Adira Energy Ltd. is pleased to announce that Modiin Energy L.P (Modiin Energy), on behalf of the Gabriella License consortium, including Adira and Brownstone Energy, has executed a detailed drilling contract (the Agreement) with Noble International Ltd (Noble Drilling). The Agreement provides for the drilling of the Gabriella License (the License) by the Noble Homer Farrington semi-submersible rig prior to the government regulated spud date of June 30, 2013.
Jeffrey E. Walter, Chief Executive Officer of Adira Energy stated: “Another major milestone has been delivered to Adira’s shareholders with the signing of the Homer Farrington rig contract. This will enable us to drill the highly anticipated Gabriella License, which is Adira’s core asset. With over 110 million barrels of contingent oil resources, this project is important to Adira as well as a fundamental key in moving forward on the oil potential offshore Israel. The Homer Farrington has drilled some of the most successful discovery wells in the Eastern Mediterranean including “Leviathan” offshore Israel and “Block 12” offshore Cyprus. ”
The Gabriella Licence is located approx. 10 kms northwest of Tel Aviv, in the waters offshore Israel. The block covers an area of approx. 392 sq kms (97,000 acres) and is in water depths that range from 100 meters on the east side of the block to just over 425 meters on the southwest side of the block. Adira holds a 15% Working Interest in the Gabriella Licence plus a 15% back-in option from Modiin Energy, to be exercised within six months of discovery, at cost.
In addition, Adira is entitled to receive: (a) 4.25% of the 7.5% management fees payable by Modiin Energy to its general partner; and (b) a royalty in the aggregate amount of 4.5% (2.25% from each of Modiin Energy and its general partner) from any resources extracted from the Gabriella Licence until Modiin Energy recovers the pro rata exploration expenditures incurred by it on behalf of the Company, after which time the royalty increases to an aggregate of 10.5% (5.25% from each of Modiin Energy and its general partner).
The Company is the designated Operator and has the right to match the terms of alternative Operators, if proposed. On March 13, 2012, the Company announced it received an independent resource report prepared by Netherland, Sewell & Associates, Inc., which included a best estimate of 110.1 MMbbl of contingent oil on the Gabriella Licence on a gross unrisked basis.