Delek Group Announces Consolidated Results for the Third Quarter of 2015

TEL AVIV, Israel, Nov. 26, 2015

Third Quarter of 2015 Highlights 

• The E&P sector contributed NIS 87 million to the Group's net income in the third quarter of 2015 versus NIS 38 million in the same period last year;
• The Tamar field reached peak production of natural gas, selling a record 2.5 BCM in the third quarter of 2015, compared with 2.2 BCM in the same period of last year; 
• Towards final regulatory resolution, with the approved Framework by the Israeli Government for increasing the amount of natural gas produced from the Tamar natural gas reservoir and the rapid development of the Leviathan, Karish and Tanin and other natural gas reservoirs;
• Delek Group is taking advantage of opportunities in the international energy market: has acquired 19.9% of Ithaca Energy and continues to examine further strategic investments in the E&P field;
• Delek Group signed an agreement to sell its remaining holdings in Republic Companies, Inc., representing another successful step forward in the Groups' execution of the sale of its non-core businesses;
• Net income, excluding a one-off impairment loss in the Company's traded financial portfolio, amounted to approximately to NIS 75 million in the third quarter of 2015, compared with NIS 150 million in the same period of last year;
• Declared a dividend of NIS 80 million.

Group revenues for the third quarter of 2015 were approximately NIS 1.7 billion, compared to NIS 2.0 billion in the same period last year. The decrease was primarily due to lower revenues from Delek Israel because of low distillate prices, countered by an increase in revenues from the E&P sector as a result of record production from the Tamar reservoir.

Operating profit in the third quarter of 2015 totaled NIS 341 million compared with NIS 240 million as reported in the same period last year, mainly due to increased contribution from the E&P sector as well as the Fuel Operations segment in Israel.

Net loss for third quarter of 2015 totaled NIS 261 million, compared with a net profit of NIS 150 million in the third quarter of 2014. The primary contributing factor to the net loss, despite a positive operating profit, was due to a P&L write-down in the values of the Group's financial investments, accounted for as available-for-sale financial assets, which includes the shareholdings of foreign companies mainly operating in the energy industry. As of September 30, 2015, the Group recognized a cumulative impairment on some of these investments amounting to NIS 336 million. It is noted that as of November 25, the market value of these investments reflected an appreciation of NIS 70 million from these levels. It is noted that, until September 30, 2015, income of NIS 45 million had been recognized on these investments.

The positive contributing factors to the net income were the increased contribution of the Oil and Gas Exploration, and Gas Production Operations from sales of gas from the Tamar field which reached peak production.

Cash balance at the Delek Group correct as of September 30, 2015 stood at NIS 3.3 billion (excluding unutilized credit lines). In October 2015, Delek Group completed a successful expansion of Series B31 Debentures, with raising an additional amount of NIS 722 million.