Welcome to ‘Isroil’?

The oil and gas exploration scene in Israel, a year after the “Tamar” and “Dalit” discoveries in the Mediterranean, is making the likes of Nochi Dankner’s IDB group and Ofer Nimrodi’s Israel Land Development enter the sector.

But according to Fred Zeidman, a US energy industry expert, and Adam Meislik, who has advised oil and gas companies on investment for ten years, it is highly likely that in the future we will hear about far bigger names, as more international companies, in addition to Noble Energy (the partner in the discoveries with Delek and Isramco), join the exploration efforts on Israeli territory.

“It happens all the time,” says Zeidman, “We see in the US that the moment a company discovers oil or gas that can be transported, there’s a crazy rush to the region by other companies, and that’s a function of the size of the reserves found. Around the world, as soon as Noble goes to a place, many other companies follow in its wake. The prospects here are amazing, and I have no doubt that we’ll see an economic boom, and a rush of more companies to Israel from overseas following Noble.”

Is there no concern at the political problems in the region?

“It’s true that there are political risks here, but we’ve seen it happen in much more hostile places. In Israel, there isn’t the risk that there is in Africa, and so the security issue isn’t too serious.”

Zeidman points to another economic sector that will benefit from the boom in the industry. “The field of services to energy companies will also develop. Beyond the daily needs, such as accommodation and food for the workers, the big companies need local help. For example, Schlumberger (the world’s largest exploration and drilling services company, R.S.), works with many small outfits around the world that help it with logistics and transporting equipment, which leaves a lot of room for enterprise”

Zeidman pins great hopes on Israeli enterprise, and thinks that the discovery of the gas reserves will even contribute to the global energy industry. “As long as oil prices were low, the industry was dormant. As soon as oil prices rose above $100 a barrel, the industry became interesting, and young people came in using new technologies that the veteran professionals didn’t use,” he says.

With the unconcealed pride of a Jewish-American, Zeidman says, “The State of Israel, which is considered a pioneer in science, can bring creativity to this field of oil exploration. This is an industry with a great deal of technology, and considering the Israeli mentality, we’ll see big results and new inventions, and thanks to the new technology there will be fewer dry drillings.”

According to Zeidman, the main problem in Israel is a small and limited consumer base, and so besides the option of exporting, additional uses for gas will be sought. He thinks it not inconceivable that in the future we will see vehicle projects that could damage Shai Agassi’s electric car dream.

The partners in the Tamar well have so far approached foreign investment banks in order to obtain assistance in financing the construction of a production infrastructure, reckoned to cost nearly $3 billion. Meislik thinks that assessing the risks of financing the projects is not very difficult, and that the local banks can also participate. “It’s something that can be learned,” Meislik says. “The US and Canadian banks have no problem in coming to Israel and lending money to the projects, but the Israel banks should train teams overseas, that will learn how gas projects are financed and bring that knowledge to Israel.”

Published by Globes [online], Israel business news – www.globes-online.com – on April 7, 2010

Offshore Gas Field is a ‘Monster’

Noble Energy chairman and CEO Charles Davidson expressed optimism that there will be more gas fields discovered at a press conference in Tel Aviv today.

He said, “We conducted a 3D seismic survey, which will provide very sophisticated information enabling us to know whether there are more reservoirs. We believe that there are other reserves adjacent to the Tamar and Dalit reservoirs. We’re now analyzing the results of the seismic survey. I hope that we’ll continue to find natural gas in this country. I’m optimistic about more reservoirs, whether at Leviathan or elsewhere.”

Davidson added, “Israel was the land of milk and honey in Biblical times, but in the modern era, its milk and honey and natural gas. In Israel’s deep waters, in virgin territory, a monster natural gas discovery has been made.”

