Tel Aviv, December 28, 2015. Delek Group (TASE: DLEKG, US ADR: DGRLY) (“the Company”) announces that attached is an Immediate Report submitted by each of Avner Oil Exploration Limited Partnership and Delek Drilling Limited Partnership ("the Partnerships") concerning receipt of leases for Karish and Tanin.
Pursuant to what was stated in section 7.8.1 of the Partnerships' Annual Reports to December 31, 2014 that was published on March 18, 2015 ('the Annual Report"), and to the Partnerships’ Immediate Report dated August 24, 2015 concerning extension of the validity of licenses 364/Alon A and 366/Alon C ("Alon A License", "Alon C License" and "the Licenses", respectively) until December 31, 2015, in the Immediate Report dated December 17, 2015 concerning approval of the regulatory outline plan for the natural gas market and the Immediate Report dated December 24, 2015 concerning the convening of a general meeting, whose agenda includes the contracting of the Partnerships with Nobel Energy in respect of acquisition of the right to sell the rights contained in the Licenses, the Company announces that on December 24, 2014 the Petroleum Commissioner at the Ministry for National Infrastructures, Energy and Water ("the Commissioner" and "the Ministry for Infrastructures", respectively) granted the Partnerships and other partners in the Licenses, two leases instead of the licenses of leases Tanin I/16 and Karish I/17 ("the Leases"). The Leases include the gas fields Karish and Tanin, with the area of Lease Tanin I/16 being included in the area of the Alon A License and Lease Karish I/17 being included in the area of the Alon C License.
The terms stipulated in the two aforementioned Leases are essentially similar to those in the Leviathan lease, as stated in section 7.5.2 of the Annual Report, and include inter alia the following principal terms:
1. Leaseholders and their percentage holdings in each of the Leases are as shown below "Leaseholder"):
Noble Energy Mediterranean Ltd. (above and below: "Nobel Energy") 47.0590%
Avner Oil Exploration - Limited Partnership 26.4705%
Delek Drilling Limited Partnership 26.4705%
2. The operator at the date of issue of the Lease is Nobel Energy.
3. The area of each of the Leases covers approx. 25,000 hectares.
4. The Lease period is 30 years, from August 11, 2014 until August 10, 2044, and can be extended in accordance with the provisions of the Petroleum Law, 1952 ("the Petroleum Law").
5. In accordance with Government Decision No. 476 dated August 16, 2015 concerning Karish and Tanin, the Leaseholders at the date of grant of the Lease are required to transfer their rights in the Lease to others, in accordance with the what is stated in the Government Decision concerning Karish and Tanin and accordance with the provisions of the Waiver dated December 17, 2015, as stated in the Immediate Report dated December 17, 2015 ("Transfer of Rights").
6. The Lease will be amended by the Commissioner close to the date of the said Transfer of Rights, according to the circumstances and inter alia following assessment of the requirements presented by the buyer of the rights in Karish and Tanin ("the Amendment to the Leases").
7. Supply and sale of oil and gas produced from the Karish and Tanin fields will be solely to consumers in Israel and not for export. At the date of Transfer of Rights the permitted export quota from the Tanin and Karish leases will be changed, in accordance with what is stated in sections 1(H)(3) and 1(H)(4) of the Government Decision concerning exports (Government Decision No. 422 dated June 23, 2013, including changes that have occurred following Government Decision 476), in respect of "the Obligation of Supply to the Local Market" that applied to the owners of Leviathan South I/14 and Leviathan North I/15 Leases.
8. As part of the Lease, the Leaseholder must provide the Commissioner with the development plan for the local market within 6 months from the date of the Transfer of Rights.
9. Planning and set up of the production system and the transmission system to the supplier shall be such that they are suited for production and transmission capabilities to facilitate supply and transmission of gas to the national transmission system in an amount to be stipulated in the Amendment to the Leases from the areas of the two leases combined, following approval by the Commissioner.
10. The Leaseholder will include in the development plan a detailed timetable for implementation of the development plan in respect of the supply system to the local market whereby the commercial production and flow of gas to the transmission system will commence on the dates stipulated in the Amendment to the Leases, subject to the authority of the Commissioner to postpone or update the timetable stated in the aforementioned development plan.
11. To ensure fulfillment of the terms of the Lease and approvals, to ensure payments in law by the Leaseholder to the Government and as a condition for grant of the Lease, the Leaseholder is required to provide an autonomous, unconditional and irrevocable bank guarantee in favor of the State of Israel ("the Guarantee"). The level of the Guarantee (in total for both Leases together) will be USD 15 million, which will be established by January 8, 2016, and 15 days after the date of Transfer of Rights, the buyer will establish for the rights in the Leases a guarantee of USD 20 million (in total for both Leases together) instead of the guarantee provided by the original leaseholders and upon grant of approval for the operating the production system the Guarantee will be increased to an overall sum of USD 30 million The Guarantee will be valid throughout the Lease period and will continue in the period following expiry of the Lease as long as the Commissioner has not said there is no need for it, and subject to section 57(c) of the Petroleum Law.
12. The Leases contain further provisions including the following issues: sale to the Israeli market; elements of the development plan (including targets, criteria and timetables); security arrangements; maintenance and handling of faults; checks, reports and supervision; provisions for environmental protection, safety, limitations on the transfer or mortgaging of the Lease and the production system assets; warranty, indemnification and insurance.
13. The Leases are public and will be published on the Ministry of Infrastructures website.
This is a convenience translation of the original HEBREW immediate report issued to the Tel Aviv Stock Exchange by the Company on December 27, 2015.
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 40 TCF.
In addition, Delek Group has a number of assets in downstream energy, water desalination, and in the finance sector.
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Delek Group
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