Tomer Energy Royalties (2012) Ltd. · TASE:TOEN
Tomer Energy Royalties (2012) — Delek Royalties — Investor Presentation (March 2020)
33 slides from Tomer Energy Royalties (2012)'s investor presentation, Mar 31, 2020
Slide 1: The High Margin Energy Royalties & Streaming Company
THE HIGH MARGIN ENERGY ROYALTIES & STREAMING COMPANY March, 31 2020
Slide 2: Cautionary Statements
CAUTIONARY STATEMENTS CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This presentation was prepared by Delek Royalties and is given to you only for the provision of concise information for the sake of convenience, and may not be copied or distributed to any other person. The Data and informati
Slide 3: About Delek Royalties
About Delek Royalties TASE: DLRL 3
Slide 4: A Model Designed to Benefit All Stakeholders
A MODEL DESIGNED TO BENEFIT ALL STAKEHOLDERS Our Vision To be a premier energy investment vehicle (*) Our Mandate To deliver value though royalties & streaming to all of our stakeholders: To our Shareholders, To our Partners, by delivering low risk, high by crystallizing value for quality, diversifi
Slide 5: Delek's Royalties & Streaming Advantage
DELEK’S ROYALTIES & STREAMING ADVANTAGE PREDICTABLE DCF ENERGY PRICE LEVERAGE Contractually defined royalties Investors get leverage to energy as % of revenues typically protects prices (*) streamers from inflationary cost pressure (opex & capex) UPSIDE HIGH LOWER Receives the benefit from oil & WIT
Slide 6: Unique and Sustainable Dividend
UNIQE AND SUSTAINABLE DIVIDEND HIGH DIVIDEND YIELD Unique Dividend Policy: • Distribute net earnings every year. • 90% of net earnings (1) Benefits: • Limited commodity price exposure • Participation in robust organic production grow • Exploration and expansion upside • Sustainable and flexible • Di
Slide 7: How Royalties & Streaming Works
HOW ROYALTIES & STRAMING WORKS A NEW ALTERNATIVE IN PROTFOLIO OPTIMIZATION Delek makes an Upfront UPFRONT PAYMANT Payment and in return, (CASH AND/OR DLRL SHARES) we receive a fixed PARTNER DELEK ENERGY percentage of the future ROYALTIES COMPANY production from energy % OF PRODUCTION project / asset
Slide 8: Delek Royalties & Streaming Model
DELEK ROYALTIES & STREAMING MODEL ANALYZE THE IMPACT POTENTIAL 6 1 ON DELEK’S PORTFOLIO OPPERTUNITY Using the Appropriate After identifying a discount rate, future potential opportunity, FUTURE cash flows are we use the production discounted to profile and 5 CASH FLOWS 2 determine the value of reaso
Slide 9: High Quality Asset Base
HIGH QUALITY ASSET BASE 9
Slide 10: Tamar – World Class Deepwater Project
TAMAR – WORLD CLASS DEEPWATER POJECT ISRAEL ECONOMIC WATER Our Royalties 1.52% from 100% Tamar Revenues 2P Reserves* 10.8 tcf (305 bcm) First Gas 31.03.2013 Production Capacity Up to 1.1 bcf/d (11 bcm/y) Long Life Production 30 years (2050) Global Scale Development & Operation: Very high operational
Slide 11: Ownership – Working Interest
OWNERSHIP – WORKING INTEREST 4% 25% (Operator) 28.75% 3.5% Everest 22% 16.75% Tamar Petroleum 11
Slide 12: Our Partners
OUR PARTNERS Delek Drilling (TASE: DEDR.L) Tamar Petroleum (TASE: TMRP) with Market Cap of with Market Cap of 205 3.0 B$ (**) and Global MM$ (**) and Global Credit Credit Rating BB (*) Rating BB (*) (*) Both have Credit rating of A1il by Midroog (Moody’s subsidiary) practically equivalent to global
Slide 13: Robust Steady CF Generating Project
ROBUST STEADY CF GENERATING POJECT GROSS REVENUES ($mm) ➢ Revenue increase resulting from supply and price protective GSPAs ➢ Long term contractual structure with limited commodity price risk 2500 2,020 2,067 1,860 2000 1,749 1,577 +1.5% 1,601 +9.2% +6.3% +8.6% +2.3% 1500 10.4 10.3 $MM 9.7 9.3 1000
Slide 14: Benefits to Partner Energy Companies
BENEFITS TO PARTNER ENERGY COMPANIES 14
Slide 15: Energy Royalties & Streaming
ENERGY ROYALTIES & STREAMING Royalty & Equity Debt THE BENEFITS TO PARTNER COMPANY Stream Non-dilutive form of funding Initial value creation for both parties Improvs project IRR and partner’s ROE Crystalize future production of energy partner Share sales risk Expedited due diligence & closing proce
Slide 16: It Is Not Mezzanine or Debt!!
IT IS NOT MEZZANINE or DEBT !! Royalty & Mezzanine or Debt THE BENEFITS TO PARTNER COMPANY Stream Capacity constrained - Credit rating and on going disclosure requirements - Minimum deal size - Early redemption costs - Financial covenants required - Bespoke disclosure and documentation requirements
Slide 17: Why Invest in Delek Royalties?
