Shemen Oil and Gas Resources Ltd. (TASE: SMOG) has raised a further NIS 24 million in a private placement, bringing the total amount raised in the past week to NIS 44 million, most of which will be used to finance the Yam 3 well.
In the placement, Shemen Oil allotted units of two shares and one warrant at NIS 0.17 per share and nothing for the warrants, for a total unit price of NIS 0.34. The shares allotted amount to 3.38% of the company's share capital, and the warrants, if exercised in full, will boost the allotment to 5.07%. The shares will be vested for six months. Shemen Oil's board of directors unanimously approved the private placement, which still requires approval by the Tel Aviv Stock Exchange (TASE).
Shemen Oil is preparing to drill Israel's first offshore oil well, at the Yam 3 license. The estimated cost of the well, including production tests and production preparations if oil is found, is $104 million, well below other marine wells, because it is located in shallow water. The well's target strata are at depths of 5,200 meters and 5,400 meters. When the well reaches a depth of 3,000-4,000 meters, the well operator will test for the presence of natural gas.
According to Netherland Sewell & Associates Ltd. (NSAI), the Yam 3 prospect has a best estimate of 120 million barrels of oil and 1.8 trillion cubic feet of natural gas. The license is located 16 kilometers offshore from Palmachim, south of Tel Aviv.
Published by Globes [online], Israel business news - www.globes-online.com - on December 23, 2012
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