Israel Land Energy and Modiin Energy announced yesterday their acquisition of American geologic consultant Prentis Tomlinson's 8.8% stake in the Sarah and Myra gas exploration licenses, for the sum of $500,000.
The compromise agreement concludes a controversy in which the two companies threatened to seize Tomlinson's interests on the grounds that he failed to meet his obligations.
Several weeks ago TheMarker reported that Tomlinson was asking $500,000 for his stake, which he originally acquired in the complicated PetroMed transaction.
In that deal Ofer Nimrodi's Israel Land Development Co., the parent company of Israel Land Energy and Modiin, controlled by Nochi Dankner and Tzahi Sultan, paid PetroMed, a Canadian-based company, $16.1 million for the majority of shares in the Sarah and Myra licenses. Tomlinson came out of the deal with an 8.8% share, for which he was required to pay $900,000 by October 14 and an additional $2.7 million for development costs on the licenses by October 22.
After an unsuccessful attempt by Tomlinson to sell his share to Modiin for about $6 million before his deadline, ILDC informed him that his rights to the licenses were void and he could not sell them, having defaulted on his contractual obligations. ILDC also demanded that he cease his negotiations for selling the stake to others, and announced that the contract prohibited transferring ownership in the licenses to third parties, except for a gas exploration limited partnership registered in Israel that Tomlinson himself set up, if he so desired. The announcement added that Tomlinson was opposed to forfeiting his shares.
On completion of the transfer of the rights in the two licenses, the holdings line up as follows: Emmanuelle Energy - 19.2%; Israel Lands Energy - 27.3%; ILDC - 5%; Modiin - 19.9%; the IDB group - 5%; Israel Petroleum Company, owned by the Ofer family and Canada's Bontan - 13.6%; and the licenses operator GeoGlobal Resources (GGR ) - 10%.
The Myra and Sarah deep-sea permit areas are located in the Mediterranean, some 40 kilometers west of Hadera. While investors await the announcement of final results of three-dimensional seismic surveys performed at the two sites, Nimrodi has already said that the partners plan to commence drilling during the second half of 2011.
Shaldieli, a company expected to merge with IPC, said last weekend that a report compiled by Chapman Petroleum Engineering claims a 43% geologic probability of finding 4.77 trillion cubic feet of natural gas in the two license areas. Chapman also rates the commercial probability for gas production, apart from its geologic probability, at 40%.
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