Tel Aviv, July 17, 2018. Delek Group (TASE: DLEKG, US ADR: DGRLY) (“the Company”) announces that Further to what was stated in section 1.7.33(10)(1) of the Company's Periodic Report to December 31, 2017 that was published on March 28, 2018 (ref. no. 2018-01-031177), attached is an Immediate Report published by Delek Drilling Limited Partnership (“the Partnership”) concerning authorization of the Partnership’s Audit Committee to handle the issue of the date of the return of the investment in the Tamar Project.
The Company is also continuing to assess the working assumptions and calculations of the Partnership in the matter of the date of the return of the investment in the Tamar Project.
Delek Drilling - Limited Partnership
July 8, 2018
Israel Securities Authority
Tel Aviv Stock Exchange Ltd.
22 Kanfei Nesharim St.
2 Ahuzat Bayit St.
Re: Date of Recovery of the Investment in the Tamar Project –
Authorization of the Audit Committee
Further to the provisions of Section 7.25.2(b)(1) of the Partnership’s periodic report as of December 31, 2017 which was released on March 21, 2018 (ref. no.: 2018-01-022209) regarding calculation of the date of recovery of the investment in the Tamar project for the purpose of determination of the date of commencement of payment of royalties to Delek Group Ltd., Delek Energy Systems Ltd. and Delek Royalties (2012) Ltd. (collectively: the “Royalty Holders”) at the rate of 6.5% (in lieu of a rate of 1.5%) (the “Date of Investment Recovery”), the Partnership respectfully updates as follows:
- Before the board meeting of July 8, 2018, a report was circulated among the board members which was prepared per the request of the Partnership’s supervisor by an external economic consultant (the “Consultant” and the “Consultant’s Report”, respectively). The Consultant’s Report summarizes checks performed by the Consultant with respect to a calculation of the Date of Investment Recovery which was included in a draft calculation report which was prepared by the Partnership, according to which the Date of Investment Recovery was in December 2017 (the “Draft Calculation”).
- The main issue mentioned in the Consultant’s Report is the handling of the levy on gas and petroleum profits by virtue of the Taxation of Profits from Natural Resources Law, 5771-2011, with respect to which the Consultant stated, inter alia, that his conclusions do not necessarily represent flaws in the Draft Calculation and are subject to a legal and economic interpretation of the royalties agreement. It is further noted that, as of such date, the auditors’ audit report with respect to the Draft Calculation has not yet been completed, and the position of the Royalty Holders with respect thereto has not yet been received.
- In view of the fact that the Royalty Holders include the Partnership’s control holders, the board has decided to empower the audit committee (which comprises outside and independent directors only) to handle this issue, and in this context to examine issues that arise from the Consultant’s Report, to inquire into the various issues vis-à-vis the Royalty Holders and to take any other action, as the committee deems fit, at its discretion, all according to the best interests of the Partnership. According to the board’s decision, the audit committee will be authorized to retain the services of outside and independent professional consultants, at its discretion and at the expense of the Partnership, for the purpose of obtaining legal and economic advice for the process and to determine the terms of compensation of the said consultants. The audit committee has been asked to formulate its recommendations on the issue and to present them to the board.
Delek Drilling Management (1993) Ltd.
General Partner of Delek Drilling - Limited Partnership
By Yossi Gvura, Deputy CEO
and Sari Singer Kaufman, General Counsel, VP
This is a convenience translation of the original HEBREW immediate report issued to the Tel Aviv Stock Exchange by the Company on July 9, 2018.
Delek Group is an independent E&P and the pioneering visionary behind the development of the East Med. With major finds in the Levant Basin, including the Leviathan (21.4 TCF) and Tamar (11.2 TCF) reservoirs and others, Delek is leading the region’s development into a major natural gas export hub. In addition, Delek has embarked on an international expansion with a focus on high-potential opportunities in the North Sea and North America. Delek Group is one of Israel’s largest and most prominent companies with a consistent track record of growth. Its shares are traded on the Tel Aviv Stock Exchange (TASE:DLEKG) and are part of the TA 35 Index.
For more information on Delek Group please visit www.delek-group.com