TEL-AVIV, Israel, December 5, 2011 /PRNewswire/ --
Ellomay Capital Ltd. ( NYSE Amex: ELLO) (" Ellomay" or the " Company"), announced today that Ellomay Oil and Gas 2011 LP, (" Ellomay Oil and Gas") a limited partnership whose general partner is a wholly-owned subsidiary of Ellomay, entered into a Farm-out Agreement (the " Farm-out Agreement") with Adira Energy Israel Ltd., an energy exploration company for oil and gas in Israel (" Adira"), a wholly-owned subsidiary of Adira Energy Ltd. (TSXV: ADL, OTCBB: ADENF, FRANKFURT: AORLB8) for the farm-in of Ellomay Oil and Gas to 20% of the participating interests in the Yitzchak oil and gas exploration and drilling license in the Mediterranean sea (the " License"). The License covers a total area of approximately 127.7 square kilometers (or 31,555 acres) and is in relatively shallow water with depths between 60 and 250 meters.
As published by Adira, simultaneously with the execution of the Farm-out Agreement with Ellomay Oil and Gas, Adira entered into a farm-out agreement with the AGR Group (" AGR") to farm-out 5% in the License to AGR as Lead Operator in accordance with Israeli regulations applying to an "Operator" with the continued involvement of Adira as co-operator and formalized a letter of intent with Brownstone Energy Inc. (" Brownstone") in respect of the License, enabling the formal registration of Brownstone's 15% participating interest in the Israeli Petroleum Registry. Following approval of the above mentioned farm-out arrangements, Adira will hold 60%; Ellomay Oil and Gas 20%; Brownstone 15%; and AGR 5% of the License (collectively the " License Owners"). The License Owners intend to negotiate a Joint Operating Agreement to regulate the commercial relationship in respect of the License.
Pursuant to the Farm-out Agreement, at the closing of the transactions contemplated by the Farm-out Agreement, Ellomay Oil and Gas will reimburse Adira for its proportionate share of the costs incurred by Adira to date of closing plus interest of LIBOR + 1%. This amount is currently expected to be approximately US$320,000. Ellomay Oil and Gas will also pay Adira a 3% overriding royalty interest (" ORRI") on Ellomay Oil and Gas's share of revenues from sold petroleum until repayment of Ellomay Oil and Gas's expenditures in the work program plus interest of LIBOR + 1%, and 4.5% ORRI following such repayment.In addition, following the closing of the transaction, each of Ellomay Oil and Gas and the other holders of the participating interests in the License will be required to bear and pay its respective share of all of the expenditures approved in relation to the License and to bear and pay its share of the carried interest with respect to AGR's 5% participating interest (such payments will be reimbursed to Ellomay Oil and Gas by AGR from its proceeds for oil and gas attributed to its interest in the License).
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