The Rotem Energy limited partnership yesterday published an initial draft prospectus for raising NIS 25 million for a first attempt at producing shale in the East Rotem prospect in Mishor Rotem. The prospect covers 2,900 dunam (725 acres), and its shale oil reserves are estimated at 245 tons, from which the partnership claims 135 million barrels of oil can be produced.
General partner Northwood Exploration Israel Ltd., founded by Australian company Northwood, formed the Rotem Energy partnership in 2016. The Casella family of industrialists, which controls Northwood, specializes in mining, and controls Australia's largest wineries company. Northwood holds 90% of the general partner, while Yitzhak Goldstein and CEO Jacques Sebag hold 5% each.
Sebag has managed the Casella family's affairs in Israel for the past decade. Also employed in the partnership are former Ministry of National Infrastructure, Energy, and Water Resources Natural Resources Administration head Dr. Yaakov Mimran (regulation supervisor), former Oil Refineries CEO and petroleum expert Moshe Farjoun, oil shale specialist Arnon Wohlfarth, and CFO Adv. Rafi Dayan.
Memorandum of understanding with a Chinese company
In its announcement, the partnership stated, "The area of the partnership's prospect is located in an unpopulated area zoned for mining. The shale oil layers are shallow and near the surface, which facilitates open mining. Furthermore, in the prospect area, there are shale oil strata above the layers of phosphate being mined in the area. Joint mining of the two mines is expected to generate operating synergy, and reduce the environmental impact.
"The facility that the partnership is planning to build will use solid heat carrier (SHC) technology, which is proven, and has been used for decades around the world (but has not yet been tried in Israel, S.G.). SHC technology is highly energy-efficient, with maximum exploitation of the shale oil stratum. In contrast to other methods, this method operates without hydraulic fracturing (fracking), underground heating, or production drilling. Most of the shale dust (a side effect of the process) will be used to rehabilitate the mine from which the shale oil is mined."
According to the announcement, Northwood Exploration Israel has signed a memorandum of understanding with a Chinese infrastructure company for the construction of the facilities needed to produce oil in the prospect. "In the facility that the partnership plans to build, the partnership is planning to enrich the oil with sorted non-biodegradable municipal plastic waste in order to increase production and preserve the environment. For this purpose, the general partner has signed a memorandum of understanding with Veridis (Veolia) for a supply of sorted municipal waste."
900,000 tons of shale oil will be mined, and will be enriched with 100,000 tons of municipal plastic waste, thereby producing 800,000-900,000 barrels of oil yearly and generating 15 megawatts of electric power for use in the facility and for sale to external customers.
The draft prospectus states that the proceeds from the offering will be used to pay $479,000 to the general partner for $11 million in past expenses in promoting the prospect. Another undisclosed sum will be paid for a loan provided by the general partner to the limited partnership. A guarantee will be provided to replace the guarantee from the general partner.
As part of the offering, the general partner will transfer ownership of the exploration prospect to the Rotem Energy partnership. Super royalties for the general partner will be calculated according to the Mining Ordinance – 6-8% before and after the investment is made back, respectively. Sebag says, "The partnership's vision fits in well with Israel's vision of encouraging employment in the Negev. This constitutes an important part of the partnership's activity, and will provide hundreds of new jobs in the Negev."
Consultation for preparing the draft prospectus was provided by Advocates Itay Brafman, Moran Pessis, and Amir Dar from the Zeev Holender law firm.
Published by Globes [online], Israel Business News - www.globes-online.com - on July 13, 2017
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