Avner Oil - Annual Report 2011 - Delek Energy Systems

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The increase in receivables and debit balances from USD 27.7 million on December 31, 2010 toUSD 43.9 million at December 31, 2011, stems primarily from funds transferred in advance to theoperator of the joint transactions for financing the Partnership's share in the Yam Tethys, Tamar,Leviathan and Alon projects.Non-current assets amounted to USD 510.2 million at December 31, 2011, compared to USD236.2 million on December 31, 2010.Investments in oil and gas assets amounted to USD 497.7 million at December 31, 2011,compared with to USD 226.6 million on December 31, 2010, an increase of 120%. The increasein this item stems from investments of USD 177.8 million in development of the Tamar project,USD 4.9 million in compression equipment and in the gas reservoir in the Mari field, USD 17.2 indevelopment of the Noa reservoir, updating the costs of the removal of assets in the gas reservoirin the Mari field, USD 5.4 million in abandonment costs in respect of development drilling in NoaNorth, USD 70.7 million in exploration drillings in the Leviathan project, and USD 10 million inexploration drilling in the Alon A license, as well as USD 14.9 million in A-1 drilling costs in Block21 in Cyprus, Conversely, depreciation and amortization expenses were recorded in the amountof USD 29.8 million.Long-term bank deposits amounting to USD 12.4 million at December 31, 2011 include a depositused as a cushion for serving debt under the terns of the loan received in connection with theYam Tethys finance agreement. On December 31, 2010, these deposits amounted to USD 9.5million, and were used in the past as a cushion for serving debt under the terms of debentures.The deposit was redeemed when the debentures were repaid in the Reporting Year.Current liabilities at December 31, 2011 amounted to USD 33.2 million, compared with USD115.2 million on December 31, 2010.Liabilities to banks amounted to USD 236.6 million on December 31, 2011, compare with USD40.2 million on December 31, 2010, of which USD 174.6 million in connection with a bridge loantaken for financing the Tamar project, and USD 42 million (net of the costs of raising) for a loantaken for financing activities in the oil and gas assets of the Partnership, which was taken as partof financing the Yam Tethys project, and USD 10 million from Bank Hapoalim. It is noted that inMay 2011, the Partnership made early repayment of the balance of the debentures and ofliabilities in respect of financial derivatives.The increase in payables and credit balances from USD 59.6 million on December 31, 2010 toUSD 95.7 million at December 31, 2011, is attributed mainly to an increase in liabilities tosuppliers and other payables amounting to USD 88.4 million in respect of investments made inthe Tamar, Yam Tethys, Leviathan and Cyprus projects.Distributable earnings distributed to the Limited Partner amounted to USD 0.4 million and will beused for payment of the Supervisor's salary and the trustee's fees in accordance with thepartnership agreement, and for covering prospectus expenses.Non-current liabilities amounted to USD 36.7 million at December 31, 2011, compared to USD22.6 million on December 31, 2009.Liabilities to banks at December 31, 2011 amounted to USD 25.7 million (net of raising costs) inrespect of a loan for activities in oil and gas assets of the Partnership, as part of the Yam Tethysproject finance agreement.Other long-term liabilities amounting to USD 11 million at December 31, 2011, stem fromliabilities for the dismantling of production facilities in the Yam Tethys project. Most of theincrease (USD 5.7 million), stems from abandonment costs in respect of the Noa Northdevelopment drilling,Capital of the Limited Partnership amounted to USD 249 million at December 31, 2011,compared to USD 181.6 million on December 31, 2010. The increase stems from the profit ofUSD 67.8 million in the reporting period, and setoff of USD 0.4 million as profits distributed to theLimited Partner.B. Cash flowCash flow from the Partnership's current operations amounted to USD 102.4 million, compared toUSD 66.1 million at December 31, 2010.Cash flows for investment activity which was used for investments in oil and gas assetsamounted to USD 259.3 million in the Reporting Year, and used by the Partnership mainly forB-5
investment in development of the Tamar project, exploration drillings and assessment of theLeviathan, Alon and Cyprus projects and in development of the Noa reservoir, compared withUSD 74.2 million in 2010, which was used mainly for development of the Tamar project and forcompression equipment for the gas reservoir in the Mari field and exploration drilling in theLeviathan project.Cash flows from finance activity amounted to USD 182.1 million. In the Reporting Year, loans inthe amount of USD 259.5 million (net of raising fees) were for financing the Partnership's share inthe costs of development of the Tamar project and for financing additional costs involved inactions in the Partnership's oil and gas rights. Conversely, USD 36.6 million of cash flows wasused to repay the loan received as part of the Yam Tethys project finance transaction and forearly repayment of debentures in the amount of USD 28.7 millionIn the Reporting Year, the Partnership distributed USD 0.4 million to the Trustee and theSupervisor for their expenses and to cover prospectus expenses. .C. Raising capital1) Early repayment of the debenturesOn March 31, 2011, the Israeli partners in the Yam Tethys project announced early repayment ofthe debentures they issued in 2005, through the dedicated subsidiary Delek and Avner