Zerah teams with Delek to expand Dead Sea oil exploration

In 1995, a 2,000-meter well was drilled in the Halamish section, which found oil and gas.

Zerah Oil And Gas Explorations LP (TASE: ZRAH) is expanding its activity in the Dead Sea. The company has bought the 335-square kilometer Zurim license from Fore Group Ltd. subsidiary Ginko Oil Exploration Ltd., which abuts Zerah's license. Delek Group Ltd. (TASE: DLEKG) units owns half of a 35 square kilometer section of the Zurim License, known as the Halamish section through Delek Drilling LP (TASE: DEDR.L) and Avner Oil and Gas LP (TASE: AVNR.L).

Zerah will pay for the Zurim license out of future revenue from oil or gas production, if any. Zerah will pay Ginko a 2.5% royalty of revenue and provide it a $2 million grant, provided that an independent expert determines that the oil and gas reserves in the license are worth at least $250 million. In addition, the Supervisor of Oil at the Ministry of National Infrastructures will have to declare a discovery at the license, and the partnerships' revenue from a discovery at the Zurim license will exceed $100 million.

In 1995, a 2,000-meter well was drilled in the Halamish section, which found oil and gas. However, no production was carried out because the price of oil at the time rendered the discovery uneconomical.

The Halamish partners intend to drill a new well at the site, which is about five kilometers from Tzuk Tamrur 4 site, where Zerah and Delek are due to begin drilling a well this month. The 2,000-meter well will cost $4-5 million. A seismic study of the structure found a closed structure with 6.6 million barrels of good-quality oil, currently worth a gross value of $470 million.

Zerah's share rose 1.4% by midday to NIS 0.14, Delek Drilling's share rose 1.1% to NIS 7.11, and Avner's share rose 0.9% to NIS 1.19.

Published by Globes [online], Israel business news - www.globes-online.com - on October 15, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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