Adira Energy announces the farmout and funding of its Gabriella license
offshore Israel with major Israeli group and strategic private placement
FRANKFURT: AORLB8; OTCBB: ADENF
The Deal
The agreement reached will see MELP farm in to 70% (of 100%) (the "Modiin Earn-In Rights") of certain rights of participation in License No. 378 / "Gabriella" (the "Gabriella License"). This is in addition to Brownstone Ventures Inc's right, subject to certain conditions, to earn a 15% participating interest in the Gabriella License. (
The material terms of the agreement include the following:
1. An agreed and approved work plan on the Gabriella License, together
with a budget of US$8 million (the "Approved Work Budget") as well as
an expected implementation timeline.
2. In addition to financing its part of the Approved Work Budget, Modiin
will finance Adira's share of the Approved Work Budget up to US$ 1.2
million. The agreement provides that in the event that Modiin does
not meet its funding commitments, as stated above, it will return the
Modiin Earn-In Rights without any compensation or any other claim
against Adira.
3. MELP and MEGP will pay Adira a combined royalty of 4.5% on the total
wellhead revenue of the rights in oil and / or gas and / or other
valuable materials produced up until such time as costs are
recovered. Once costs are recovered this combined royalty will
increase to 10.5%.
4. Commencing on the 1st of February 2010, and for a period of two years
thereafter, Modiin will pay Adira a monthly fee in respect of
advisory services provided by Adira in connection with the license.
5. MEGP will pay Adira 3.75% (half) of the 7.5% operator fee which MEGP
is entitled to receive from MELP in terms of the management agreement
between the two. This payment is for a period of 24 months. Following
the initial 24 month period Adira will be entitled to receive 4.25%
of the operator fee MEPG is entitled to receive from MELP.
6. Adira have been granted an option to reacquire 15% of the Modiin
Earn-In Rights (the "Back-In Option") back from MELP at cost. Cost is
defined as cumulative expenditure on the exploration program as at
date of exercise of the Back-In Option. The Back-In Option can be
exercised during the period commencing on the date hereof and ending
on the date which is 6 months from the earlier to occur of a
discovery (as defined in the Israel Petroleum law of 1952) or until
the license period ends.
7. The parties have committed to negotiate in good faith a joint
operating agreement within 60 days of signing the agreement, with
Adira being designated as the Operator and being entitled to a 7.5%
fee based on gross expenditures.
8. The agreement includes provisions regarding the right of refusal and
tag along clauses.
9. As part of the agreement, the general partner of MEGP has committed
to invest a total of US$ 300,000 for the purchase by way of a private
placement of 600,000 Subscription Receipts to purchase shares of
Adira Energy Ltd (the "Subscription Receipts"). The Subscription
Receipts will be exchanged automatically without any further
consideration for 600,000 common shares in the capital of Adira
("Common Shares") on the date upon which the Common Shares will be
listed for trading on a recognized stock exchange in Canada.
10. The transfer of the Modiin Earn-In Rights is subject to approval of
the Petroleum Commissioner responsible for oil affairs in the
Ministry of National Infrastructures in Israel.
11. The agreement is conditional upon approval by the board of Adira and
MEGP, as well as the holders of participation rights of MELP to the
extent required shareholders to the extent required, as well as any
other applicable regulatory approvals.
Ilan Diamond, CEO of Adira Energy Ltd. stated today: "Adira Energy has executed upon a number of significant milestones in a short time span, since the company's inception. We are delighted to have partnered with a group as experienced and entrenched on the financial side of the oil and gas sector in
Tzahi Sultan, Chairman of Clal Finance Underwriting commented: "We are delighted about partnering with Adira Energy and look forward to a fruitful and long term partnership with Adira in Oil and Gas exploration in
About Modiin Energy
MELP is an Israeli listed limited partnership managed by MEGP which is controlled in equal shares by Tzahi Sultan and I.D.B Investments through a company called Noya Investments. Tzahi Sultan is the executive Chairman of Clal Finance Underwriting ("CFU"). CFU is the leading underwriter and investment banker in
About Tzahi Sultan
Tzahi has over 15 years experience in the field of underwriting. During his career, he's served as managing director at HSBC, was the chief executive of Gmul Sahar Underwriting, and headed the underwriting division of Poalim Capital Markets, a subsidiary of Bank Hapoalim. In the past 5 years, Tzahi serves as the CEO of Clal Finance Underwriting. Under his management, Clal has executed hundreds of issuings, public and private, including some of the high-profile IPOs and privatization processes in the Israeli market and M&A transactions.On
About Clal Finance Underwriting
Clal Finance Underwriting Ltd., ("CFU") the investment-banking division of Clal Insurance Enterprises Holdings, is a leading player in the local financial markets. During 2007 the company managed deals in excess of 43 NIS Billion (over
About IDB
The IDB Group is Israel's largest, top-tier, leading, diversified business group with total assets of over US$ 30 billion. IDB was recently ranked by leading international institutions as the leading diversified Group in
About Adira Energy Ltd.
Adira Energy Ltd. explores for oil and gas in and offshore
Forward-Looking Statement Disclaimer
This press release includes certain statements that may be deemed "forward-looking statements". All statements in this press release, other than statements of historical facts, are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance, and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include the failure of investors who are believed to have committed to the financings to complete them as a result of general market conditions, adverse developments unique to such investors, or otherwise. Accordingly, the actual amounts raised may differ materially from those projected in the forward-looking statements. For more information on the Company, investors should review the Company's filings, available at www.sedar.com and www.sec.gov. This announcement does not constitute an offering of securities nor a solicitation to purchase securities. An offer of securities will only be made by subscription agreement and subject to applicable law.
For further information: Canada, Alan Friedman, Executive VP, Corp. Development, Adira Energy Ltd., [email protected], (416) 250-1955; Israel, Ilan Diamond, Chief Executive Officer, Adira Energy Ltd., [email protected], + 972 54 286 7503, + 972 50 991 8555
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