Israel Petroleum Company (IPC) has announced that preliminary findings of the 3D seismic survey of the Myra and Sara licenses indicate the presences of a total of about 5.71 trillion cubic feet of natural gas, justifying the drilling of an exploratory well. The quantities of gas are considerably less than at the adjacent Leviathan and Tamar sites.
IPC, owned by Canada's Bontan Inc. (Bulletin Board: BNTNF), owns 13.6% of the Myra and Sara licenses. Its partners are Tzahi Sultan's Modiin Energy LP (TASE:MDIN.L) (19.3%), and Emanuelle Energy Ltd. (43.3%), owned by Ofer Nimrodi's Israel Land Energy Ltd., and four other companies, including the operator, GeoGlobal Resources (India) Inc.
The 3D seismic survey found potential reserves of 3.03-5.45 trillion cubic feet at Myra, with a median of 4.24 trillion cubic feet. It found potential reserves of 1.05-1.89 trillion cubic feet at Sara, with a median of 1.47 trillion cubic feet. Bontan said that results confirmed the results of the 2D seismic survey, published last month. The company did not state a probability of geological success.
In contrast to the results for the Myra and Sara licenses, which gives them a combined median total of 5.71 trillion cubic feet of natural gas, Tamar has an estimated 8.7 trillion cubic feet of natural gas, and Leviathan has 16 trillion cubic feet. Noble Energy Inc. (NYSE: NBL), a partner in both Tamar and Leviathan, said that Leviathan has a 50% probability of geological success.
IPC appended a valuation of the company's stakes in the two licenses by Calgary-based Chapman Petroleum Ltd., which estimates the net present value of Sara at $298 million, and the net present value of Myra at $746 million. These figures refers to IPC's 13.6% stake, giving the licenses a total value of $7.68 billion. The valuations are less than Chapman's previous estimate, announced by IPC in August, of more than $10 billion for the two licenses altogether.
However, even a total value of $7.68 billion appears high, based on a price of $5.50 per million cubic feet of natural gas, in view of analysts' average estimate of $6.5 billion for Tamar, which has more gas than Myra and Sara put together.
Published by Globes [online], Israel business news - www.globes-online.com - on September 5, 2010
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