Sarah well abandoned
Oct 21, 2012 (Menafn - Globes - McClatchy-Tribune Information Services via COMTEX) --The Sarah well has been declared a dry hole, and its partners have abandoned it. In a notice to the TASE, Israel Land Development Company Energy Ltd. (tase:IE), Modiin Energy LP (tase:MDIN.L), and IPC Oil and Gas Holdings Ltd. (IPC) (tase:IPC) said, "On the basis of information received from the operator, analysis of the findings from the drilling, including the wire line logging, the well is a dry hole with no commercial quantities of hydrocarbons found, and it has been decided to abandon the well."
The Sarah partners had hoped to discover 0.8 trillion cubic feet of natural gas in the license, but preliminary data from the target strata found no significant signs of gas. The 50 million spent on the well has gone down the drain.
The Sarah license is a sister license of Myra, which was declared a dry hole in September, after 100 million was invested in it.
In the notice to the TASE, the Sarah partners said, "The operator carried out logging while drilling, which found no substantial signs of petroleum. The operator found high quality upper Miocene and lower Oligocene epoch sands, which were saturated with water at the well site."
They added, "However, the results of the logging, combined with the high quality of the sands found at the well, may indicate a system of active hydrocarbons in the license area. The operator is analyzing the geologic information collected during the drilling, including analysis of the logging, and the abovementioned data will make it possible to reexamine the potential of oil and gas resources in the license area, and consider additional exploratory drillings in the license in the future."
The partners said that 48.5 million was invested in the Sarah well up to its abandonment. The plug and abandonment costs are estimated at 7 million. The partners are examining the accounting ramifications of the abandonment of the Sarah well in the financial statements.
Yesterday, Modiin Energy controlling shareholder Tzahi Sultan said, "There is no doubt that this is a great disappointment for the partners, investors, and the Israeli economy as a whole. Regrettably, a dry hole is part of the risk of exploratory operations."
Modiin Energy, controlled by Tzahi Sultan and Nochi Dankner through IDB Development Corp. Ltd. owns 29.1 percent of the Sarah license; IDB Development directly owns 5.6 percent; ILDC Energy owns 41.6 percent through Emanuel Energy Ltd. and Emanuel Energy Oil and Gas LP, ILDC Energy's parent company, Israel Land Development Company (tase:ILDC), controlled by Ofer Nimrodi, owns 5 percent; IPC owns 13.6 percent, and the well operator, GeoGlobal Resources Inc. GGR owns 5 percent.
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