Former Isramco Negev 2 LP (TASE: ISRA.L) and Nafta Israel Petroleum CEO Yossi Levy and Energy Texas have completed a deal for acquiring full ownership of Zerah Oil And Gas Explorations LP (TASE: ZRAH), the general partner in the Zerah partnership. Following the completion of the deal, Zerah is expected to change its name to Petrotex. Levy is being appointed CEO of the company.
Energy Texas will own 80% of the capital of the general partner, and Levy 10%, with Advocate Jacob Katz, Levy's partner, owning the remaining 10%. The partnership is now preparing to raise capital, with a target of $5-10 million and a minimum of NIS 10 million. This will enable the partnership to buy the rights owned by Energy Texas in two oil and gas exploration projects in Louisiana.
The first project, Mirror Image, involves drilling to a depth of 5,500 meters. A seismic survey on the site indicates chances of finding oil. The general partner plans to find partners for the project, in which the investment is estimated at $8 million.
The second project, Badger Pass, includes a prospect for drilling in sand at depths of 5,000 meters and 6,000 meters. A gas producing field is located five kilometers from the proposed point of drilling. Investment in the project is estimated at $9 million.
Equity offering planned in near future
In addition, Energy Texas is currently negotiating the acquisition of 49.9% of the rights to the Baxterville project in Mississippi. The cost of the acquisition is estimated at $23 million, and the partnership is likely to buy the rights from it later, along with the bond issue being planned.
Levy was CEO of Aramco and Nafta for 23 years. The managers of Energy Texas are former Noble Energy executives who took part in the teams of that company that led the development of the major offshore gas fields in Israel (Yam Tethys, Tamar, and Leviathan). Energy Texas was founded two years ago by leading oil and gas exploration professionals CEO Colin Sinclair, COO Ken Stanley, executive VP operations Doug Smith, and executive VP drilling and completions Chris Thomasson.
Levy told "Globes," "Over the past three years, the cost of drilling and exploration services have been cut in half, so that it is worthwhile exploring and drilling even at the current prices of oil and gas."
"Globes": Many energy companies in the US lack money. They are in distress, and want to bring in partners.
Levy: "The project in Mississippi is already in operation and producing oil and gas. Even if prices drop 10-20%, it will still be worth investing in it. Companies don't have enough cash to develop every field, so we'll buy the producing part, and enter into development with them at a negligible price. Former Noble Energy personnel have spotted the situation and the opportunities that have emerged."
How and when are you planning to raise money?
"Our plan is to raise money soon through an equity offering, and if we succeed in buying the rights in the field in Mississippi, we'll issue bonds."
Is this worthwhile at a price of $40-50 a barrel and $3 per gas unit (one million cubic meters)?
"The US is now becoming an exporter of gas. There, once you finish drilling, you can produce and sell it within a week, because the infrastructure is very developed. It's still very worthwhile producing at $3 per gas unit."
Published by Globes [online], Israel Business News - www.globes-online.com - on August 31, 2017
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