TomCo Inks LOI for Israeli License
TomCo Energy Plc is pleased to announce that it has today signed a Letter of Intent (LOI) with Avenue Group Inc, a NY based US listed Oil & Gas Company, and its wholly-owned subsidiary Avenue Energy Israel Limited; to acquire a 50% interest in the Heletz-Kokhav License awarded to AEI by the Israel Petroleum Commission.
The Heletz-Kokhav field, located 55 kilometers south of Tel Aviv and 12 kilometers east of the Mediterranean, is Israel's only producing onshore oil and gas field. The 60,000-acre license has produced in excess of 17 million barrels of oil to date from Cretaceous sands, with peak production of approximately 3,000 to 4,200 barrels per day between 1959 and 1967. The original oil-in-place (OOIP) for the field was estimated at 50.7 million bbls; the Israeli Government estimates that there are 2 million bbls of primary recoverable oil remaining, and studies suggest 5-10 million bbls of secondary recovery potential.
A number of undrilled, deeper exploration prospects have estimated potential of more than 30 million bbls. Recent production for the field was around 60 bpd, although TomCo expects that the implementation of modern production and recovery methods and the drilling of additional wells on the License will significantly increase production, resulting in the granting of a 30 years Production Lease.
Within five days of signing the LOI, TomCo must pay a non-refundable security deposit of US$75,000, granting TomCo 45 days exclusivity in which to sign a definitive agreement. This period can be increased to 60 days by TomCo paying an additional deposit of US$25,000. At closing, the company will pay AEI US$1 million in cash, as well as issue to AEI TomCo ordinary shares valued at US$0.5 million at a price per Share equivalent to the average middle market price for the seven days prior to Closing. Additionally, at closing TomCo will pay to AEI 50% of AIE costs incurred to date in relation to the License, which have been confirmed at US$108,000. Over the three-year Phase 1 period of the License, TomCo will pay up to US$4.5 million of development costs. It will pay a further US$1.5 million to AEI after a 30 years production lease is issued, which lease may be issued once production at the field reaches 300 bpd; and pay a further US$5 million to AEI after the recoverable reserves are declared to be more than 10 million barrels by an internationally acceptable geologist.
"Heletz-Kokhav is an excellent opportunity to join with the US public company, Avenue Group, to develop the highly potential Heletz field in Israel and will create new horizons and will be an important investment for us," said Howard Crosby, TomCo's CEO. "We will continue to expand our portfolio, both in the USA and outside, in order to build TomCo into an oil company with both significant production and an aggressive exploration program."
- Avenue Energy to Pool Licenses Covering Heletz Oil Field in Israel (Mar 03)
- TomCo Acquires Israeli Insterests Through Avenue Group (Apr 02)
- TomCo Inks LOI for Israeli License (Jan 21)
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