Avner Oil - Annual Report 2011 - Delek Energy Systems

AVNER OIL EXPLORATION (LIMITED PARTNERSHIP)NOTES TO THE FINANCIAL STATEMENTSNote 1 – General (Continued):H. Working Capital Deficit:As at December 31, 2011, the partnership has a working capital deficit of $225 million, which resulted primarily fromliabilities to banks that were used to finance investments in oil and gas properties, primarily in respect of the "Tamar"project. Over the next few months, the partnership intends to finalize its long-term "Tamar" project financing program,which will replace, inter alia, a bridge loan of $190 million which is to be repaid by June 24, 2012 (see note 9 B below).Finalization of the project financing plan will also be affected, inter alia, by an agreement for the supply of gas that wasrecently signed with Israel Electric (see note 12 M 1 A).In addition, on February 21, 2012, the general meeting of participation unit holders approved an issue of participationunits and/or securities convertible into participation units during 2012, for up to $125 million.In the partnership's opinion, the "Tamar" project financing finalization, the financing agreement that was signed inrespect of the "Leviathan project during December 2011 (see note 9 D), and a capital issue, if any issue will be made,will enable further investment financing and the repayment of said bank liabilities.I. Tax on Oil Profits, 5771-2011:On January 3, 2011, the Sheshinski Committee that was appointed to consider fiscal policy vis à vis oil and gasresources in Israel submitted in final recommendations. On January 23, 2011, th Government adopted the Sheshinskicommittee's report and conclusions, and on March 30, 2011, the Knesset passed the Tax on Oil Profits, 5771-2011 Law("Law"). This law was officially published in the Government of Israel's Reshumot on April 10, 2011.See note 14 A for additional details on the Law's main points.The Law has significantly increased and will increase the tax burden on partnership unit holders, and will have anadverse effect on the partnership's business affairs. Further to finalization of the legislation, the partnership willconsider its legal avenues, especially those relating to the Law's application vis à vis oil rights that were granted beforeenacting the LawJ. Definitions:In these financial statements:Partnership or limited partnershipJoint venturesManagementRelated partyInterest party and controllingownership holderDollarAvner Oil Exploration (Limited Partnership)Contractual arrangements under which the partnership, together with otherparties, take part in oil and gas explorations vis à vis a property under jointcontrol.Management of the limited partnership's general partnerAs defined by International Accounting Standard 24 (Amended).As defined by Securities Law Regulations (Annual Financial Statements),5770-2010.The United States Dollar.Note 2 – Significant Accounting Policies:A. Presentation Basis Of These Financial Statements:1. Measurement Basis:These financial statements of the partnership are prepared on the cost basis, except for:Financial instruments at fair value through profit and loss;Provisions.The partnership has elected to present profit and loss items by the nature of its operations-01-