Avner Oil - Annual Report 2011 - Delek Energy Systems

(B)B. A license or preliminary permit with priority offshore rights - proof of the financialrobustness as set out in the offshore regulations 169 (the average estimated costsfor carrying out an offshore drilling is USD 100 million).C. The company or group will be considered as having appropriate financialrobustness if it has liquid assets (cash, deposits, securities) in amounts set out insection (1) or (2) and shareholders' equity in these amounts.D. When assessing the financial robustness of the applicant, the capital that waspresented and the liabilities for the licenses, permits or any other right grantedaccording to the Petroleum Law will be deducted from the assets, as well as othercontingent liabilities that will be disclosed when reviewing the financialstatements. Other applications submitted before the council hearing will also beconsidered.(7) The March 2010 guidelines note that the provisions therein do not derogate from anyrequirements in the law, even if such requirement is not explicitly noted in theguidelines.If a number of applications are submitted for overlapping areas, the applications willbe assessed according to the criteria set out below, to obtain the best results from theright:A. The experience of the applicant companies or groupsB. The applicants' compliance in the past with implementation of the work plans inrights according to the Petroleum LawC. A work plan, including geological background, schedule, scope (area and depth)and intensity of the surveys planned and extent of the investmentD. Considerations of benefit to the economy including considerations of competitionThe aforesaid does not derogate from the Minister's authority, according to the Law, todeclare competition when a number of applications for rights are submitted.(8) The March 2010 guidelines note that submission of an application does not obligatethe Council to discuss the application, if the Commissioner of Petroleum Affairsdecides, by virtue of his authority under the law, that there is no cause to discuss theapplication or if the applying group does not meet the financial capacity or theminimum professional requirements defined above.Under the guidelines for submitting applications published by the Commissioner ofPetroleum Affairs in January 2011, August 2011 and November 2011 (prior to discussionsheld by the Petroleum Council in March 2011, September 2011 and December 2011,respectively), the applications are also to be filed in accordance with the clarificationsspecified in the foregoing guidelines, the main ones being:(1) For applications for licenses by virtue of a priority right, applications to transfer rightsunder section 76 of the Petroleum Law and applications for an additional area inaccordance with section 49 of the Petroleum Law, where the general work plan for thearea relevant to the requested right (including wells) exceeds USD 1 million, the groupapplying for the right should include an operator, as defined below, which will be apartner in the oil right at a rate of 5% or more. "Operator", means a company withexperience in the management, supervision and execution of oil exploration. Theoperator will be responsible for all professional operations related to oil exploration inthe right to which it is a partner.(2) The operator will be required to comply with the following conditions:A. The operator of an onshore right is required to have experience in oil explorationprojects amounting to at least USD 10 million in one onshore oil field in the lastfive years.169According to the Offshore Regulations, the applicant for an offshore preliminary permit with priority right is requiredto prove, to the satisfaction of the competent authority, financial robustness to finance the full estimated cost of onedrilling in the area of the permit and the applicant for an offshore license is required to prove, to the satisfaction ofthe competent authority, the financial robustness to finance half of the estimated cost of executing the work planapproved for the license.A-154