Notera is approximately 19,000 acres and contiguous and directly to the south of Adira’s Eitan petroleum license no 356 (Eitan) in the Hula Valley of northern Israel. Prior drilling and evaluation of Notera indicates a similar geologic profile and hydrocarbon development potential as Eitan, which is held 100% by Adira.
The parties have agreed, subject to certain conditions, to enter into an operating and development agreement, whereby Adira will pay $200,000 to the shareholders of CGH to compensate them for previous costs incurred on the Notera block.
CGH will transfer to Adira a 70% net revenue interest (NRI) (after government royalty of 12.5% and a 2.5% royalty to CGH) and a 70% working interest (WI) in the license. Adira will provide certain exploration and development science and expertise as well as to drill and complete one cored well at its sole cost, to evaluate the exploitation potential on Notera.
Adira will operate Notera. This agreement and working interest is independent of Adira’s wholly-owned Eitan block to the north and does not affect the ownership of Eitan.
The terms of the LOI is subject to board approval of Adira as well as Israeli government approval of the transfer of participation right and government approval to merge license commitments of the two licenses so that Adira will not have additional obligations to maintain both licenses in good standing.
Adira will have rights of first refusal over the remaining 30% owned by CGH, and CGH will have a onetime right on certain conditions, to put its remaining 30% interest in Notera to Adira within 12 months, at fair market value.
