2/20/08		10		46
		2/15/08		6		54			8-K
		1/1/08		6		54
For Period End:		12/31/07		1		57			8-K,  8-K/A
		12/30/07		11		45
		11/15/07		41
		9/30/07		30					10-Q
		9/1/07		30
		7/11/07		9		47
		6/30/07		1					10-Q,  10-Q/A,  NT 10-Q
		3/31/07		28		30			10-Q,  NT 10-Q
		3/28/07		24
		3/2/07		6		47			8-K,  8-K/A
		2/27/07		8		47
		2/26/07		9		47			8-K
		2/16/07		5		29
		2/12/07		29
		1/1/07		6		41
		12/31/06		18		57			10-K,  8-K
		12/15/06		41
		11/5/06		53
		10/19/06		5					UPLOAD
		10/1/06		42
		4/6/06		53
		1/1/06		42
		12/31/05		20		57			10-K,  10-K/A
		12/31/04		36					10-K
		12/31/03		30					10-K,  10-K/A
		1/1/03		41
		6/30/02		29					10-Q
		6/12/02		29
		3/25/00		53
		11/1/99		29					8-K
		12/31/97		29					10KSB
		9/4/97		29
		3/17/93		28
		1/21/93		28
		6/11/92		26
		3/5/92		26
									List all Filings