"I find myself in good shape, and I don’t have to prove that there are discoveries. I need to get out what there is in Myra and Sarah, and there's a lot there," said Israel Land Development Company Energy Ltd. (TASE: IE) geologist Ilan Bruner at a company investors' conference yesterday. The drilling of exploratory wells at the licenses are scheduled to begin in three months.
ILDC Energy chairman Ofer Nimrodi is usually responsible for the colorful quotes at company conferences, but Bruner stole the show yesterday. "Sarah and Myra have a fantastic geological structure, which show very good results in processing the underground seismic lines. The analysis based on a lot of 3D seismic material collected within these blocks gives amazing results, like a surgeon who goes into the arteries for analysis."
According to the resources report that ILDC Energy published in late June 2011, the best estimate of the gas discovery at Myra and Sarah is 2.9 trillion cubic feet, with a 54% geological probability of success. Beneath the gas-bearing strata are possible oil-bearing strata with 150 million barrels of oil with an 18% chance of geological success.
Waiting for the rig
ILDC Energy CEO Ohad Marani said, "The Homer Ferrington rig, which has entered Israel's economic waters is due to drill the Leviathan 1 well for almost two months, and if there is an oil discovery there, it will carry out production tests, which will take three weeks. Therefore, the earliest date to receive the rig is mid-March, and if there's an oil discovery at Leviathan 1, we'll get it in the first of second week of April."
The Homer Ferrington rig will first drill the Myra 1 well, located 80 kilometers west of Hadera, with the drilling scheduled to take 70 days. It will then head east to drill the Sarah 1 well, 60 kilometers offshore, where it will drill for 50 days.
ILDC Energy and its affiliates own 41.6% of Myra and Sarah, and its parent company Israel Land Development Company (TASE: ILDC) owns 5%. Modiin Energy LP (TASE:MDIN.L), controlled by Tzahi Sultan and Nochi Danker's IDB Holding Corp. Ltd. (TASE:IDBH), owns 29.2%, IDB directly owns 5.6%, well operator GeoGlobal Resources Inc. (AMEX: GGR) of Canada owns 5% (ILDC Energy owns 16.6% of GGR), and IPC Oil and Gas Holdings Ltd. (IPC) (TASE: IPC) owns 13.6%.
The budget for drilling the two wells is $160 million, and production tests, if the partners decide to conduct them, will cost an additional $20 million. "More than 95% of the costs have been closed, the contract for the rig is signed, the equipment has been procured, and most of the money paid, so we don’t expect any big fluctuations in the budget," said Marani.
Seeking oil and gas in the Adriatic
ILDC Energy used the conference to update investors on its operations in Albania, first announced a few months ago. On Monday, the company announced that its Cypriot-registered subsidiary Emanuelle Adriatic Energy Ltd. had reached agreements with the Albania government to obtain three offshore concessions with a total area of 5,070 square kilometers. ILDC Energy invested €3 million in Emanuelle Adriatic for a 51% stake in it, with the rest held by Albanian partners.
ILDC Energy said that 1,500 wells were drilled in the Adriatic Sea in 1960-2006, of which 150 were outside Italy's economic waters. More than 90 gas fields and eight oil fields have been discovered, 90% of them in Italian waters.
Nimrodi said, "There have been a lot of successful wells on the Italian side of the Adriatic Sea, in contrast to Albania, where there was no money and only a few wells were dug with Soviet technology and were not very successful. We believe that there are the same kinds of assets on the Albanian side, where we've located some interesting blocks, which we're going to check out."
He added that, once Emanuelle Adriatic receives the licenses, it will seek partners for the project, and that it did not rule out raising capital on a foreign market. "The trick is to invest a little and do a lot, and not invest a lot of money and pray," he concluded.
Published by Globes [online], Israel business news - www.globes-online.com - on January 18, 2012
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