YamTethys Ltd. The debentures were repaid at the beginning of May 2011. For details, see Note 10to the financial statements at December 31, 2011.2) Execution of loan agreement by the Israeli partners in the Yan Tethys projectOn June 7, 2011 the Partnership announced the signing of a loan agreement ("the FinanceAgreement") by the Partnership and a consortium of banks led by Morgan Stanley & Co.International PLC (together" the Financing Banks"), whereby the Partnership will receive a nonrecourseloan of up to USD 109 million ("the Loan") to finance its share in the costs if actions thatwill be taken in the oil rights it holds. For more details, see Note 9C to the financial statements atDecember 1, 2011.3) Extension of maturity date of the bridge loans for financing the Tamar projectDuring December 2011, the Partnership announced that the maturity date of the bridge loan forfinancing the Tamar project has been extended by six months to June 24, 2012. For details, seeNote 9B to the financial statements at December 31, 2011.4) Execution of loan agreement in the Leviathan projectOn December 24, 2011 the Partnership announced the signing of a loan agreement ("theFinance Agreement") between it and HSBC Bank Plc ("the Financing Bank"), under which thePartnership will receive a non-recourse loan of USD 250 million ("the Loan"). The loan will beused for investment in the Leviathan project, for development of Tamar, for a limited investmentin the Partnership's other oil assets and for payment of various expenses related to the loan.Concurrently with the Partnership signing the Finance Agreement, other finance agreements onthe same terms were signed by the Financing Bank and Delek Drilling Limited Partnership, forreceipt of a loan in the same amount and for the same purposes.The Loan is divided into two facilities:Facility A, USD 75 million, which will be available for withdrawal upon compliance with anumber of preconditions (mainly receipt of approval from the Commissioner for Oil Affairs forplacing a charge on the licenses), and the maturity date is 24 months after the date ofexecution of the agreement. In March 2012 the Partnership withdrew USD 60 million fromthis facility.Facility B, USD 175 million, which will be available for withdrawal when the full projectfinancing for Tamar is closed and the bridge loan (extended to the Partnership in connectionwith the Tamar project) has been repaid, and not later than June 24, 2012, with a maturitydate 24 months after the date of the first withdrawal from Facility B and not later than June24, 2014. The Partnership can make early repayment of the Loan without penalty, subject tothe terms laid down in the Finance Agreement.The loan is denominated in dollars and bears variable annual interest to be paid quarterly,calculated at 3-month LIBOR plus a staggered margin between 3.5% and 4.5% (excluding fees).For details, see Note 9D to the financial statements.B-6
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All English versions / translation
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2.5 Map of the Limited Partnership'
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351/Hannah, 352/David and 353/Eran
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Law), which sets out provisions for
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(D)(E)(F)(G)(H)(I)(J)(K)(L)(M)Exami
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The Natural Gas Sector Law and its
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Description of the Partnership's oi
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The main terms of the leases in the
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Noa leasePeriodSummary of the opera
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7.3.7 Calculation of the effective
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the oil asset (before other payment
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DescriptionBudget actually invested
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have not been brought before the co
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Salesquantity(BCM)(100% of theoil a
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Salesquantity(BCM)(100% of theoil a
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(4) Production dataThe following ta
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on the project level and the Partne
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Sensitivity analysis for the main p
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(3) Basic parameters used to calcul
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7.4 Tamar project7.4.1 GeneralTamar
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7.4.2 Main terms of the I/12 Tamar
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(C)If the Commissioner postpones or
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(F)(G)(H)(I)(J)(K)(1) The leasehold
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7.4.5 Actual work plan and intended
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PeriodDalit leaseSummary of the ope
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Dalit leaseParticipation rate %Perc
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DescriptionEffective share attribut
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7.4.9 Royalties and payments paid d
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expenses which can be directly attr
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Total discounted cash flow from pro
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Total discounted cash flow from pro