קבוצת דלק בע"מ WHY INVEST IN DELEK ROYALTIES? 17
Slide 18: A Premier Energy Investment
A PREMIER ENERGY INVESTMENT DELEK HAS HIGH QUALITY ROYALTIES Delek Energy Royalties Project / Assets 100% Energy No capital cost exposure & No abandonment liabilities No operating cost exposure & No environmental costs Exploration & expansion upside Highly diverse asset base Sustainable dividend Lev
Slide 19: Delek's Track Record
DELEK’S TRACK RECORD AS OF DECEMBER 31 , 2019 174 mm$ invested in royalties 38 mm$ of operational cash flows generated from IPO to Dec 2019 ~ 4 mm$ paid in dividends to Dec 2019 (~ 10% annualized yield) (TASE Avg. 2.6%) ~ 900 mm$ cash flows expected (1) 30 years of reserve life remaining (1) ~ 21% a
Slide 20: Delek Is Both the Present and the Future of Royalties & Streaming
DELEK IS BOTH THE PRESENT AND THE FUTURE OF ROYALTIES & STREAMING Delek Royalties provide strong balance sheet with low risk business/profile: ✓ DCF predictability ✓ High quality asset base ✓ Sustainable operations ✓ Leverage to energy prices ✓ Attractive valuation ✓ Tax confidence ✓ Competitive div
Slide 21: Financial Snapshot
FINANCIAL SNAPSHOT FINANCIAL RESULTS AND BALANCE SHEET (IFRS GAAP) YTD Q1 19 Q2 19 Q3 19 Q4 19 (2019) Revenues (mm$) 7.1 6.4 7.5 7.9 28.9 G&A (%) 3.9% 4.3% 3.2% 3.3% 3.6% EBITDA (mm$) 6.8 6.1 7.3 7.7 28.0 EBITDA (%) 96% 95% 97% 97% 97% Net earnings (mm$) 3.6 3.0 3.9 4.0 14.5 Net earnings (%) 51% 47%
Slide 22: Delek Versus Other Energy Companies
DELEK VERSUS OTHER ENERGY COMPANIES (*) STRONG CASH FLOW GENERATING As of 31 December 2019 EBITDA Margin Operating CF/Revenues Delek Royalties 97% Cohen Development Gas & Oil 92% Cohen Development Gas & Oil 94% Delek Royalties 85% Tamar Petroleum 74% Alon Natural Gas Exploration 67% Solegreen 67% Ta
Slide 23: Corporate Costs
CORPORATE COSTS LOW G&A COSTS ENABLE SCALABILITY OF BUSINESS As of 31 December 2019 G&A as % of Revenues 30% 29% 25% 20% 15% 14% 12% 10% 8% 4% 4% Sector 5% Avr. 10% 1% 0% Tamar Petroleum Delek Royalties Alon Natural Gas Cohen Development Sunflower Solegreen Modiin Energy Exploration Gas & Oil IFRS G
Slide 24: Delek Overview
DELEK OVERVIEW (December 31, 2019) Capitalization Table Common Shares Outstanding 20,001,000 Share Price ($) (1) 2.5 Market Capitalization (mm$) 50 Net Debt (mm$) 75 Adj (mm$) 9 Enterprise Value (mm$) 134 Yield (2) 10% ROE (3) 21% P/E 3.4 (1) Closing price as of December 31, 2019. Share price is tra
Slide 25: Leadership Team
LEADERSHIP TEAM Senior leadership team offers unique expertise managing royalty assets and broad, long-standing industry relationships Board of Directors Executive Team Assi Bartfeld, Chair of the Board Meir Menachem, President & CEO / Director Former CEO of DELEK GROUP (TASE: DLEKG) Former CEO of T
Slide 26: Contact
CONTACT www.delekroyalties.co.il TASE: DLRL 26
Slide 27: Thank you
קבוצת דלק בע"מ Thank you 27
Slide 28: Types of Royalties
TYPES OF ROYALTIES The following figure outlines the royalty hierarchy. As you move down the royalty hierarchy, costs increase and duration decreases Crown Royalties Fee Simple Petroleum Title Low Risk Gross Overriding Royalties Delek Royalties Core Streams Business Net Profit Interest High Risk Vol
Slide 29: Royalty Interests Generally Senior to All Claims in Capital Structure
ROYALTY INTERESTS (oil & gas) GENERALLY SENIOR TO ALL CLAIMS IN CAPITAL STRUCTURE In many countries royalty interests (oil & gas) are considered by law to be real property interests and are thus afforded additional protection under bankruptcy law Royalty Interest owner entitled to ~ 15%-25% of produ
Slide 30: Why Delek Is a Premier Royalties & Streaming Company
WHY DELEK IS A PREMIER ROYALTIES & STREAMING COMPANY Focused on sustainable An established track record of treating our partners fairly. relationships Maintaining a focus on high-quality, long-life assets that are Quality is of utmost importance accretive to our portfolio. Our knowledge of the royal
Slide 31: Highest Dividend Yield Amongst Streamers
HIGHEST DIVIDEND YIELD AMONGST STREAMERS “ Flowstream targets 7% yield from oil and gas royalties 26 July 2019, London FlowStream Royalties looks to raise $250 million (£200 million) for trust investing in mature oil exploration and production companies. FlowStream Royalties (FSR), a new investment
Slide 32: Delek Royalties Is Independent from Delek Group
DELEK ROYALTIES IS INDEPENDENT FROM DELEK GROUP • Delek Royalties is traded in TASE:DLRL owned 39.9% by Delek Group (non-controlling interest) and 60.1% by the public • The 39.9% stake of Delek Group, must be sold until December 2021 and until then those shares doesn’t have any voting rights nor man
Slide 33: Delek Royalties Has High Level of Corporate Governance
DELEK ROYALTIES HAS HIGH LEVEL OF CORPORATE GOVERNANCE ✓ Article of association ✓ Board procedure ✓ Internal audit ✓ SOX ✓ Ethical code ✓ Company procedures ✓ Securities compliance program ✓ Enterprise Risk Program (ERM) 33