delek group april 2014

8/12/2019 Delek Group April 2014

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1DELEK GROUP LTD > Expanding, Empowering

Delek GroupLeading Israeli Oil & Gas E&P Group

April 2014


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2DELEK GROUP LTD > Expanding, EmpoweringDELEK GROUP LTD > Expanding, Empowering 2

Disclaimer

This presentation has been prepared by Delek Group Ltd (Delek or the Group)and is provided to you solely for your information and is not to be copied or

distributed to any other person. This presentation does not purport to be all-inclusive or to contain all of the information that may be relevant in making anydecision concerning an investment in the securities of the Delek Group or anycompany in the Group.

No representation or warranty, express or implied, is made by any person as to the

accuracy or completeness of any of the information contained herein. In particular,no representation or warranty is given as to the achievement or reasonableness ofany forecasts about the future prospects of the Delek Group or any company in theGroup.

This presentation does not constitute an offer or invitation to purchase or subscribe

for any securities, and neither this presentation nor anything contained herein shallform the basis of or be relied upon in connection with any contract or commitmentwhatsoever.


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Leading the East Med. Energy Revolution

Long term track record of growth and attractive dividend policy

Issued NIS 3 billion in dividends in last 5 years

Transforming Levant Basin into an Natural Gas Export Hub

World-class portfolio of E&P assets with 37 TCF of natural gas in 8consecutive discoveries

Significant Potential from Unexplored Acreage

Extensive 3D Seismic Surveying in Israel & Cyprus to Capture AdditionalGas & Oil Resources

Top Tel Aviv listed Company

$4.7bn market cap, part of the TA 25 index


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Delek Groups Strategy at Work

Focus on Upstream

Reduce Groups Leverage

Long Term Shareholder Value


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8 Consecutive Natural Gas Discoveries; 37 TCF

2011Aphrodite

4.1 TCF

2010Leviathan

19 TCF

Cyprus Block 12

2011Dolphin0.1TCF

2000Yam Tethys

0.1 TCF Remaining

2013Karish1.8 TCF

NoaMari-B

2009Tamar10TCF

Haifa

Tel-

Aviv

Ashdod

Ashkelon

2010Tanin

1.2 TCF

Lease owned by Delek & partners

Licenses owned by Delek & partners

Natural gas discovery

For illustration purposes onlyNumbers refer to reserves and resources (Contingent & Prospective) in the best estimate category

2009Dalit

0.5TCF

Turkey

Egypt

Israel

Cyprus

Jordan

Licenses under appeal (were not extended)

2013Tamar SW0.9TCF

Option


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Projects Updates


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Tamar Project Significant Additional Potential

1Reserves are as of 31.12.2013, also includes Tamar SW, according to NSAI

2Delek Group economic interest 17.27%

Noble 36.0% Isramco 28.8% Avner 15.6% Delek Drilling 15.6% Dor4%

Delek Group2WorkingInterest

Operator

Noble Energy Inc.

Natural Gas (2P) Reserves

11Tcf (307BCM)1

Condensate (2P) Reserves

14.1MMBoe1

First Gas Produced

30th March 2013

Development Cost

$3.2bn (100%)Well Production Capacity

Processing CapacityPhase 1: ~1.0 Bcf/d

over 250MMCF/D each (5wells)

Next Steps

Phase II Compression at Ashdodonshore terminal. Post compressioncapacity of 1.2 Bcf/d (12BCM/Y),targeted 2015

Phase III Evaluating furtherexpansion alternatives

Reviewing refinance options

Regional Export to Jordan


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World Class Project Execution

For illustration purposes only

Tamar

Mari-B

Production from Tamar contributed ~0.7% to IsraelsEconomy Growth in 2013*

30 pipeline to theonshore receiving

terminal, totalmax. deliverycurrently ~10 BCMannually

Dual 16''pipeline world's longest

subsea tieback(150 km)

5 subsea wellswith a capacity

of over250mmcfd each

Tamar project is

the largestprivateinfrastructureproject inIsraels history

*Source: Bank of Israel, 2014


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Tamar Project Robust Contractual Structure

IEC 83 BCM Others 80 BCM Options 16 BCM 128 BCM

To Be Sold

Signed Contracts for Tamar Project*:

Israel ElectricCorp.

