Canada's Bontan announces two more huge Israeli gas fields

Gas at the Mira and Sarah offshore prospects could be worth $7.54 billion.

Canada's Bontan Corporation Inc. (Bulletin Board: BNTNF) subsidiary Bontan Oil and Gas Exploration today announced that its Mira and Sarah prospects offshore from Israel have up to 6 trillion cubic feet of natural gas, worth up to $7.54 billion, at current prices.

The Mira and Sarah prospects are located just south of the Tamar and Dalit prospects, where Delek Group Ltd. (TASE: DLEKG) and its partners, Noble Energy Inc. (NYSE: NBL), Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), and Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) unit Dor Alon Energy Exploration Ltd found natural gas last year, which some sources estimate to be worth up to $40 billion. The prospects are north of Yam Tethys' Mary prospects offshore from Ashkelon, BG Group plc's (NYSE; LSE: BG) undeveloped fields offshore from Gaza, and East Mediterranean Gas Co. (EMG) fields offshore from El Arish in Sinai.

Bontan's prospects are just north of the Gabriella prospect, which Modiin Energy LP (TASE:MDIN.L) acquired 70% of from Canada's Adira Energy Corporation(XETRA: AORLB8; Bulletin Board: AMGOF) subsidiary Adira Energy Israel Ltd. last week.

The Evaluation Report prepared by Chapman Petroleum Engineering Ltd. estimates that the Mira prospect has 3.03-5.45 trillion cubic feet of gas, with the best estimate of 4.24 trillion cubic feet. The Sarah prospect has 1.05-1.89 trillion cubic feet of gas, with a best estimate of 1.47 trillion cubic feet.

According to Chapman, the present value of gas in the Mira prospect is $2.54-5.37 billion, with $3.96 billion as the most likely amount. The value of gas in the Mira prospect is $1.02-2.17 billion, with $1.59 billion as the most likely amount. The probable value of the gas at the two prospects is $5.55 billion.

Bontan indirectly owns 71.625% of the Mira and Sarah prospects through its 75% stake in Israel Petroleum Company, which owns 95.5% of the drilling licenses.

Chapman concludes, “Based on our analysis, after consideration of risk, we have concluded that the potential of these prospects is of sufficient merit to justify the work program being proposed, and we therefore recommend and support the company’s participation."

The Mira and Sarah Drilling Licenses are adjoining 154-square mile blocks located 50-100 kilometers offshore from the Netanya-Hadera area. No exploratory drilling has been done on either block to day. A 3D seismic survey was completed on both blocks in late 2009 and is currently undergoing analysis.

Bontan CEO Kam Shah said, “The company is very pleased with the results of the Evaluation Report on these offshore Israeli prospects. This independent technical assessment confirms that these exploration blocks are indeed world class assets and completely justify the company’s investment of time and capital in this highly significant project. A review of global exploration discoveries in 2009 just published by the American Association of Petroleum Geologists also reported that the recent offshore Israel natural gas discoveries were among the most significant in the world. This independent technical report places the company’s prospects in the same geological setting as the 2009 offshore Israel discoveries. Our next step is the completion of the processing and interpretation of the 3D geophysical survey acquired over the Mira and Sarah drilling licenses. Firm drilling locations can then be selected on both prospects and application made to the Government of Israel to commence an exploratory drilling program."

Published by Globes [online], Israel business news - www.globes-online.com - on February 2, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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