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Total discounted cash flow from pos
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Sensitivity/categoryTotalPresentval
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Contingent resources in the Dalit l
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ParameterPorosity (decimal)Lowestim
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7.5 Ratio Yam licenses7.5.1 General
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The following are the planned activ
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PeriodEran licenseDescription of th
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PeriodAmit licenseSummary of the op
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Hannah licensePeriodSummary of the
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PeriodEran licenseSummary of the op
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7.5.7 Calculation of the effective
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(B)(C)(D)(E)B. A statistical progra
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7.5.10 Prospective resources in the
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ParameterLower-Oligocene(%)Mid-Cret
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(D)(E)(F)(G)(4) The contingent reso
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7.5.12 Prospective resources in the
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PeriodDescription of the updated wo
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Description%Summary of the calculat
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7.7.3 Binding work plan according t
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7.7.5 Disclosure of the effective p
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General information about the Partn
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PeriodDescription of the updated wo
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Description %Summary of the calcula
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7.8.10 Royalties and payments paid
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(B)(C)The report was based on the r
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7.9 Petroleum licenses that were re
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7.10 Products and servicesDuring th
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7.11.3 Agreements to sell natural g
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At the signing date of the letter o
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(G)addition, Yam Tethys partners ha
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(B)(13) Breach and damages: Accordi
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(D)Agreement to sell natural gas to
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(4) The gas price stipulated in the
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energy market is characterized by h
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7.20 Financing7.20.1 General(A)(B)(
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The dollar-denominated loan bears a
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tests 157 ; compliance with the res
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(E)financing agreement; purchase of
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(C)Tamar financing agreementFinanci
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As set out above, under licenses an
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(C) Petroleum Regulations (Principl
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The gas facilities that the license
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Page 182 and 183: obtaining Cypriot government approv
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Page 190 and 191: Liquefaction (LNG) The Partnership
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Page 196 and 197: process for transferring the rights
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Page 205: USD 6.5 million, as noted above. In
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Page 215 and 216: 3. Independent directorsThe Compani
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Page 224 and 225: AVNER OIL EXPLORATION (LIMITED PART
Page 226 and 227: Auditors' Report to the Partners of
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Page 249 and 250: Untimely Meditationshad only you, t
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AVNER OIL EXPLORATION (LIMITED PART
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Regulation 10A: Summary of the Part
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Regulation 12:Regulation 13:Regulat
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C. Interested parties in the Partne
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Regulation 24:will not be able to d
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Regulation 24B: Holders of the Part
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10. Occupation in the past five yea
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9. Education: LLB, Tel Aviv Univers
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Ronen Edward (ID 024652745)1. Date
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executive liability insurance, base
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Avner Oil Exploration - Limited Par
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Declaration of the CFO based on Reg
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Avner Oil - Annual Report 2011 - Delek Energy Systems

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