Avenue Closes on Farmout Agreement of Heletz Field
Avenue Closes on Farmout Agreement of Heletz Field
NEW YORK, NY, Apr 03, 2008 (MARKET WIRE via COMTEX) -- Avenue Group, Inc. (AVNU) ("AGI"), and its wholly owned Israel subsidiary Avenue Energy Israel LTD. ("AEI"), is pleased to announce that it has completed an agreement with TomCo Energy Plc ("TomCo"), a London-based, AIM-listed Oil & Gas Company and its wholly owned Israeli subsidiary Luton-Kennedy LTD ("LKL"), to farm-out interests in two onshore petroleum licenses in Israel. The interests acquired are a 50% interest in the Heletz-Blur-Kokhav Licence and a 25% interest in the Iris License (the "Licenses"), which include the original Heletz-Blur-Kokhav oilfields ("Heletz").
Pursuant to the terms of the agreement, TomCo has:
- paid AGI US$1 million in cash;
- issued to AGI 12,618,615 million ordinary shares of 0.5 pence each in the Company ("Ordinary Shares") valued at approximately US$500,000 at a price of 2p per share with a one year sale restriction;
- paid to AGI US$107,000 which represent 50 percent of costs incurred to date in relation to the License;
- agreed to assume 100 percent of the costs associated with implementing the three year work program covering the Phase 1 period of the License, up to a maximum of US$4.5 million;
- agreed to pay a further US$1.5 million to AGI upon the successful conversion of the License into a production lease;
- agreed to pay a further US$5 million to AGI upon recoverable reserves being certified at 10 million barrels or more by an independent reservoir engineering firm.
AEI and LKL are currently assessing the remaining reserves for the Heletz field as one of the first steps in an active technical program designed to identify well re-completion and infill well drilling targets, and to examine secondary recovery options. Recent production from the field was around 60 bopd. The implementation of modern production and recovery methods and selected infill drilling has the potential to significantly increase production over the next 24 months, which may lead to the granting of a production lease.
Levi Mochkin, AGI's Chief Executive Officer, commented:
"We are very pleased to have completed this agreement with TomCo. TomCo's management team has had a long and storied career in creating shareholder value in the energy and mining sectors. Their investment in AGI and Heletz signifies their confidence in the potential of the Heletz field. It gives us the opportunity to re-develop the Heletz field and evaluate the significant potential of the deeper play while mitigating our financial exposure. We look forward to continue to work with TomCo in implementing the work program that will unlock the potential of the Heletz oilfield."
Heletz Field Background
The Heletz-Kokhav license and the Iris license equaling approximately 68,000 acres, are comprised of 3 oil fields -- Heletz, Brur and Kochav, and is located approximately 55 km south of Tel Aviv and 12 km east of the Mediterranean Sea. Heletz was the first oil field discovered in the eastern Mediterranean and remains the most significant oil field discovered onshore Israel.
The first well (Heletz 1) was drilled to a depth of 4800 feet (1515 Meters) and recognized as a producing well on 12 October 1955. Initial production was approximately 400 barrels per day; oil was 29 degrees API. A total of 88 wells have been drilled on the Heletz field to depths ranging from 4,000 to 6,500 feet., of which 59 were producing wells with the other 29 having oil shows. Peak production occured between 1959-1967 when daily production was between 2,500 and 4,000 barrels of oil per day ("BOPD").
Total proven reserves have been estimated at 19.1 million barrels, of which 17.2 million barrels of oil has been recovered. Recovery estimates do not include secondary, tertiary recovery methods that may have the potential to raise production; these methods have not yet been applied to the field. A number of significant undrilled, deeper exploration prospects on the licenses have also been identified.
ABOUT AVENUE GROUP INC
Avenue Group, Inc. (AVNU) is engaged in the exploration and development of oil and gas reserves. Its strategy is to acquire a portfolio of oil and gas assets that include the acquisition of low risk oil and gas reserves and the generation of low risk drilling opportunities.
Certain statements in this announcement including statements such as "believes," "anticipates," "expects" and all similar statements regarding future expectations, objectives, intentions and plans for oil and gas exploration, development and production may be regarded as "forward-looking statements" within the meaning of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on the opinions and estimates of management at the time the statements are made. Management's current view and plans, however, are subject to numerous known and unknown risks, uncertainties and other factors that may cause the actual results, performance, timing or achievements of Avenue Group to be materially different from any results, performance, timing or achievements expressed or implied by such forward-looking statements. The various uncertainties, variables, and other risks include those discussed in detail in the Company's SEC filings, including the Annual Report on Form 10-KSB, for the year ended December 31, 2006 and its Quarterly Report on Form 10-Q for the period ended September 30, 2007. Avenue Group Inc. undertakes no duty to update or revise any forward-looking statements. Actual results may vary materially.
For further information, please visit our website at http://www.avenuegroupinc.com or contact Levi Mochkin at (888) 612-4188 ext 4 or email IR@avenuegroupinc.com.
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