Israeli offshore gas well Sara is dry

Sun Oct 21, 2012 6:07am EDT
 
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TEL AVIV Oct 21 (Reuters) - The Sara well off Israel's Mediterranean shores, estimated to contain 1.47 trillion cubic feet of natural gas, is a dry hole and has been abandoned, the consortium with rights to the site said on Sunday.

The share prices of investors in the well were hit hard - IPC Oil and Gas holdings plummeted 67 percent in morning trade, while Israel Land Development Energy was down 63 percent and Modiin Energy <MDINp.TA fell 43 percent.

"There is no doubt this is a great disappointment to the partners, investors and the Israeli economy as a whole," Modiin controlling shareholder Tzahi Sultan said in a statement.

"Regrettably, a dry hole is part of the risk of exploratory operations."

Some $48.5 million was spent drilling Sara and another $7 million will be needed to plug it.

The news followed disappointment last month at the nearby Myra prospect, owned by the same group and also found to be dry.

The failure at Myra, in which about $100 million was spent, was the first of its kind for Israel's nascent offshore exploration industry.

GeoGlobal Resources - the well's operator and which a 5 percent stake - is analysing information obtained during the drill to enable a re-examination of potential oil and gas resources in the licence area and consider exploratory drillings in the licence in the future, the consortium said.

The failures at Myra and Sara could have repercussions for the wider offshore gas industry in Israel, where 19 new wells were expected to be drilled in the next two years at a cost of about $2 billion. (Reporting by Tova Cohen; Editing by Dan Lalor) (tova.cohen@thomsonreuters.com; +972-9-899-0222; Reuters Messaging: tova.cohen.thomsonreuters.com@reuters.net)