Shemen Oil and Gas Resources Ltd. (TASE: SMOG) today notified the TASE that the cost of the Yam 3 offshore oil well will increase by $4 million, because of requirements by the Ministry of Defense. The company added that drilling is continuing on schedule.
Shemen Oil originally estimated the cost of the shallow water well, including production tests and production preparations if oil is found, is $104 million. 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.
In late 2012, Shemen Oil sold rights in the Shemen license to Zerah Oil And Gas Explorations LP (TASE: ZRAH) for $4 million, increasing Zerah's rights in the license to 7.5%. The sale proceeds provided the final financing of the Yam 3 well, after Shemen Oil earlier raised $16 million in a private placement.
Published by Globes [online], Israel business news - www.globes-online.com - on January 24, 2013
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