Shimshon well borehole collapses

Isramco estimates the sidetrack drilling cost will amount to $19 million, and take an additional 14 days to carry out.

Sources inform ''Globes'' that drilling of Shimshon 1 well, located offshore from Ashkelon, has been suspended for ten days, due to the partial collapse of the borehole.

Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) and its affiliates own 59% of the Shimshon license and well operator ATP Oil & Gas Corporation (Nasdaq: ATPG) owns 40%.

ATP is trying to re-cement the sides of the borehole. ATP Israel manager Rob Happe told "Globes" that he hopes that drilling will resume next week. The Ensco 5006 rig is drilling the Shimhson exploratory well.

The breakdown will delay publication of the exploratory well's results, which were due this week. Energy exploration market sources said that the breakdown is minor, and that similar problems in wells of Noble Energy Inc. (NYSE: NBL) caused delays of 30 days.

The Ensco 5006 rig, previously called the Pride North America, changed its name after a series of breakdowns during the drilling of the Leviathan verification well, owned by Noble Energy, Delek Group Ltd. (TASE: DLEKG), and Ratio Oil Exploration (1992) LP (TASE:RATI.L). The Shimshon well is the first exploratory well in Israel that is not owned by Noble Energy.

Drilling of the Shimshon well began in mid-April, and was due to take 45 days. A 3D seismic study of the structure estimates 2.3 trillion cubic feet of gas with a 20% geologic probability of success.

In a notice to the TASE, Isramco said that ATP notified it that drill pipe at the Shimshon 1 well was stuck in the borehole, preventing further drilling, and that the operator will carry out sidetrack drilling instead. ATP estimates the sidetrack drilling cost will cost an $19 million, and take an additional 14 days to carry out.

Isramco's share price fell 0.6% by midday to NIS 0.48, giving a market cap of NIS 6.1 billion.

Published by Globes [online], Israel business news - www.globes-online.com - on June 6, 2012

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

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