Gas Subsidiaries Update

The following updates are based on information released by Delek Group gas subsidiaries, Delek Energy Systems Ltd., Avner Oil & Exploration L.P and Delek Drilling L.P. All financial and business information is given only for the convenience of the reader. The only official financial and business information, is that which is included in the officially published immediate reports and financial reports of Delek Group and its gas subsidiaries, to the Israeli Securities Authority and the Tel Aviv Stock Exchange, in Hebrew. In the event of any conflict between financial and business information given on this site and the Hebrew published immediate reports, the Hebrew published immediate reports shall prevail. More on Delek Group's disclaimer.

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Agreement with Dalia Power Energies Ltd. for the Sale of Natural Gas

Tel Aviv, January 9, 2012. Delek Group (TASE: DLEKG, OTCQX: DGRLY) ("the Company") announced that the following report was published by its Delek Drilling - Limited Partnership and Avner Oil Exploration subsidiaries:

We hereby announce that on January 8, 2012, an agreement for the supply of natural gas was signed between the partnership and other partners of the "Tamar" lease ["sellers" or "Partners" and "Tamar project" respectively] and Dalia Power Energies Ltd. ["Dalia"], under which Dalia will purchase, from the sellers, natural gas for the purpose of operating a power station which it plans to construct ["supply agreement"].

According to the supply agreement, the sellers are committed to supply Dalia with up to 1.38 BCM [billion cubic meters] per year of natural gas for a period of 17 years, starting from the beginning of commercial operation of the power plant that Dalia plans to build ["basic agreement period"], or until Dalia has consumed the volume of gas provided by the agreement, the earlier of the two. The parties have the right to extend the supply agreement period, by up to two more years, if up to said date, not all volumes as provided by the agreement have been consumed.

Dalia is committed to "take or pay," an annual minimum volume of gas, in a volume and in accordance with a formula provided by the supply agreement.

The price of gas provided by the agreement will be determined according to a formula that is based primarily on the cost of generating electricity, as fixed, from time to time, by the Public Services Authority-Electricity, including a "floor price" for the price of gas.

The "Tamar" project partners estimate that total revenue from the sale of gas to Dalia [vis à vis 100% of the rights to the "Tamar" project], during the basic agreement period [on the basis of estimates prepared by the partners for gas prices over the supply period], may reach US$ 5 billion. It should be noted that actual revenue is a function of many factors, including the volume of gas that will be actually purchased by Dalia, and the cost of generating electricity.

The supply agreement includes a number of conditional terms, primarily - the closure of the financing of Dalia, financing of part of the partners share of the "Tamar" project [including the Partnership], and approval by the Antitrust Authority [if said will be required].

Based on this contract and as estimated by the Partnerships, gas supply is estimated to begin in the second half of 2014.

Caution Regarding Forward-Looking Information:

These estimates vis à vis the supply agreement's overall financial consideration, and the start of supply on the basis of the agreement, are considered forward-looking, as defined by Securities Law, 5728-1968. There is no certainty that said will be realized, in whole or in part, and may be realized in a manner substantially different, because of various factors, including non-compliance with various conditional terms, in whole or in part, changes in volume, rate and timing of demand for natural gas by Dalia, the price of gas that will be determined in accordance with a formula set by the supply agreement, etc.

Percentage Holdings Of The "Tamar" Holding Are As Follows:

Noble Energy Mediterranean Ltd. 36%
Isramco Negev 2 – Limited Partnership 28.75%
Avner Oil Exploration - Limited Partnership 15.625%
Delek Drilling - Limited Partnership 15.625%
Dor Gas Explorations – Limited Partnership 4%

THIS IS A TRANSLATION OF THE HEBREW ANNOUNCEMENTS ISSUED TO THE TEL AVIV STOCK EXCHANGE ON JANUARY 9, 2012 BY DELEK DRILLING L.P. AND AVNER OIL & EXPLORATION L.P.

About The Delek Group

Delek Group is the leading energy & infrastructure group based out of Israel with investments in upstream & downstream energy, water desalination and power plants globally. In addition, Delek, though its subsidiaries, is a leading importer & distributor of vehicles in Israel and owns insurance assets in Israel and the US. Recently, Delek Group, through its subsidiaries, discovered significant quantities of high quality natural gas off the coast of Israel. Delek Group sales reached over 44 billion Israeli shekel in 2010.

Contact
Dalia Black / Dina Vince

Investor Relations
Delek Group
Tel: +972 9 863 8444
Email: investor@delek-group.com

Ehud Helft / Kenny Green

International Investor Relations
CCG Investor Relations
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E-mail: delek-group-ir@ccgisrael.com

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