Israel Land Development Company (TASE: ILDC), controlled by CEO Ofer Nimrodi, today announced that it signed a binding agreement to buy two offshore gas and oil drilling licenses from PetroMed Corporation for $16 million. The Mira and Sarah leases are located 40 kilometers west of Hadera.
The two drilling licenses are considered highly attractive, due to the proximity to the Dalit lease, owned by Delek Group Ltd. (TASE: DLEKG), Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) and Noble Energy Inc. (NYSE: NBL), which has 14.2 billion cubic meters of gas.
Canada's Bontan Inc. (Bulletin Board: BNTNF) controls PetroMed through a 75% stake in its parent company, Israel Petroleum Corporation. PetroMed has had financing problems and was concerned that it might not be able to carry out its work plan for the two drilling licenses, which would result in the licenses being revoked. The company recently had its exploration license to the Benjamin lease, adjacent to Mira and Sarah, revoked when it failed to carry out the work plan submitted when it obtained the license.
Most of Israel Land's payment is for the seismic surveys conducted by PetroMed at the two leases.
Closing of the deal is subject to due diligence and approval by Israel Land's board of directors. The agreement of principles stipulates that if Israel Land seeks to acquire the drilling licenses, but is not assisted by PetroMed due to bad faith, Israel Land will then have the right to payment of a $50 million cancellation fee.
Israel Land's share price fell 2.5% today to NIS 25.07.
Published by Globes [online], Israel business news - www.globes-online.com - on March 10, 2010
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