Less than five years after Ofer Nimrodi held an IPO for Israel Land Development Company Energy Ltd. (TASE: IE) (ILDC Energy) at the colossal company value of NIS 830 million, the company's exploration business is coming to an end, at least for now. The company yesterday announced the expiration of its two main off-shore licenses - Myra and Sarah - in which $155 million was invested, without any gas having been discovered in them.
ILDC Energy said that the Ministry of National Infrastructure, Energy, and Water Resources Petroleum Commissioner had decided against extending the validity of the licenses, seven years after the licenses were first granted. The company added that it had not received an answer from the Petroleum Commissioner about obtaining a license for the Guy prospect, a request submitted at the end of 2014, a request that was designed to change the boundaries for the licenses, and to consolidate them into a single license. The other main partners in the Sarah and Myra drilling were Ratio Oil Exploration (1992) LP (TASE:RATI.L), Energean, and Modiin Energy LP (TASE:MDIN.L).
In view of the termination of its business, ILDC Energy, owned by Nimrodi through the Israel Land Development Company (TASE: ILDC), reported the resignation of former Ministry of Finance director general Ohad Marani as company CEO. Marani said, "Until the company is granted new licenses and its activity in the sector is renewed, company controlling shareholders Israel Land Development is not expected to continue injecting money into the company to enable it to maintain its current volume of activity and expenses."
In his resignation announcement, Marani said, "Given the new rules issued by the Petroleum Commissioner, and in view of the emerging trend in the offshore oil and gas exploration industry, the company is liable to find itself without oil and gas licenses for a substantial period of time."
Marani added, "The Ministry of National Infrastructure, Energy, and Water Resources' 'closed sea' policy is preventing the issuing of offshore licenses, and is not allowing companies in the industry to develop and renew their activity." Since being appointed to his post in April 2010, and up until the end of 2014, Marani's employment cost the company a total of $1.75 million.
The main value that ILDC Energy was to have generated for Marani, however, was wiped out, following the crash in the company's value when its efforts to find gas failed. When the company was active, its leaders received options and shares in it.
The profit from the options remained on paper
In June 2011, right around the time that seismic surveys were published by ILDC Energy, its value skyrocketed to a record NIS 1.5 billion, reflecting a profit on paper of tens of millions of shekels for its leaders. Other than Nimrodi, the most prominent of those being paid in this manner, the paper value of whose holdings in the company exceeded NIS 30 million, was MK Eli Cohen, who was Nimrodi's deputy in Israel Land Development Company before he entered politics.
The failure of the company's explorations, however, brought the value of ILDC Energy to almost nothing, and the company's share is currently traded at a negligible company value of less than NIS 20 million, making the holdings of its senior executives worth almost nothing.
Published by Globes [online], Israel business news - www.globes-online.com - on July 14, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015