Delek Group (TASE: DLEKG, US ADR: DGRLY) (“the Company”) announces that below is an Immediate Report published by each of Avner Oil Exploration Limited Partnership and Delek Drilling Limited Partnership (jointly “the Partnerships”) concerning the decision to drill the Leviathan-7 development and production well.
Further to the provisions of Section 7.5.9(a)(5) of the Partnerships’ periodic reports as of December 31, 2015, as released on March 28, 2016 (the “Periodic Reports”) regarding the updated development plan for the Leviathan reservoir which is located in the area of the I/14 Leviathan South and I/15 Leviathan North leases (the “Development Plan” and the “Leviathan Project” or the “Leviathan Reservoir”, respectively), of the immediate reports of June 2, 2016 regarding approval of the Development Plan by the Petroleum Commissioner at the Ministry of National Infrastructures, Energy and Water Resources (the “Commissioner”), of the immediate reports of December 18, 2016 regarding the decision of the Leviathan partners to drill the “Leviathan-5” appraisal and production well (the “Leviathan-5 Well”), and the immediate reports of February 23, 2017 regarding the adoption of a final investment decision (FID) for the development of the Leviathan Reservoir, the Partnerships respectfully announce that on March 13, 2017, the Leviathan partners made a decision regarding the drilling of the “Leviathan-7” development and production well in the area of the I/14 Leviathan South lease (the “Leviathan-7 Well” or the “Well”).
Set forth below are further details regarding the Well:
1. The date on which the decision regarding the drilling of the Well was made:
March 13, 2017.2. Reasons for the decision:
Noble Energy Mediterranean Ltd. (“Noble” or the “Operator”) recommended that the Partnership drill at this time an additional development and production well in the Leviathan Reservoir, as an integral part of the Leviathan Reservoir production wells, in the framework of the Development Plan. By drilling the Leviathan-7 Well in a batch with the Leviathan-5 Well, it will be possible to streamline and reduce the cost of the drilling of these two wells.
3. Conditions to the drilling of the Well and to participation in the drilling thereof:
The Commissioner has approved the Development Plan, as specified in the Partnership’s immediate report of June 2, 2016, whereby, inter alia, the Leviathan-7 Well will be drilled as a development well and later connected as a production well to the Leviathan Project’s production system. The Operator has received the approvals required from the Commissioner and the Ministry of Environmental Protection, including for a drilling plan for the first stage, as specified in Section 6 below, for a piping permit, and for a pre-drilling environmental impact assessment survey. It is noted that the drilling rig that will drill the Well is the Atwood Advantage, which is currently working in the “Tamar-8” development and production well, as specified in the immediate report of July 3, 2016 (ref. no.: 2016-01-072463) (the “Tamar-8 Well”), which is expected to be completed (including completion and connection to the production system) in the coming weeks. According to the Operator’s reports, the rig meets the various requirements determined by the Commissioner and the Ministry of Environmental Protection.4. Name of the Well:
“Leviathan-7”.5. Location of the Well:
Offshore well, approx. 120 km west of Haifa.6. The drilling dates:
Since the Leviathan-7 Well will be drilled in a batch with the Leviathan-5 Well, and in order to increase the efficiency of the activity, according to the Operator’s recommendation, the two wells will be drilled in the following order: at the first stage, the upper part of the Leviathan-7 Well will be drilled to a depth of approx. 2,900 meters below sea level; at the second stage, the drilling rig will be moved to the Leviathan-5 Well site, where it will drill this well to a final depth of approx. 5,200 meters below sea level; at the third stage, the drilling rig will be returned to the Leviathan-7 Well site, where it will drill the lower part of this well to a final depth of approx. 5,100 meters below sea level. It is noted that the Leviathan wells will be completed and connected to the production system on another date, in accordance with the Development Plan. The drillings are expected to commence immediately after completion of the Tamar-8 Well, and to take approx. seven months in the aggregate (Leviathan-5 and Leviathan-7 together, excluding their completion and connection to the production system).7. The target layers in the Well:
Oligo-Miocene layers.8. The Well’s type, purpose and future stages that are dependent on its findings:
A development and production well intended to form an integral part of the Leviathan Reservoir production wells, in the framework of the Development Plan.9. Depths:
The depth of the water at the drilling site is approx. 1,630 meters, and the final depth planned for the Well is approx. 5,100 meters below sea level.10. Budget:
The total (100%) drilling budget is approx. U.S. $71 million (excluding the cost of completion thereof and connection to the production system of the Leviathan Reservoir). It is noted that the drilling budget as aforesaid is included in the budget for development of the Leviathan Project, as approved by the Leviathan partners, as specified in the Partnerships’ immediate reports of February 23, 2017.11. Name of the Operator:
Noble.12. Name of the corporation drilling the Well:
Noble.
13. The share of the holders of the equity interests of the Partnership in the drilling budget:
22.67%.14. The share of the holders of the equity interests of the Partnership in the possible income deriving from the Well:
18.48%, taking into account the royalties paid to the State, affiliates and others.15. The names of the partners in the petroleum asset in which the Well will be drilled and their share in the drilling budget:
Names of the Partners
|
Share of Each Partner in the Drilling Budget
|
Avner Oil Exploration Limited Partnership
|
22.67 %
|
Delek Drilling, Limited Partnership
|
22.67 %
|
Noble
|
39.66%
|
Ratio Oil Exploration (1992), Limited Partnership
|
15 %
|
Delek Group economic interest
|
25.65%
|
16. Reference to the description of the petroleum asset in the Periodic Reports:
For a description of the petroleum asset, see Section 7.5 of the Periodic Reports.
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