Oil and gas exploration company ADIRA Energy has entered a series of agreements to farm out part of its interest in the Yitzhak licence, offshore Israel.

Adira Energy, through its wholly owned subsidiary Adira Energy Israel, agreed to farm out a 5% working interest in the licence to the AGR Group.

Under the terms of the deal, AGR will pay Adira a 3% overriding royalty interest on AGR’s share of revenues from Petroleum sales; this interest will increase to 4.5% until AGR’s expenditures have been repaid.

Adira also entered an agreement with Ellomay Oil and Gas 2011 to farm out a 20% working interest in the Yitzhak licence.

Ellomay will reimburse Adira for its proportionate share of the costs to the date of closing, as well as interest at LIBOR +1%.

In addition, Adira has formalised a letter of intent with Brownstone Energy regarding the Yitzhak licence, enabling the formal registration of Brownstone’s 15% working interest in the Petroleum Registry.

The Yitzhak licence covers an area of 127.7km2 in shallow water at depths of 60-250m.

The agreements will reduce the company’s working interest from 85% to 60%, and strengthen its operating and business profile in the licence.

The farm-out will make AGR the lead operator of the licence, with Adira as a cooperator, pursuant to the agreement.

The licence owners will negotiate a joint operator agreement to regulate the commercial relationship.