drilling permit for the Canoe oil asset in the Gulf of Mexico, USA

July 30, 2018 at 9:30 AM CEST

Tel Aviv, July 29, 2018. Delek Group (TASE: DLEKG, US ADR: DGRLY) (“the Company”) announces that  Further to section 1.8.6 of the Company's Periodic Report for 2017, published on March 28, 2018 (Ref. No. 2018-01-031177) concerning the agreement of Delek GOM Investments LLC, a wholly-owned foreign subsidiary of the Company (“the Buyer”) for the acquisition of rights in two oil and gas assets in the Gulf of Mexico, USA - Canoe and Tau (“the Oil Assets”) and the Buyer’s commitment to finance 90% of the cost of the first two drillings in the Oil Asset in exchange for 75% of the rights in the assets, and further to the Directors Report attached to the Company’s first quarter report for 2018, which was published on May 31, 2018 (Ref. No. 2018-01-045681), according to which GulfSlope Energy Inc., the operator of the Oil Assets, submitted the two drilling plans for the Oil Assets for the approval of the relevant regulator in the Gulf of Mexico, the Bureau of Ocean Energy Management (“BOEM”) , the Company announces that after approval of the drilling plan, a permit for exploration drilling in the Canoe prospect in Block VR-378 was received.

The operator intends to start drilling in the Canoe prospect on August 1, 2018 to a total depth of Approx. 6,200 feet. The drilling is expected to continue for two weeks and immediately after drilling at the Canoe prospect, the operator plans to transfer the rig to Block SS361, where exploration drilling for the Tau prospect is planned. The drilling plan for the Tau prospect was recently approved by BOEM, and the operator expects that the drilling permit for this prospect will also be received next week.

In addition, on July 19, 2018, the Buyer received a letter of certification from BOEM attesting that the Buyer is authorized to hold rights in oil and gas assets in the Gulf of Mexico and in the region.

It should be noted that according to the resources report received by the Company from Netherland, Sewell and Associates, Inc. (“NSAI”), which was prepared in accordance with the principles of the Petroleum Resources Management System (SPE-PRMS) attached as Appendix B to the Immediate Report of the Company dated January 8, 2018 (Ref. 2018-01-003307), as of December 31, 2017, in the best estimate (P50), the quantity of prospective resources in Oil Assets is 99 million barrels of oil and 177 BCF of natural gas (129 MMBOE ). In accordance with the rights acquisition agreement, the two drillings will cost the Company an amount not exceeding USD 50 million.

Forward-looking information: The Company's estimate regarding the prospective resources and the planned operations in the Oil Assets, including the receipt of the detailed regulatory approvals and the drilling plans, schedules and their actual performance, is forward-looking information as defined in the Israel Securities Law, 1968, based entirely on assessments received by the Company from the operator, and that there is no certainty that it will materialize in whole or in part, and in particular there is no certainty that the required approvals will be received and that the drilling plan will be performed in the manner stated or in any other way and that the quantity of resources will be the quantity of the prospective resources. The above information may differ materially, due to various factors, including delays in schedules, changes in market conditions, regulation, technical capacity, and economic feasibility.

Rates of holdings in the leases in the Canoe and Tau prospects:

Delek GOM Investments LLC 75%
GulfSlope Energy, Inc. 20%
Texas South Energy, Inc. 5%
              
  100%

This is a convenience translation of the original HEBREW immediate report issued to the Tel Aviv Stock Exchange by the Company on July 29, 2018.

About The Delek Group

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

 

Contact

Investors

Yonah Weisz
Head of Investor Relations
Delek Group Ltd.
Tel: +972 9 863 8443
investor@delek-group.com

 

 

 

   For further information about the Oil Assets, see section 1.8.6(B) and section 1.8.6(C), respectively, to the Company's Periodic Report.

   It should be noted that the operator signed an agreement with Rowan Companies to lease the Rowan Ralph Coffman rig (“the Drilling Rig”) for the two exploration drillings in the second half of 2018.

    Conversion key - the conversion to MMBOE was based on the following data: the conversion ratio of natural gas to MMBOE is 6,000 cubic feet per barrel, whereas the conversion ratio of oil to equivalent oil is one to one Caution - MMBOE units may be misleading, especially when used without taking into
account additional characteristics; the conversion is made according to the energy ratio at the burner and does not represent a value equivalent.