Adira Energy Partner Signs Addendum to Drilling Contract
Accelerating Drilling Commencement of Gabriella Well
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.