Noble Corporation notified Modiin Energy that it will stop drilling, unless $21.1 million is transferred by tomorrow.
Gabriella well operator Noble Corporation (NYSE: NE) has notified licensee Modiin Energy LP (TASE:MDIN.L) that unless a $21.1 million transfer is made within 48 hours, it will suspend drilling of the well, as Modiin Energy is in breach of contract.
Modiin Energy provided Noble Corporation unit Noble Drilling with a $12 million letter of credit in early January. Modiin Energy says that it has its full $11.2 million share of the second letter of credit, but that its partners in the license, Canada's Adira Energy Corporation (TSXV: ADL; Bulletin Board: ADENF; XETRA: AORLB8) and Brownstone Energy Inc. (TSX: BWN; Bulletin Board: BWSOF) have not deposited their shares of the letters of credit - $10 million. Modiin Energy says that its partners are in material breach of their commitments to desposit their shares of the two letters of credit - $5 million each by Adira and Brownstone - which has resulted in Modiin Energy not being able to provide the second letter of credit. Modiin Energy notified its partners that they have until 9 am Wednesday to remedy this breach.
Modiin Energy owns 70% of the offshore shallow water Gabriella license, and Adira and Brownstone each own 15%. The budget for the Gabriella well is $96 million, and the budget for production tests, if carried out, is $34 million.
Published by Globes [online], Israel business news - www.globes-online.com - on February 13, 2013
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