Company holding talks with Warburg Pincus equity fund for approximately a half a billion dollars for offshore drilling in Israel

Lior Gutman, Calcalist
Published: 03.21.12, 08:48 / Israel Business

US energy giant ATP has been conducting advanced negotiations with the Warburg Pincus private equity fund over the establishment of a gas and oil investment fund, Calcalist learned. ATP is seeking to raise another half a billion dollars for the purpose of gas and oil explorations on the continental shelf off the coast of Israel.

Warburg Pincus was established in the late 1930s and manages an estimated $40 billion in 650 companies in 30 countries worldwide. The fund specializes in finances, health and industry and since 1980 has been investing in energy projects with investments amounting to approximately NIS 5.5 billion in gas explorations, oil production and the construction and operation of power plants and renewable energy facilities.

One avenue of development under consideration is the establishment of infrastructures and platforms for handling natural gas and the construction of offshore gas liquefaction facilities dozens of kilometers off the coast of Israel.

The main impediment for such projects are construction costs which can amount to as much as $2 billion per facility. An investment fund, if one is established, will provide the funding for exploration drillings in the various sites and facilitate the construction of an offshore liquefaction facility.

Nobel Energy and Delek Energy have already signed memorandums of understanding with Korean companies for the construction of similar facilities.

American ATP is listed on NASDAQ under the symbol ATPG. Its estimated market cap is $429 million. ATP is considered a leader in deep-water drilling and specializes in drilling in the Gulf of Mexico. ATP has been active on the Israeli market for the past 18 months after it acquired a stake in the Samson, Daniel East and Daniel West licenses.

Last June ATP procured a permit from the Fuel Authority at the Ministry of Energy to increase its share in the Samson licenses to 40%. The Samson field is located about 100 kilometers off the coast of Ashkelon in southern Israel where natural gas exploration drilling is planned at a cost of $24-29 million. The field has an estimated potential of 1.5-3.4 TCF of natural gas.

ATP declined to comment.