Delek Drilling and Avner, part of Israel's leading integrated energy company, yesterday signed a deal for the sale of 100% of their holdings in the Karish and Tanin natural gas fields to the international energy company Energean Oil & Gas.

The deal, which is being undertaken as part of the implementation of the Gas Framework, set up by the Israeli Government as part of their strategy to develop the energy market, is estimated to be valued at $148m, which reflects return of Delek Drilling and Avner’s investment and future royalties from the expected sales of gas and condensate from the reservoirs.

Yossi Abu, CEO of Delek Drilling and Avner Oil Exploration:
“We are very pleased to sell Karish and Tanin to a serious, well-known and respected energy group. In recent months we have examined several offers and I believe that the present deal provides the most compelling route to developing Karish-Tanin in the coming years.

“I am pleased that we have demonstrated absolute compliance with the provisions of the framework, in strict adherence with very challenging timetables. Just as we have met our obligations in this respect, we are determined to achieve the other targets that we have set ourselves for the benefit of our investors and all of the citizens of Israel.”

Mathios Rigas, Chairman & CEO Energean Oil & Gas:
"We are very pleased to enter Israel, a strategic market for us, and to sign a deal that will lead to the development of the Karish and Tanin fields. Our experience of operating for more than 35 years in offshore natural gas and oil fields, the expertise of our key management in the development of some of the world’s most significant hydrocarbon fields, and our ability in fundraising even in adverse market conditions underpin our commitment to developing the Karish and Tanin fields for the benefit of Israeli consumers.

Within six months of closing the deal, Energean will submit a development plan for the two fields to the Israeli government, in the context of a project which will also strengthen the geopolitical role of the energy triangle shaped by Israel, Greece and Cyprus”.

It should be noted that according to the gas framework regulation, the deal is subject to the final approval of the relevant Israeli authorities.

About Karish and Tanin natural gas fields

The two fields are located in the north of Israel’s exclusive economic zone (EEZ), approximately 40 km from each other. In Tanin, which was discovered in 2011, approximately 22.4 BCM of natural gas (contingent resources) and 12.7 BCM of natural gas (prospective resources) was discovered. In Karish, which was discovered in 2013, approximately 36.3 BCM of natural gas (contingent resources) and 14.0 BCM of natural gas (prospective resources) was discovered. In addition, a further approximately 14.3 million barrels of condensate (contingent resources) and approximately 4.3 million barrels of condensate (prospective resources) was discovered in the two reservoirs.

Under the requirements of the Gas Framework, the partners in the reservoirs were obligated to sell their holdings in the reservoirs 14 months after the date of execution of the agreement.

The gas that shall be produced from the Karish and Tanin reservoirs is intended for the domestic Israeli market and is expected to be sufficient to supply gas for domestic needs for many years. Energean has committed to submitting a development plan to the Israeli government within six months of closing the transaction.

About Energean

Energean Oil & Gas, the only producer of oil & gas in Greece with offshore assets that have been producing for over 35 years, operates throughout the Middle East and North Africa. The company employs 400 oil & gas professionals, operates 4 offshore platforms, its own drilling rigs and supply ships and is based in Athens, Greece.

Energean holds five oil & gas exploration and development licences in Greece and Egypt, and has recently reached agreement for the exploration of two offshore blocks in Montenegro. The company produces approximately 5,000 boepd from the offshore Prinos Complex in the North Aegean Sea, and is currently executing a $200m investment programme, including the drilling of 15 wells, aiming to increase production to over 10,000 bbls/day by 2018.

Energean also owns a 100% interest in and is Operator of the Prinos Offshore Licence that holds 30 million barrels of oil (2P reserves), as well as the South Kavala offshore natural gas field which has produced 850 MCM of gas in total and which Energean is planning to convert into an Underground Gas Storage facility. Energean’ s oil production is sold to BP through a long term offtake agreement.

Energean’ s investment programme is supported by the European Bank of Restructuring and Development (“EBRD”), which recently extended project financing for the company’s activities in Greece to $95m.

Through its founding shareholders the company is affiliated with the international shipping company Prime Marine, which operates and transports gas and oil products worldwide, through a fleet of 34 ships with a carrying capacity of more than 2.2 million tons.

In 2013, the U.S. investment house Third Point LCC acquired a strategic stake in Energean. Third Point LLC is an SEC-registered investment adviser based in New
York City. The firm was founded in 1995 by Daniel S. Loeb, who serves as CEO and oversees all investment activity.