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 for the Sale of Natural Gas - Tamar Partners

Tel Aviv, Monday March 10, 2014. On March 06, 2014, the Board of Directors of Delek Group's gas subsidiaries authorized the managements to sign a Take-or-Pay agreement ("Agreement") together with the Tamar partners for the supply of natural gas in the coming days with Delek Sorek IPP Ltd. (“Sorek IPP”), fully owned subsidiary held indirectly by Delek Group. The main terms as included in the Agreement are highlighted as follows: The agreement is for the supply of up to a total quantity of 3.3 BCM, as described in the Agreement. The supply of natural gas is expected to commence in the beginning of the first quarter of 2016 for the period of over 15 years or up until the contracted quantity has been utilized (with an option to extend for an additional two years, if after 14 years from the start of the commercial natural gas supply, the quantities as stipulated in the agreement have not yet been supplied). The Agreement entitles Sorek IPP with an option to reduce the minimum annual amount it has committed to purchase or pay for it (Take or Pay) such that it will minimize the quantity to 50% of the average annual amount consumed during three years prior to exercising the option. In the case of option exercise, the remaining agreed amounts of natural gas to be supplied that were determined in the agreement will be reduced accordingly. Sorek IPP will be entitled to exercise this option, by providing notice to the Tamar partners during the period from the beginning of the fifth year of the supply of gas in commercial quantities or on January 1, 2018 (whichever is the latest), and this option will terminate at the end of the seventh year of the date of commercial operations or on December 31, 2020 (whichever is the latest). In the agreement, the gas price will be linked to the Israeli and the American CPI, includes a ”ceiling rate” and a “floor rate", all in accordance with the determined equation in the agreement. The estimated cumulative revenues from this agreement amounts to approximately US $ 750 million.  The agreement is subject to, inter alia, Antitrust Authority's approval, financial closure of Sorek IPP and the approval of the Desalination Water Authority.

For more information please see the immediate reports as published on TASE.

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