Noble Energy Inc. (NYSE: NBL) is a partner in the Tamar and Dalit offshore gas fields, together with Delek Group Ltd. (TASE: DLEKG) subsidiaries Delek Drilling LP (TASE: DEDR.L) and Avner Oil and Gas LP (TASE: AVNR.L), Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), and Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) subsidiary Dor Alon Energy Exploration Ltd. It is also a partner with Delek Group in the Yam Tethys partnership, which owns a natural gas field offshore from Ashkelon, and in the Leviathan prospect, west of Tamar, with Delek Group Ratio Oil Exploration (1992) LP (TASE:RATI.L).

Noble Energy convened the press conference at the Tel Aviv Hilton not only to wax poetic about biblical Israel, but to outline its program to develop its natural gas reserves in Israel. Investors are eager for any scrap of information about the Leviathan lease, where 3D seismic survey is underway, whose results are due later this month. If gas is found, the prospect’s partners will begin drilling toward the end of the year, at an estimated cost of $100 million.

Davidson said, “The company expects to drill into another large structure during the second half of the year, and to drill in the two discoveries already made during 2011.”

The statement reiterates what Noble Energy said in the conference call following the publication of its financial report for 2009 last month, without explicitly mentioning “Leviathan”. “As for Tamar, the immediate challenge is to reach an agreement with the government on how to bring the gas to shore, since seafront real estate in Israel is very expensive. One possibility is to build a new terminal, another is to use Yam Tethys’ existing infrastructure,” Davidson said.

Davidson promised that the company would meet its timetable for the Tamar well. The well’s partners are due to publish their development plan for the reservoir in the second half of the year. The plan will reportedly cost more than $2.6 billion, with gas production beginning in early 2012.

“We’ve been here for over ten years already,” said Davidson. “Noble Energy won’t be here for years, but for decades. I can’t imagine a better place to be than here.”

Noble Energy will invest $140 million in gas exploration in Israel in 2010, almost 10% of its budget.

Shares of Israeli gas and oil exploration partnerships on the Tel Aviv Stock Exchange (TASE) have skyrocketed by hundreds and even thousands of percent in the past year, as investors seek the next Isramco. Davidson, however, sends a clear message to investors: Be careful. “Oil and gas exploration shares were hyped last year, and I urge caution,” he said. “There is no sure thing in the energy industry, and in the end, only a few companies will succeed. There’s an upside potential in the shares of Noble Energy. I’m a long-distance runner, and I don’t comment about the market’s response over the next week or two. We’re managing projects that will last us decades. In this business, you don’t plan for days, but for the long haul.”

Published by Globes [online], Israel business news – www.globes-online.com

Noble Energy plans $530m investment in Israel

The company plans to resume exploration in the Eastern Mediterranean.

Amiram Barkat21 Feb 10 16:56

Oil and gas exploration company Noble Energy Inc. (NYSE: NBL) will invest $530 million in natural gas exploration in Israel and in development of its current reserves at Yam Tethys and Tamar, said company executives during a conference call on Friday.

During the conference call, which followed the publication of Noble Energy’s financial report for the fourth quarter of 2009, Noble Energy chairman and CEO Chuck Davidson said, “Late in the year, we anticipate resuming exploration in the Eastern Med, looking to build on our tremendous success that we’ve had already there in Israel.”

The reference is to economic zones of Israel and Cyprus, probably at the company’s Leviathan license, west of Tamar. Leviathan is jointly owned by Noble Energy, Delek Group Ltd. (TASE: DLEKG), and Ratio Oil Exploration (1992) LP (TASE:RATI.L). Drilling will probably begin after the recently completed 3D seismic study of the strata structure is analyzed.

Noble Energy said that its capital program in 2010 will total $2.5 billion, $1 billion for major projects, most of which will be directed to projects in the Gulf of Mexico, Equatorial Guinea in West Africa, and Tamar.

Noble Energy said that natural gas sales in Israel were 25% lower in 2009 than in 2008. Sales are from the Yam Tethys field offshore from Ashkelon, in which Noble Energy owns 47.1%, with Delek (4.44%) and its subsidiaries Avner Oil and Gas LP (TASE: AVNR.L) (23%) and Delek Drilling LP (TASE: DEDR.L) (25.5%) owning the rest.

