No gas in Aphrodite 2

Well partner Israel Opportunity invested $10 million in the drilling in the Ishai license.

There has been another failure in Israel's natural gas exploration industry. On Friday, Israel Opportunity Energy Resources LP (TASE: ISOP.L) announced that there was only negligible quantities of gas at the Aphrodite 2 well in the Ishai license, according to the final resources report from the independent consultants Ryder Scott Company LP.

Israel Opportunity owns 10% of the Ishai license, Benny Steinmetz's Nammax Oil and Gas Ltd. owns 42.5%, two companies owned by Teddy Sagi, Frendum Investments Ltd. and Daden Investment Ltd. own 33.5%, and 9%, respectively, and well operator AGR Petroleum Services Holdings AS of Norway owns 5%. The Homer Ferrington Rig, owned by Noble Corporation (NYSE: NE), completed the well several months ago at a cost of $100 million. Israel Opportunity's share of the cost was $10 million.

Bad omens for the Aphrodite 2 well emerged early this year, when Israel Opportunity announced that although signs of gas were discovered at the well, which was drilled in 2012, the thickness of the gas-bearing strata was only 15 meters. For the sake of comparison, the thickness of the Tamar Sands strata, 50 kilometers east of the Ishai license, is 140 meters. Provisional estimates of gas at the Aphrodite 2 well were low and there was great doubt whether it was a commercial discovery.

"We regret the results, and we would have been happy were they different. Nonetheless, the partnership's strategy to diversify risks and hold only a 10% stake has proved itself," said Israel Opportunity CEO Eyal Shuker. "The partnership has a portfolio of assets, and it has $30 million in cash, which will allow it to continue to realize their potential. We believe that this strategy of diversifying risk is the correct strategy, and it will help the partnership survive the statistics of the exploration industry."

Published by Globes [online], Israel business news - www.globes-online.com - on April 14, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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