Delek Group (TASE: DLEKG, US ADR: DGRLY) (“the Company”) provides below an Immediate Report published by each of Delek Drilling Limited Partnership and Avner Oil Exploration Limited Partnership ("the Partnerships") with regard to an engagement in a non-binding LOI for the supply of natural gas from the Leviathan project to Edeltech Ltd.
Further to the provisions of Section 7.14.1 of the Partnerships’ periodic report as of December 31, 2015, as released on March 28, 2016 (the “Periodic Report”) regarding the conduct of negotiations of the partners in the Leviathan project including the Partnerships (the “Leviathan Partners”) for the marketing of natural gas and condensate to potential offtakers in the domestic economy, the Partnerships hereby respectfully announce as follows:
On January 16, 2017, a non-binding LOI was signed between the Leviathan Partners and Edeltech Ltd. (the “LOI” and the “Buyer”, respectively), in which the parties confirmed their intent to conduct negotiations regarding an agreement for the supply of natural gas from the Leviathan project to the Buyer (the “Binding Agreement”).
The LOI includes several commercial conditions to the proposed potential transaction, which will serve as a basis for the conduct of the negotiations regarding the terms and conditions of the Binding Agreement. The estimated scope of the Binding Agreement is for the supply of a total quantity of approx. 14.8 BCM for a period of 17 years. The Buyer shall Take-or-Pay for a minimum annual quantity of gas at such scope and according to such mechanism as shall be determined in the Binding Agreement. The price of the gas shall be linked to the electricity production tariff, as shall be determined from time to time by the Electricity Authority.
It is clarified that the LOI is not binding and the parties intend to conduct negotiations with the aim of signing the Binding Agreement. The Binding Agreement (if signed) will be subject to several conditions precedent, as shall be agreed between the parties in the framework of the Binding Agreement.
It is further noted that the Binding Agreement (if signed) is in addition to the supply agreement that was signed between the Buyer and the Leviathan Partners as specified in the Partnerships’ immediate report of January 31, 2016.
To the best of the Partnerships’ knowledge, the Buyer is a private company owned by the Edelsberg family. The Buyer is a partner in the Dorad power plant and holds other cogeneration plants, Ashdod Energy and Ramat Negev Energy.
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