Davidson said, “Internationally, we had tremendous exploration success in Israel, with our largest discovery ever at Tamar and subsequent Dalit find. We announced signed letters of content covering $10.5 billion in gross expected revenue, with less a third of resources committed. And we immediately moved forward with the development plans that should lead to the sanction of Tamar this year.”

The Tamar partners today announced that they have signed a third letter of intent for the sale of natural gas to Dimona Silica Industries Ltd. The 17-year contract is worth $500 million. Noble Energy owns 36% of the Tamar prospect, alongside Delek Drilling, Avner Oil, Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), and Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) subsidiary Dor Alon Energy Exploration Ltd.

Noble Energy attributed the lower than expected natural gas sales in Israel to warmer than normal weather, increased imports of competing Egyptian gas (from East Mediterranean Gas Company (EMG), which began deliveries in early 2009), and because the company’s customer, Israel Electric Corporation (IEC) (TASE: ELEC.B22) had some downtime on one of their power plants.

Investment house Barclays Capital reiterated its “Overweight” rating on Noble Energy stock, and kept its target price for the share at $84. However, it cut its earnings per share estimate as production guidance figures ranged lower than Barclays analysts had expected. They nevertheless maintain that strong future production growth, beginning in 2012, will support the shares.

Langotsky Suing For His Share

Last month we reported on Yossi Langotsky, “Israel’s Unlucky Oil Man”. Yossi has been part of Israel’s search for oil for fifty years. He played an integral role in last year’s natural gas discovery off the coast of Haifa; so much so that the two gas fields were named after his  daughter ‘Dalit’ and his granddaughter ‘Tamar’. But Yossi wasn’t a part of the planned profits from his discovery. The reason is that his financial partner, Benny Steinmetz, pulled the plug on their involvement two months before drilling began.

Now Yossi wants what he believes is his. Israeli newspaper Haaretz reported today:

“Geologist Joseph Langotsky is on a crusade to reclaim his rights in the Tamar and Dalit gas field exploration, which he himself initiated.

Langotsky will shortly be suing his former partner, mining tycoon Benny Steinmetz, over the loss of his rights to the Tamar and Dalit fields, where large reserves of natural gas were discovered last year. The fields are named for Langotsky’s daughter, Dalit, and granddaughter, Tamar.

Langotsky and Steinmetz had been the owners of a limited partnership, STX, which had a 5% stake in the exploration rights. But Steinmetz dropped out of the exploration partnership two months before drilling began and Langotsky, who was unable to find an investor to replace him in time, lost his rights.

Langotsky is believed to be seeking compensation equal to 1% of the project’s value – $60 million, based on the project’s assessed value of $6 billion.” (read more …)

Adira Energy Awarded Offshore License

(source: Scandinavian Oil & Gas Magazine)

AMG Oil says that the Israeli Petroleum Commissioner’s office has notified the Company that, during the most recent sitting of the Israeli Petroleum Board, the Company, through its wholly-owned subsidiary Adira Energy Corp., was awarded a second petroleum license in offshore Israel (the “Yitzhak License”).

Yitzhak License The Yitzhak License area is centered approximately 17 km off the Israeli coast and stretches from Netanya in the South to Hadera in the North (about 11 km). The Yitzhak License covers a total license area of 127,700 Dunam (approximately – 127.7 square kilometers or 31,555 acres). The Yitzhak License is directly to the North of, and contiguous to the company’s Gabriella License.

The license area is in shallow water with a depth of approximately 150 meters, which the Company believes will make drilling more cost efficient. The Yitzhak License has been granted for an initial period of three years commencing October 15, 2009.

