Modiin Energy's Gabriella partners refuse payments
Feb 03, 2013 (Globes - McClatchy-Tribune Information Services via COMTEX) --
Modiin Energy LP's (TASE:MDIN.L) partners in the Gabriella offshore exploration license, Canadian companies Adira Energy Corporation (TSXV: ADL; Bulletin Board: ADENF; XETRA: AORLB8) and Brownstone Energy Inc. (TSX: BWN; Bulletin Board: BWSOF) have not deposited their letters of credit for the hiring of a rig to drill at the license according to the company's notices to the TASE today. Adira Energy is due to provide a $5 million letter of credit and Brownstone a $10 million letter. Noble Corporation (NYSE: NE) unit Noble Drilling is due to provide the rig.
The 392-square kilometer offshore Gabriella license is located 10 kilometers northwest of Tel Aviv, in water ranging from 100 meters to 425 meters. Modiin Energy owns 70 percent of the license, and Adira Energy and Brownstone Energy Inc. subsidiary Brownbarb (Israel) Ltd., each own 15 percent.
Modiin Energy added that it has successfully raised more than $85 million over the past two months for its share of the two letters of credit for the rig. It also says that it has met its work plan and timetable set in the agreements, and that it was in talks to bring in an operator and partner into the license.
Modiin Energy said that, in early January, it provided a $12 million letter of credit for the rig, and that it had the full $11.2 million needed for tis share of the second letter of credit. It said that it was reviewing the business and legal aspects of its partners' failure to provide their letters of credit, as well as possible remedies. It added that in view of their failure, it has asked Noble Drilling for a week's grace to provide it the second letter of credit.
The licensees estimate the cost of the Gabriella drilling at $96 million, excluding production tests, which will cost an additional $34 million.
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