Oil and gas found at Gabriella, Yitzhak licenses

Modiin and Adira discover an estimated 128 million barrels of oil and 1.8 trillion cubic feet of gas in shallow water northwest of Tel Aviv.

Modiin Energy LP (TASE:MDIN.L) and Adira Energy Corporation (XETRA: AORLB8; TSX: ADL; Bulletin Board: ADENF) today announced an oil and natural gas discovery at their offshore Gabriella and Yitzhak Licenses. Modiin controlling shareholder Tzahi Sultan and IDB Holding Corp. Ltd. (TASE:IDBH) CEO Haim Gavrieli made the announcement at IDB's headquarters in Tel Aviv.

According to Adira, Gabriella and Yitzhak have a best estimate of 232.2 million barrels of oil, including 110.1 million barrels of contingent oil. Together, the Gabriella and Yitzhak licenses have a best estimate of 1.8 trillion cubic feet of natural gas. The discoveries were made in Jurassic strata, located in shallow water 24 kilometers northwest of Tel Aviv. The estimates are based on a 3D seismic survey by Netherland Sewell & Associates Ltd. (NSAI).

In its notice to the TASE, Modiin says the best estimate for Gabriella is 128.4 million barrels of oil.

Adira, a Canadian company, owns 30% of the Gabriella license and 85% of the Yitzhak license. Modiin, controlled by Tzahi Sultan and Nochi Dankner through IDB Holding Corp. Ltd. (TASE:IDBH), owns 70% of Gabriella.

Gavrieli said that the discovery was "significant", adding, "Surveys conducted in recent months found oil in the target strata. The potential oil reservoir is 128 million barrels of oil, and the contingent reserves are an additional 120 million barrels." He added, "The Gabriella license in near shore in shallow water. At a time of soaring oil prices, this is good news for IDB, Modiin, Adira, and for the Israeli economy, which is trying to diversify its energy sources." He hinted that it will be easier to produce oil than natural gas from Gabriella.

Gavrieli continued, "Modiin today became a leading player in Israel's energy market. This is good news - we found high quality oil inshore, which can be extracted. A previous well there produced 500 barrels of oil a day. In other words, we have an oil target in commercial quantities that can meet Israel's energy needs for 18 months."

The natural gas discovery is a fifth the size of the 9 trillion cubic foot deep water Tamar discovery, owned by Delek Group Ltd. (TASE: DLEKG), Noble Energy Inc. (NYSE: NBL), and Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L).

Sultan said, "Bottom line, there is oil. It's 100%. Secondly, the quantities are commercial."

Asked by "Globes" about the timing and costs of a well, Sultan replied, "Drilling at Gabriella should begin by the end of the year. We're now working on the budget, and when we have a figure, we'll notify the TASE. I believe that, during 2013, we'll have more figures about the production rates, and a precise figure on the size of the reservoir. As for actual oil production - it will be about five years to the first well."

Adira CEO Jeffrey Walter said, "There's a best estimate of 79 million barrels of oil at the Yitzhak license and an additional 25.6 million barrels of contingent oil, as well as one trillion cubic feet of natural gas. I said that I came to find oil and gas and was laughed at. I was told that there is no oil here. They were wrong."

Walter said that the latest technologies have been used to discovery oil and gas in the Eastern Mediterranean since the discoveries in Syria and Egypt. Describing the Syrian-Egyptian arc, which passes through Israel, he said, "We're now connecting the dots."

Modiin's share price rose 10.8% in morning trading today to NIS 0.348, giving a market cap of NIS 800 million. Adira's share price rose 3.2% on the Vancouver Stock Exchange yesterday to C$0.17, giving a market cap of $17 million.

Published by Globes [online], Israel business news - www.globes-online.com - on March 13, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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