Noble Energy, Delek, Ratio Start Drilling Dolphin 1

- Noble Energy, Delek, Ratio Start Drilling Dolphin 1

Tuesday, August 30, 2011
Knight Ridder/Tribune Business News
by Yael Gruntman, Globes, Tel Aviv, Israel

The Sedco Express rig on Monday began initial exploratory drilling of Dolphin 1 Exploratory Prospect, located in the Hanna license, near Leviathan. Dolphin 1 drilling will take place 100 km west of Haifa, and the purpose of the drilling is to discern if there is natural gas in Dolphin 1. Netherland, Sewell & Associates, Inc. (NSAI) best estimate of the gross natural gas reserves at Dolphin 1 is 550.5 billion cubic feet (BCF), with a geologic probability of success of 73 percent.

The drilling is based on the report by NSAI. Well operator, Noble Energy Inc. (NYSE: NBL), owns 39.66 percent of the license, Delek Group Ltd. (TASE: DLEKG) and Avner Oil and Gas LP (TASE: AVNR.L), each own 22.67 percent, and Ratio Oil Exploration (1992) LP (TASE:RATI.L) owns 15 percent.

The decision to drill is partly based on NSAI's prospective resources report. The resources report also says that if there is a gas discovery, based on previous experience in developing similar fields, best estimate has a reasonable chance of being commercially viable.

The drilling will be implemented in two phases. The first phase, is based on Noble Energy's recommendation to take advantage of the time needed for periodic treatment of the rig's blowout preventer (BOP) system. The rig is currently drilling the initial well at Tamar. The first phase will only drill to a depth of 2,560 meters, and will not reach the target strata. Casing pipes will be installed during the first phase, which will strengthen the borehole with cement.

The well's second phase will be drilled later, apparently using the same rig. The two phases are expected to last two months, with the first phase lasting only two weeks. The total budget of both phases, not including production test costs, is $51 million, $8 of which is for the first phase. The final drilling depth is expected to reach 6,000 meters, including 1,560 meters of water, to the target strata 1,440 meters.

Dolphin 1 is one of the 3 dolphin prospects in the Hanna license. According to the NSAI prospective resources report, Dolphin 1 has the largest potential for gas, and for now is the only prospect that has been chosen for exploratory drilling.

(c)2011 the Globes (Tel Aviv, Israel). Distributed by MCT Information Services.

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Delek, Noble Energy Reconsider Developing Noa

- Delek, Noble Energy Reconsider Developing Noa

Friday, May 20, 2011
Knight Ridder/Tribune Business News
by Amiram Barkat, Globes, Tel Aviv, Israel

Sources inform "Globes" that Delek and Noble Energy are about to decide to develop the offshore Noa natural gas field near Yam Tethys and the Gaza Strip. Development of the field could ease the expected natural gas shortage if the gas flow from Egypt does not resume in full.

Until recently, Delek and Noble Energy said that there was no economic justification to spend $200 million to develop the two billion cubic meters Noa gas field. Development would take a year.

However, the prevailing high prices for natural gas have changed the picture. The price the two companies obtained in their gas supply contract with Hadera Paper -- $8.50 per million British Thermal Units, 50 percent above 2009 prices -- translates into $300 million per billion cubic meters.

Delek says prices are set according to the same formula used to set the price in the company's 2009 contract with Israel Electric Corporation (IEC), and it attributes the entire rise in the price in the Hadera Paper deal to the higher price of oil, to which natural gas prices are linked.

The financial report for the first quarter of Delek unit Delek Drilling indicates that the suspension in natural gas deliveries from Egypt did not greatly affect the company's revenue, partly because of the increased gas deliveries were sold at the same price as regular deliveries.

Delek and Nobel Energy reportedly supplied 100 million cubic meters of gas from Yam Tethys because of the suspension of Egyptian deliveries during the first quarter. Yam Tethys supplied 800 million cubic meters of gas during the first quarter.

The financial report also indicates that, despite the crisis in Egyptian gas deliveries, Israeli demand for natural gas slightly exceeded government projections. Demand reportedly increased because of increased use of natural gas by IEC, which for the first time preferred natural gas instead of coal for the generation of electricity, due to the sharp rise in the price of coal in recent months.

The price of coal has reached $120-130 per ton, comparable to $5.50 per million BTU for natural gas. When the excise on fuel and externalities are factored in the cost of coal equals the cost of natural gas, except that coal is more polluting and harmful to the health.

Copyright (c) 2011, Globes, Tel Aviv, Israel

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