"There is a good chance that gas from the Ishai reservoir [one of the Pelagic licenses] could pass through Cyprus, which will greatly expedite the field's development," Israel Opportunity Energy Resources LP (TASE: ISOP.L) CEO Eyal Shuker told "Globes". He says that the Cypriot government strongly supports development of the Aphrodite structure, which spreads from Cyprus's exclusive economic zone (EEZ) into the Ishai license in Israel's EEZ. The Aphrodite prospect has the potential of 3.7 trillion cubic feet (TCF) of natural gas (contingent and prospective resources) in the area of the Ishai license.
Shuker says that the company's strategy is based on a portfolio which will enable investors to be exposed to as many discoveries as possible, while spreading the risks and company's cash reserves. "Our strategy is to hold 10% of a large number of licenses by joining with partners. In this way, we're building a portfolio to benefit from numerous potential discoveries," he says.
As for the updated resources report on the Pelagic licenses published earlier this week, Shuker says, "The report is better than the preliminary estimates we had when we decided to acquire 10% of the Pelagic licenses. The report is very important, both for the company and its asset, and at the national level and Israel's energy independence. It establishes Israel Opportunity as a key player in the Israeli gas exploration industry.
"The report shows very good results, which indicate the likelihood of finding world-class oil and gas reserves. The geologic probability of success of the gas targets is very high in global comparison, ranging from 28.5% in the Yoad prospect to 76.7% in the Aphrodite prospect. This is because these target strata are part of the Tamar Sands structure, which characterize all the big natural gas discoveries in Israel and Cyprus to date. According to the report, the Aphrodite prospect has 3.7 TCF."
For the sake of comparison, Shuker adds that Israel's offshore gas discoveries to date total 30 TCF, including 9 TCF at Tamar and 16 TCF at Leviathan.
As for the geologic probability of finding two billion barrels of oil at the Pelagic licenses, Shuker says that the resources report states that the 12.3% geologic probability of finding oil is high for deep strata. "This is a high probability and very promising for us, taking into consideration that these are strata which have before been drilled or proven," he adds.
The first well in the Pelagic licenses is planned at Ishai, the license closest to Cyprus and which is part of the Aphrodite prospect, and has 3.7 TCF of natural gas in contingent and prospective resources with a 76.7% probability of success. The Noble Homer Ferrington rig will drill the well, after it completes drilling the wells at the Myra and Sarah licenses. The rig previously drilled the Leviathan 1 well.
Israel Opportunity has already leased port storage and operating space, and placed orders for drilling equipment, including drill heads and casings. The company has also secured most of the contracts with Israeli and foreign service and equipment vendors for the well. The well operator, Norway's AGR Group Inc. already has a team in Israel for the operation, which will cost an estimated $100 million.
There are five deep-water Pelagic licenses - Aditya, Ishai, Lela, Yahav, and Yoad - covering two million dunam (500,000 acres) 170 kilomters west of Haifa, between Leviathan's Ratio Yam and Cyprus's Block 12, which includes the Aphrodite structure. Israel Opportunity owns 10% of the licenses, Beny Steinmetz and Teddy Sagi each own 42.5% through various private companies, and AGR Group owns 5%.
Published by Globes [online], Israel business news - www.globes-online.com - on June 21, 2012
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