ADIRA SECURES OPTION TO ACQUIRE INTERESTS IN ADDITIONAL LICENSE IN
SYRIAN ARC OIL TREND, OFFSHORE ISRAEL
TSX.V: ADL
TORONTO, Dec. 24, 2012 /CNW/ - ADIRA ENERGY LTD. (TSXV: ADL) (OTCBB: ADENF) (FRANKFURT: AORLB8). Adira Energy Ltd. ("Adira" or the "Company") is pleased to announce that further to its press release dated June
23, 2012, Modi'in Energy L.P ("Modi'in") signed an addendum to the detailed drilling contract (the "Addendum") it has with Noble International Limited ("Noble Drilling") in respect of the Company's Gabriella licence ("Gabriella"). Adira further announces it has entered into a corresponding
agreement (the "Agreement") with Modi'in and Brownstone Energy Inc.
The Addendum amends key terms of the original drilling contract to
include among others, the provision of (i) a Letter of Credit as
collateral to Noble Drilling in two phases; $20 million by January 3,
2013 and $13.2 million by January 31, 2013 (Adira's corresponding
obligation is to provide its proportionate contribution in the amount
of $5 million by January 25, 2012; (ii) a reduction in the daily
drilling rate from $500,000 per day to $415,000 per day; (iii) to the
extent used, reduction in stand-by rates to between $100,000 and
$300,000 per day; and (iv) the Gabriella consortium taking possession
of the Homer Ferrington rig directly after the completion of its
current drilling program, which is up to three months earlier than
originally anticipated.
In terms of the Agreement, Modi'in has granted to Adira, an irrevocable
option to purchase ("Option") from Modiin, a 15% participating interest in the Yam Hadera petroleum
license ("Yam Hadera"), offshore Israel. Yam Hadera is located 30 kilometers offshore
Israel, between Hadera and Haifa and North West of Adira's Yitzhak
license. According to Modi'in's public disclosure, a report ("Report") prepared by Netherland, Sewell & Associates Inc. ("NSAI"), dated October 31, 2011, provides that Yam Hadera has a best estimate
of gross recoverable prospective resources of 133 million barrels of
oil and 1.4 trillion cubic feet (TCF) of natural gas, with a geologic
probability of success of between 17%-29% for different horizons. Adira
shall be entitled to exercise the Option until 14 business days before
the signing of a rig contract for Yam Hadera.
If Adira exercises the Option, it agrees to reimburse Modi'in for its
share of the past expenditures in respect of its 15% share, incurred by
Modi'in in connection with the operations conducted in Yam Hadera up to
the date of transfer of the Option interest. Adira's share of this
expenditure is not expected to be in excess of $900,000. Modi'in will
also be entitled to an overriding royalty interest ("ORRI") from Adira of 3% in all oil and gas (including any distillate and
condensate) produced, saved and marketed from the area covered by Yam
Hadera that is attributable to the Option interest, before Payout, and
4.5% after Payout. The transfer of the Option interest is subject to
the approval of the Petroleum Commissioner of Israel.
The Report was prepared in accordance with Modi'in's disclosure
requirements for the Tel Aviv Stock Exchange, and complies with the
relevant guidelines set forth in the 2007 Petroleum Resources
Management System (PRMS) approved by the Society of Petroleum Engineers
(SPE). The Company has engaged NSAI to complete a National Instrument
51-101 - Standards of Disclosure For Oil and Gas Activities compliant report, the results of which we will be disclosed when it
becomes available. There is no certainty that any portion of the
resources will be discovered. If discovered, there is no certainty that
it will be commercially viable to produce any portion of the resources.
The Agreement further provides that in the event that Modi'in secures a
farm-in partner of its participating interest in Gabriella, Adira will
proportionally reduce its ORRI's, buy-back rights and management fees,
set out in the farm-out agreement between Modi'in and Adira, dated
January 26, 2010, up to a maximum of 30% of such ORRI, buy-back right
and management fee. Adira's proportional reduction obligation will only
be applied to partners that have farmed into Modi'in's participating
interest in Gabriella, up to a date that is the earlier of the (a)
commencement of the first test of the first well on Gabriella; or (b)
plugging and abandoning or suspending of the first well on Gabriella.
Any consideration received by Modi'in from any farm-in partner will be
shared equally between Adira and Modi'in, provided that at a minimum,
Adira will receive 50% of past costs incurred by Modi'in up to the date
of the Agreement, estimated to be $1.3 million per each 10% farmed out,
as well as an ORRI of 1.5%. In addition, Adira will have a 10% tag
along right to farm-out, on the same terms to the farm in partner that
farms into Modi'in's participating interest in Gabriella, in the event
that such partner complies with certain criterion.
Jeffrey E. Walter, CEO of Adira Energy, stated "Due to changes in the drilling schedule of the offshore licenses in the
area, this new arrangement with Noble Drilling will allow the
consortium to drill the Gabriella well sooner than anticipated.
Additionally, we are fortunate to have the option to acquire an
interest in the Yam Hadera license, which complements our existing
portfolio of high impact oil blocks in the proven oil trend offshore
Israel and enables our shareholders to participate more significantly
in the emerging oil story of the Eastern Mediterranean."
About Adira Energy Ltd.
Adira Energy Ltd. is an oil and gas company which is focused in the
eastern Mediterranean. The Company has interest in three petroleum
exploration licenses offshore Israel; the Gabriella, Yitzhak and Samuel
Licenses. These licenses are located respectively 10 km offshore
between Netanya and Ashdod, 9 km offshore between Hadera and Netanya
and adjacent to the coast between Ashkelon and Bat-Yam.
Forward-Looking Statement Disclaimer
This press release includes certain statements that may be deemed
"forward-looking statements". All statements in this press release,
other than statements of historical facts are forward-looking
statements. Although the Company believes the expectations expressed in
such forward-looking statements are based on reasonable assumptions,
such statements are not guarantees of future performance, and actual
results or developments may differ materially from those in the
forward-looking statements. Forward-looking statements are based on the
Company's internal projections, estimated or beliefs, concerning, among
other things an outlook on the estimated amounts and timing of
exploration work and capital expenditures or other expectation,
beliefs, plans, objectives, assumption, intentions or statements about
future events or performance, which are considered by management to be
reasonable at the time made. Actual events or results may differ
materially. Although the Company believes that the expectations
reflected in the statements are reasonable, it cannot guarantee future
results since such results are inherently subject to significant
business, economic, corporate, political and social uncertainties and
contingencies. Many factors cause the Company's actual results to
differ materially from those expressed or implied in any forward
looking statements made by, or on behalf of, the Company and the
foregoing stated factors are not exhaustive. The statements contained
herein are made as of the date hereof and the Company disclaims any
intent or obligation to update publicly any forward looking statements,
whether as a result of new information, future events or results or
otherwise, except as required by applicable law. Company shareholders
and potential investors should carefully consider the information
contained in the Company's filing with Canadian securities
administrators at www.sedar.com before making investment decisions with
regard to the Company.
Neither the TSX Venture Exchange nor its Regulation Services Provider
(as that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
SOURCE: Adira Energy Ltd.