IPP & ElectricityRelated

Industry &Other

Total: 83 99 BCM $14 23bn 15-17 years

Price linked to US

CPI

Total: 70-72BCM $16.9bn 15-19 years

Price of majority

of contracts linkedto electricity index

Total: 8.5 BCM +Condensate

$2bn 5-8 years

Price of majority ofcontracts linked toprice of Brent

*also includes Tamar SW


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Accelerated Natural Gas Demand in Israel

Government Continues to Shift PowerGeneration to Gas

Natural gas to replace coal in a number of powerstations (total of 1,440MW) starting 2015

Transportation: By 2040 Government targetsare; of private transport & of public transportwill run on CNG and methanol

Industrial use of natural gas in place of heavyfuel;

Expected annual growth of ~6% until 2025, (incomparison to European annual demand growth of~1%)

Growth is driven by the addition of small businesses

to the inland natural gas transmission system

Creation of new industries based on naturalgas as a raw material, e.g. methanol or GTL

Source: The Inter-ministerial Committee to Examine the Government's Policy Regarding NaturalGas in Israel (Zemach) final recommendation report dated 12.09.20122Source: Natural Gas Authority, May 2013

Fuel Mix for the Production of Electricityin Israel2

Natural Gas Coal Renewables

201349% 51% 203072%

18%

10%

Electricity

Demand Forecast for Natural Gas in Israel1

Transportation Methanol

0

5

10

15

20

25

30

Industry

BCM


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Leviathan Game Changing Discovery

Operator

Noble Energy Inc.

Natural Gas (2C) Resources

19 TCF (536BCM)1

Condensate (2C) Resources

34.1MMBoe1

Deep Mesozoic Prospects

Prospective resourcespotential c. 4 TCF and 560MMBBLO (Best Estimate)2

Current Status

Leviathan 3 and 4 appraisalwells successfully executed.

Well design of over 250mmcf/d

Next Steps

Noble 39.6% Avner 22.7%

Delek Group3

Delek Drilling 22.7% Ratio15%

WorkingInterest

1Resources are as of 31.03.2013, according to NSAI2Resources are as of 31.12.12, according to NSAI3Delek Group economic interest 25.06%

Finalize development plan by year

end 2014

Continuing negotiation withWoodside to acquire 25% WI ofLeviathan as outlined in the MOUsigned in Feb 2014 (Delek selling11.46%)

Possible drilling deeper oil targets(no final decision has been made)


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Demand in Turkey forecastedto increase from 46BCM in2012 to 60BCM in 2020.

Diversification - 75% ofTurkish natural gas isimported from Iran andRussia

Planned transmitting systems(TAP, TANAP).MOU signed with the government

of Cyprus to review option tobuild LNG terminal in Vassilikos.

A number of options are beingreviewed; Ashkelon, Ashdod orEilat (Government decisiontogether with Delek & partners)

Vigorously Analyzing Export Options

Israel Based LNG Terminal

Cyprus Based LNG Terminal

Tamar joint venture withDaewoo (DSME) & Gazprom; atFEED stage

Leviathan evaluating theprogression of FEED

Pipeline to Turkey

FLNG

VassilikosEnergy Center

Egypt

Jordan

Turkey

Cyprus

Mediterranean Sea

For illustration purposes only

Leviathan

Israel

LNG PlantIn Israel

FLNG/FPSOExisting Pipeline

Potential Pipeline

Tamar

Aphrodite

Pipeline to Jordan

Pipeline to Jordan

Jordan, Palestinian Authority

and Egypt

Regional Sales throughpipeline


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Significant Additional Potential in the Region

