DELEK GROUP LTD. 
By Tel Aviv, January 6, 2014. Delek Group (TASE: DLEKG, OTCQX: DGRLY) ("the Company") Further to that stated in Section 1.11.29(F) of the Company's Annual Report dated March 24, 2013, as amended on July 4, 2013 (Ref. No. 2013-01-083805), below is included the immediate report as published by the subsidiary partnerships yesterday, Delek Drilling Limited Partnership and Avner Oil Exploration - Limited Partnership (together "the Partnerships") with regard to the signing a natural gas supply agreement between the Partnerships and the other partners in licenses 349/Rachel and 350/Amit (the "Sellers"), with the Palestine Power Generation Company PLC (the "Purchaser" or "PPGC"). According to the agreement, the Purchaser will acquire natural gas from the Sellers for power plant operating needs that the Purchaser intends to build near Jenin in the northern West Bank.
"Further to that stated in the Partnerships shelf prospectus dated May 31, 2013, as amended on August 5, 2013, hereby a notice is issued that on January 5, 2014 a natural gas supply agreement was signed between the Partnerships and the other partners in licenses 349/Rachel and 350/Amit with the PPGC. According to the agreement, the Purchaser will acquire natural gas from the Sellers for power plant operational needs that the Purchaser intends to build near Jenin in the northern West Bank (the "Supply Agreement").
Under the Supply Agreement, the Sellers committed to supply natural gas to PPGC in the total scope of 4.75 BCM (the "overall contractual amount").
The period of the Supply Agreement will start from the beginning of the flow of gas from the Leviathan Project and shall end after 20 years, or at the date that PPGC shall have purchased the overall contractual amount, whichever is the earlier ("Supply Period"). The PPGC is entitled to reduce the quantities to be purchased in accordance with a mechanism defined in the Supply Agreement.
PPGC undertook to take or pay a minimum annual quantity of gas to the extent and in accordance with the mechanism set forth in the Agreement.
The price of gas determined in Supply Agreement will be linked to Brent Crude prices, and includes "a floor price".
The Sellers estimate that the aggregate level of revenues from the sale of natural gas to PPGC (at a ratio of 100% of the rights in the Leviathan Project) during the Supply Period (and based on an evaluation by the Leviathan partners regarding the price and quantity of natural gas which will be purchased during the Supply Period), is likely to aggregate to approximately US$ 1.2 billion.
If the overall contractual amount is reduced as mentioned above, the revenue scope is likely to aggregate to approximately US$ 1 billion.
It should be clarified that the actual revenues that will be derived depends on various factors, including the quantities of gas actually purchased by PPGC and the Brent Crude prices at the time of sale.
The Supply Agreement includes several contingent conditions, of which the main ones are the development approval of Leviathan Project by the Sellers, obtaining all regulatory and other approvals required by law for the development of the project and gas exported from it, the financing development closure of the Sellers' project and the financial closure of the Purchaser in financing the construction of the power plant.
In the Partnerships' best knowledge, PPGC is a special purpose company dedicated to be developed, construction and operation of power plants in the area of the Palestine Authority, which is registered and operating under the laws of the Palestine Authority.
Caution with Regard to Forward Looking Statements: The above estimates including the estimates concerning the financial amounts included in the Supply Agreement, the amount of natural gas to be purchased, and the start date for supply under the Agreement are forward looking information in terms of its meaning under section 32A of the Securities Law, for which there can be no certainty that it will happen, in whole or in part, as specified above or otherwise, and whether it will happen in a materially different manner, which may depend on account of various factors including non-fulfillment of the contingent conditions, in whole or in part, changes in volume, rate and timing of natural gas consumption by the PPGC, change in the price of gas as a result of changes in the prices of Brent, etc.
The partners in the Leviathan project and their holdings:
Noble Energy Mediterranean Ltd. | 39.66% |
Delek Drilling - Limited Partnership | 22.67% |
Avner Oil Exploration - Limited Partnership | 22.67% |
Ratio Oil Exploration (1992) - Limited Partnership | 15.0% |
This is a convenience translation of the original HEBREW immediate report issued to the Tel Aviv Stock Exchange by the Company on January 05, 2014.
About The Delek Group
The Delek Group, Israel's dominant integrated energy company, is the pioneering leader of the natural gas exploration and production activities that are transforming the Eastern Mediterranean's Levant Basin into one of the energy industry's most promising emerging regions. Having discovered Tamar and Leviathan, two of the world's largest natural gas finds since 2000, Delek and its partners are now developing a balanced, world-class portfolio of exploration, development and production assets with total gross natural gas resources discovered since 2009 of approximately 37 TCF.
In addition, Delek Group has a number of assets in downstairs energy, in water desalination, and in the finance sector.
Contact
Dalia Black / Dina Vince |
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