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July 1, 2013 /CNW/ -
ADIRA ENERGY LTD. (TSXV: ADL) (OTCBB: ADENF) ( FRANKFURT: AORLB8). Adira Energy Ltd. is pleased to announce that its wholly owned subsidiary, Adira Energy Israel Ltd. (together with Adira Energy Ltd., "
Adira"), has entered into a settlement and release agreement (the "
Agreement") with Modi'in Energy LP ("
Modi'in") and Brownstone Energy Inc. ("
Brownstone") (together with Adira, the "
Consortium"). The Agreement resolves the Consortium's previously disclosed disputes over their respective funding obligations and related suspension of operations on the Gabriella License.
Pursuant to the Agreement, the Consortium members agree to waive and release each other from any claims and demands they may have with respect to the Gabriella License. The Agreement further provides that the Consortium members will fund their proportionate share of costs associated with the Gabriella License incurred in connection with the attempted drilling of the first well. Adira's net share of the costs total approximately
US$3.2 million and is payable in stages over a 90 day period from the Effective Date (as defined below).
Jeffrey E. Walter,
Chief Executive Officer of Adira commented, "
Adira and its partners in the Gabriella License have faced many operational and financial challenges over the past half year. Despite confirming contingent resources on the License and having a drilling rig on site, the Consortium was unable to execute the drill program. Appreciating the need for co-operation and mutual agreement in order to maintain and extend the tenure of the License, as well as to secure financing for the continued operations on the License, the Consortium has worked diligently to complete the co-operation agreements and submit the request for License extension to the Ministry of Energy and Water. Adira has the intention and aspiration to develop the Gabriella License and is currently assessing finance options to maintain its interest in the License."
The Agreement also provides the Consortium members with tag-along rights for a period of one year from the Effective Date (as defined below) to participate in any farm out of their participating interests in the Gabriella License consummated by the other members. In addition, Adira agrees to relinquish its 15% buy back option and management fee, and reduce its overriding royalty interest to 2.625%.