Asset Rig/Vessel Schedule

Tamar SW

Ruth C

Over 5,000sqkmof explorationacreage in Israel

& Cyprus

05 Dec 13 -Pronounced a naturalgas discovery

3D seismic survey

completed

Asset WorkingInterest Resources

Karish1

Dolphin3

Tanin2

1.8TCF53%

45%

53%

Acitvity Schedule Additional Discoveries

Ensco 5006

0.1TCF

1.2TCF

1Resources are as of 30.06.2013, according to NSAI2Resources are as of 31.12.2013, according to NSAI3Resources are as of 31.12.2012, according to NSAI

Dolphin

Polar Duke


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The Delek Group Opportunity


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Examination of the Strategy to Separate the Holdings

New Company

Delek Group

Delek Group

Upstream Energy

Downstream Energy Infrastructure

Insurance & Finance Automotive

TODAY

AFTER

POSSIBLESPLIT

Upstream Energy

Downstream Energy

Infrastructure

Insurance & Finance

Automotive


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Reducing Leverage & Increasing Financial Flexibility

*Including unutilized credit lines

Jun 13 Sep 13Mar 13

Cash Balance (Billions NIS)*

1.6

1.5

1.2

715

753

970957 926

844

715

1,057

20202014 2015 2016 2017 2018 2019 2021-22

0

29

20 570

177

0

0

Bond & Loan Schedule for Delek Group andHeadquarter Companies (Millions NIS)**

**Excluding credit lines

Bank Loans

Bonds

Dec 13

1.0


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Long Term Shareholder Value

*Source: Bloomberg data for period 16.03.2013-16.03.2014

DLEKG Outperformed the TAOil&Gas Indexby 20% in LTM*

Delek Group has Distributed ~3bn NISin the last 5 years

460

1,060

425

365

540

2009 2010 2011 2012 2013

TA Oil&Gas

Delek Group

TA 100

March 13 March 14

15.04%

34.72%

15.22%

%C

hange

NISMillions


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Delek Group Leading E&P Player in a Region with Huge Potential

Delek Group has thebroadest portfolioof oil & gas assets in

the EasternMediterranean

Delek Group hasunparalleledexpertise with a long

history of managinglarge and complexprojects

Significant upside andopportunities fromunexplored fields as

well as exportpotential of naturalgas

Delek Groupsdivestiture of non-core assets is a short-

term catalyst forincreasing andrealizing shareholdervalue


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Appendix 1 - Increasing Focus on E&P Assets

Delek US

Delek Europe

Delek Israel

IDE

25%

100%

100%

50%

Examining Exit Options

Privatized

68% 25% - Block Trade & Marketed OfferingProceeds to date - ~3bn NIS

Phoenix

Republic

52%

100%

55% 52% - Examining Exit Options

Delek Motors 24% 55% 24% - Block to CEO & Block TradesProceeds to date - 260m NIS

Energy & Infrastructure

Finance

Auto

Roadchef 100%


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Appendix 3 - Zemach in Details

June 23rd 2013 - Final government decision adapts main Zemach recommendation(Commission for examining government policy on the natural gas industry in Israel)

Total gas quantities that can be exported currently 360BCM (will increase with additional

discoveries) Based on 29 years of projected domestic demand 540 BCM held back;

Reservoirs with reserves higher than 200BCM have to retain 50% of the reserves to the localmarket; 100-200BCM 40% and 25-100BCM 25%

Swap is allowed as long as the above is met, and a reservoir keeps at least 25% of reservesto the local market

LNG facilities to be built in Israeli controlled territories unless decided otherwise in bilateralagreement with other countries

All gas fields that are developed on Israels territory and/or EEZ will be connected to thenational gas transmission network

Note: Published on August 29th2012 on http://energy.gov.il/English/Subjects/Natural%20Gas/Pages/GxmsMniNGPolicyIsrael.aspx,adoption of the final recommendations is pending new government


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