Israel: GeoGlobal Resources Fails to Meet Myra/Sarah Deadline?

Canada’s GeoGlobal Resources Inc. is facing disputes over its stakes in Israeli offshore gas exploration licenses.  On Tuesday, Myra and Sarah license holders Modiin Energy LP and Israel Land Development Company Energy Ltd. announced that GGR had not transferred the money by the deadline for the acquisition of an additional 5% of rights in the two licenses, and that GGR’s right to exercise its option had therefore expired.

GGR’s option dates from the original filing for the Myra and Sarah licenses in 2010. Myra and Sarah license holders ILDC Energy and Modiin Energy awarded GGR an option to an additional 5% of Myra and Sarah in exchange for a corresponding option by GGR to 20% the Samuel license, for which GGR applied at the same time. GGR and Canada’s Adira Energy Corporation  own the Samuel license in equal shares.

GGR gave its option for 5% of the Myra and Sarah licenses to Adira under the same terms (back-to-back), which would have given Adira the option to rights and participate proportionately in the development of the two licenses.

In a statement on Tuesday, Adira said that, notwithstanding the filing today in Israel by certain owners of Myra and Sarah licenses, Adira’s option to acquire a 5% stake in them, which it received from GGR (as Adira announced on August 25, 2010), remains valid.

Sources inform ”Globes” that a dispute has broken out between Adira and GGR over the Samuel license, located in shallow water between Bat Yam and Ashkelon. Under the companies’ agreement, they would equally share in any dilution of their stakes in it, to 40% each in the event that Modiin Energy and ILDC Energy exercised their right to a stake in Samuel. Adira now claims that only GGR should bear the dilution, and that Adira should keep 50% of the license.

As a consequence of this dispute, GGR failed to transfer payment for exercising its option to 5% more of Myra and Sarah, resulting in the expiration of the option.

Adira, run by CEO Hezi Kugler, told “Globes”, “We are still in talks with GGR, and cannot disclose details.

ILDC Energy owns 41.6% of Myra and Sarah; its parent company Israel Land Development Company (TASE: ILDC), controlled by Ofer Nimrodi, owns 5%; Modiin Energy owns 29.2% and its shareholder IDB Development Corp. Ltd., controlled by Nochi Dankner, owns 5%; IPC Oil and Gas Holdings Ltd. (IPC) (TASE: IPC) owns 13.6%; and GGR unit GGR India Ltd., the drilling operator, owns 5%.

Adira own four petroleum exploration licenses: Eitan in the Hula Valley, Gabriella located 10 km offshore between Netanya and Ashdod, Yitzhak located 17 km offshore between Hadera and Netanya, and Samuel.

By Ron Steinblatt (Globes)

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Globes, December 8, 2011; Image:GGR