Sources inform ''Globes'' that ATP Oil & Gas Corporation (Nasdaq: ATPG) has reached an initial agreement to acquire 30% of the offshore Myra and Sarah licenses and 50% of the Daniel license and Shimshon permit. No deal will actually be signed until after the Sheshinksi committee releases its final recommendations on gas and oil and gas royalties and taxes.
An Israeli source said, "They are very worried about the tax levels proposed by the committee. As far as they are concerned, if the government take remains unchanged, the feasibility of projects in Israel will be marginal."
ATP executives outlined their position during two meetings with Petroleum Supervisor Dr. Yaakov Mimran. The executives also asked to appear before the Sheshinski committee's public hearing ahead of the publication of its final recommendations.
The decision to become a partner in the Myra and Sarah is based on analysis of the 3D seismic surveys of the licenses, whose results have not yet been published.
In October, Yuli Ofer acquired 50% of Israel Petroleum Company's (IPC) holding in Myra and Sarah, and committed to investing $28 million into the two exploratory wells planned for them in late 2011. Each well will cost $80 million to drill, and if they are successful verification wells will be drilled at an additional cost of $60 million each.
Houston-based ATP is a small company but has a strong reputation for drilling deepwater wells. It is involved in almost 20 wells in the Gulf of Mexico and other wells in the North Sea.
The sources said that the negotiations with ATP have been going on for three months, during which the company was given data on the 3D seismic survey on Myra and Sara, which were conducted in late 2009. ATP's analysis of the survey concluded that the reserves were economically viable. The results of the survey are due to be published in the first quarter of 2011.
Currently, Ofer Nimrodi owns 54% of Myra and Sara through Emmanuelle Energy Ltd. and Israel Land Development Company Energy Ltd. (TASE: IE), Nochi Dankner and Tzahi Sultan own 27% through Modiin Energy LP (TASE:MDIN.L), and Yuli Ofer owns 19% through IPC.
Shaldieli Ltd. (TASE: SHDL-M), which carried out a reverse merger with IPC in October, said that Myra could have 3.12 trillion cubic feet of natural gas and Sarah could have 1.65 trillion cubic feet, which gives them a value of up to $7 billion. However, the value plunges to $2.74 trillion when the 40% probability of geological success is taken into account. The values are based on Israel's current royalties and tax regime, but if the Sheshinski committee's reiterates its interim recommendations in the final recommendations, the values will be slashed.
Published by Globes [online], Israel business news - www.globes-online.com - on December 26, 2010
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