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Monday, December 27, 2010

Looks Like ATP has a Tentative Agreement on Israel Fields

I'm surprised at the size of the prize here. 30% of 5 TCF of gas is more than all of ATP's current reserves.

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.

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.

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.

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