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Atwood Considers Pulling Drilling Rig Out of Israel on Terrorist Attack Fears

The American company will wait for the results of the summit meeting in Egypt before making a final decision.

Atwood Oceanics

(ATW)

decided at the end of last week to abandon its offshore gas and drilling operations and leave Israel's territorial waters due to concerns about possible terrorist attacks. The American company plans to appeal to the "acts of God" provision in its contract as justification for pulling out of the Oil Fields exploration partnership. However, it has agreed to wait for the results of the summit meeting in Egypt Monday between Israel and Palestine, under U.S. supervision.

The Houston, Texas-based company instructed its German subsidiary,

Aurora Offshore Services

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, to pull up its Atwood Southern Cross drilling rig and transfer the gear to Cyprus. Atwood Southern Cross began drilling only a week ago. The well is located 27 kilometers northwest of Haifa. So far it has drilled to a depth of 500 meters out of a planned 2,700 meters.

Over the weekend, Oil Fields' management tried to convince Atwood to delay implementation of this decision. The U.S. Embassy in Israel was involved in these discussions. In the end, Atwood decided that it would stop drilling and prepare the rig for transit, but would wait until after the summit meeting today in Sharm el Sheikh to make a final decision on withdrawing the rig from Israeli waters.

A spokesman for the Oil Fields group said Sunday that efforts were still being made to persuade Atwood to reconsider its decision to abandon its Israeli activities. Meanwhile, the share value of Oil Field's "Fields L" unit dropped nearly 14% on the

Tel Aviv Stock Exchange

Sunday, on a volume of more than NIS 800,000.

The general partner in the Oil Fields limited partnership announced yesterday that in light of the recent developments, he is considering delaying the planned rights issue detailed in a prospectus published on Oct. 12, aimed at raising NIS 9 million. The cost of the drilling operation is estimated at $8.5 to $9.5 million.