Stephen Pierce, AMG’s Senior Vice President of Geology, said, “During early 1970 an oil well located in the area covered by the Yitzhak License called “Delta-1″ was drilled. The total depth of Delta-1 was 4423m, and ended in the Upper Jurassic. However, this depth is above the oil encountered in the Jurassic Bathonian age limestones in the Yam Yafo-1 (4894m – 4955m) and Yam-2 wells (5315m). It remains unclear as to why drilling stopped at this depth. However, the Delta-1 well was drilled in 1970 before the later discoveries of Yam Yafo-1 and Yam-2. Subsequent to Delta-1 being drilled, seismic mapping demonstrated a structural high extending from Delta-1 to the oil discoveries at Yam Yafo-1 to Yam-2. We believe that we have a good prospect that is an attractive target for hydrocarbon exploration.”

The Company’s successful application for the Yitzhak License expands AMG’s portfolio of petroleum licenses from its current two licenses (“Eitan” and Gabriella”) to include a prospective offshore area within a region that is known to host significant evidence of hydrocarbons.

AMG’s Chief Executive Officer, Ilan Diamond stated, “We are very pleased to have been successfully granted the Yitzhak License, the second block in the region. Both the Company’s offshore licenses, “Gabriella” and “Yitzchak” are within the broader region of the Nobel/Delek Tamar gas discoveries, which are 60 km west of Hadera (Dalit) and 90 km west of Haifa (Tamar). Evaluation work on our ‘Gabriella’ license has recently commenced and we are excited to continue work on this license. In addition, we continue to plan for the start of our exploration and drilling program on our “Eitan” license in the Hula Valley, northern region of Israel. We have completed the purchase of the drill rig and associated equipment, and are in the process of moving the rig to site. We have contracted the services of a full time drilling team who have significant experience operating rigs of similar nature and who have worked in the area previously.”

Tamar partners to raise large sums for development

The partners in the Tamar and Dalit offshore natural gas fields are preparing to raise capital to develop Israel’s largest natural gas field. Delek Group Ltd. (TASE: DLEKG) subsidiary Delek Energy Systems Ltd. (TASE: DEOL) has published a shelf prospectus to raise hundreds of millions of shekels in the coming weeks and is currently working on the structure of the offering.

Delek Energy controls Delek Drilling LP (TASE: DEDR.L) and Avner Oil and Gas LP (TASE: AVNR.L), which each own 15.625% of the Tamar and Dalit prospects. Last week, both companies, authorized Noble Energy Inc. (NYSE: NBL), which owns 36% of the prospect, to buy $230 million worth of equipment and services by 2011 to develop the gas fields. Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), which owns 28.75% of the prospect approved purchases of up to $160 million.

The partners in the Tamar and Dalit offshore natural gas fields are preparing to raise capital to develop Israel’s largest natural gas field. Delek Group Ltd. (TASE: DLEKG) subsidiary Delek Energy Systems Ltd. (TASE: DEOL) has published a shelf prospectus to raise hundreds of millions of shekels in the coming weeks and is currently working on the structure of the offering.

Delek Energy controls Delek Drilling LP (TASE: DEDR.L) and Avner Oil and Gas LP (TASE: AVNR.L), which each own 15.625% of the Tamar and Dalit prospects. Last week, both companies, authorized Noble Energy Inc. (NYSE: NBL), which owns 36% of the prospect, to buy $230 million worth of equipment and services by 2011 to develop the gas fields. Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), which owns 28.75% of the prospect approved purchases of up to $160 million.

Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) unit Dor Gas Exploration LP, which owns 4% of Tamar and Dalit, is also getting ready to raise capital. Dor Alon plans to split its holding in the prospects from its gas stations and convenience stores business, and create a partnership that will hold the Tamar stake. Dor Alon is working with the Israel Tax Authority on this new structure, which will make it possible for the new partnership to raise capital directly to develop the gas fields.

Dor Alon is meeting with institutional investors to hold a bond issue of up to NIS 250 million for this purpose.

Published by Globes [online], Israel business news – www.globes-online.com – on September 1, 2009

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