Ofer Nimrodi, Zachi Sultan near agreement to buy PetroMed

Ofer Nimrodi and Yitzhak "Zachi" Sultan are near to signing an agreement to buy the Canadian company PetroMed Corporation, which holds licenses to explore two Israeli permit areas for fossil fuels.

The permit areas in question are the Mira and Sarah fields, which are located 40 kilometers west of Hadera, in the Mediterranean Sea.

A difference of opinion with a 5% stakeholder in the drilling licenses had earlier stymied negotiations for the purchase. It seems that Nimrodi's company Israel Land Development Corporation and the Hershberg group will acquire a 52.5% interest in PetroMed.

Sultan's energy company Modi'in Energy in partnership with Nochi Dankner's IDB group will own 28%, and the Canadian company Bontan will own 15%. The remaining 4.5% interest will be owned by a foreign company owned by geologist David Peace.

The rights to the Mira and Sarah licenses belong to Canada's PetroMed (95%), while Peace's company owns the rest.

Peace had belonged to the original group that bid on the licenses issued by the National Infrastructure Ministry.

On Tuesday night, the talks between Ofer's group, the Hershberg group and PetroMed had almost fallen apart, but the differences of opinion were resolved.

The Nimrodi-Hershberg group also includes the brothers Levi and Mendel Mochkin, who explore for oil in Australia, the United States and elsewhere. The group asked Joseph Langotsky, the geologist who discovered the Tamar and Dalit drilling sites, to head the current project.

Last week Nimrodi's Israel Land Development Corporation announced the outlines of the deal regarding PetroMed, saying its cost would be $16 million. This payment includes the 3D seismic surveys conducted by PetroMed at the two leases; the results have not yet been published. The purchase price was calculated to cover PetroMed's debts (about $12 million) and the cost of 2D seismic surveys conducted at the drilling sites. ILDC announced its intentions to buy the licenses jointly with Modi'in Energy and IDB.

Even before last week's announcement, ILDC protected itself against complications due to PetroMed's involvement with another Canadian company, Bontan, which is claiming ownership of the drilling rights.

Accordingly, Nimrodi's agreement of principles stipulates that if ILDC's purchase of the drilling licenses "is not assisted by PetroMed due to bad faith, ILDC will be eligible for a payment of a $50 million cancellation fee."

Last month Bontan reported that it saw "global potential" in the Sarah and Mira gas deposits.

The Infrastructure Ministry's records indicate that 95.2% of the rights in the two licenses belong to PetroMed, whose owners are listed as Hagai and Giora Amir. But a Bontan report from last month asserted Bontan's ownership stake of 71.63% in the Sarah and Mira licenses through a 75% interest in Israel Petroleum. A lawsuit is pending over the ownership of the licenses, each of which is for the exploration of the earth's crust under a 399-square-kilometer area of seabed about 40 kilometers off Hadera.