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.
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.
SOURCE Adira Energy Ltd.
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