Significant signs of gas at Karish 1 well

The reservoir has a best estimate of two trillion cubic feet of natural gas.

Noble Energy Inc. (NYSE: NBL) and Delek Group Ltd. (TASE: DLEKG) have announced that significant signs of natural gas have been found in the target strata of the Karish 1 well in the Alon C license. The target strata are at a depth of 4,790 meters, including the depth of the water.

"The partners conclude that significant signs of petroleum (natural gas) have been discovered at the well, according to the operator's reports on the basis of tests conducted during the drilling," said Delek in a notice to the TASE.

Noble Energy, the well operator, said that the target strata had natural gas. The companies have not yet stated how much gas has been found, as it is necessary to wait for the results of the electrical logs.

The best estimate of the Alon C reservoir by Netherland Sewell & Associates Ltd. (NSAI) previously published by Delek indicates that it contains two trillion cubic feet (TCF) of gas. However, Clal Finance analyst Yaron Zar believes that 0.9-1.5 TCF of gas will be found at the reservoir.

"Stabilization and preservation work is underway at the borehole at this stage, to enable wireline logging, including electrical, seismic, and magnetic tests, as well as to test the composition of the natural gas, rocks, and liquids in the reservoir. It should be noted that the wireline logging is comprehensive and more accurate than the logging during drilling tests, and the results could result in substantial changes in the estimates, including the estimate of the thickness of the strata," Delek stated.

Noble Energy owns 47.06% of the Alon C license, and Delek Group units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) each own 26.47%.

"This is further proof of the power of Israel's gas industry and the great potential of the gas along Israel's coastline, and we must keep up the momentum," said Avner CEO and Delek Drilling chairman Gideon Tadmor. "The news from Karish follows the increase in the estimated quantities of gas at Leviathan announced just two weeks ago. Israel's energy security strengthens with each discovery, and we must not stop the momentum towards building a thriving Israeli natural gas industry, which will generate hundreds of millions of shekels for the government in the coming decades, since the government's take in taxes and royalties is 60%."

The drilling of the Karish 1 well began in March, and cost $90 million. According to the prospective resources report, published in December 2012, there is a 77% chance of find gas at the well, which is located 75 kilometers northwest of Haifa. The geologic structure of the license's target strata is Tamar sands.

"I welcome the announcement about the Karish reservoir," said Minister Energy and Water Resources Silvan Shalom. "Increasing the natural gas supply in reservoirs will make it possible to supply more gas to the domestic market and boost the state's revenues, which will be channeled to investment in education, welfare, health, and investments in the Negev and Galilee, for the good of Israel's people."

Published by Globes [online], Israel business news - www.globes-online.com - on May 16, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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