The Tel Aviv District Court has seized the rights of ATP Oil & Gas Corporation (Bulletin Board: ATPAQ) in the Shimshon and Daniel offshore licenses. The unexpected seizure could delay by up to two years the development plans for the Shimshon license, where natural gas has been discovered, and exploration plans for the East and West Daniel licenses.
The court seized ATP's rights to the licenses after the company filed for Chapter 11 bankruptcy protection with the United States Bankruptcy Court for the Southern District of Texas in mid-August. However, ATP's creditors discovered that the company's offshore exploration licenses in Israel were held by a subsidiary, ATP East Med Number BV, which was not protected from seizure under US bankruptcy laws.
ATP set up ATP East Med at the order of the Petroleum Supervisor at the Ministry of Energy and Water Resources. ATP East Med owns 35% of the Shimshon and East and West Daniel licenses, and ATP directly owns 5% of them. Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) and its affiliates own the other 60%.
ATP said in its petition for bankruptcy protection that it owes 1,000 creditors $3.4 billion. The Texas court appointed a trustee for the company's assets. According to documents obtained by "Globes", the trustee wants to keep some of the company's exploration rights in Israel and sell the rest. Until the fate of the seizure and the trustee's decisions are decided, ATP's business will likely be paralyzed.
Energy market sources believe that the seizure of ATP East Med's assets is a complication for the Israeli government, because the Shimshon licensees could obtain rights to the license after major signs of gas were found in a survey of it. The gas discovery prevents the state from seizing ATP's rights to the licenses for two years from the date of the discovery.
Shimshon was officially declared a gas discovery in early August. The license, located 91 kilometers northwest of Ashdod, has a best estimate of 2.3 trillion cubic feet of natural gas with a 20% geological probability of success.
The Ministry of Energy said in response, "The ministry is examining the significance of the seizure on ATP's subsidiary on part of the Shimshon and Daniel exploration licenses. It should be noted that, in any case, the licensees are required to meet the work plans approved by the Petroleum Supervisor."
Published by Globes [online], Israel business news - www.globes-online.com - on September 4, 2012
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