Payment dispute affects well preparations offshore Israel

Offshore staff

TORONTO – Contract issues are affecting preparations for drilling on the Gabriella license offshore Israel.

In mid-December 2012, Adira Energy entered into an agreement with Modi’in Energy and Brownstone Energy. This established the collateral required to place a letter of credit in favor of the rig contractor.

However, Adira Energy Israel has not placed its share of the cash collateral due to material breaches (the company claims) of the agreement by Modi’in.

Jeffrey E. Walter, CEO of Adira Energy, said: “Adira is working with Modi’in to resolve these issues so that the license partners can move forward with the drilling of the Gabriella well, which is expected to begin in March 2013.”

The Gabriella license is 10 km (6.2 mi) northwest of Tel Aviv, and covers 392 sq km (151 sq mi) in water depths ranging from 100 m (328 ft) on the east side of the block to just over 425 m (1,394 ft) on the southwest side. Adira operates with a 15% interest.

A report by Netherland, Sewell & Associates last year estimated 110.1 MMbbl of contingent oil on the license on a gross unrisked basis.

2/1/2013

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