Newmed Energy Limited Partnership · TASE:NWMD
Newmed Energy Limited Partnership — Delek Drilling Limited Partnership — Investor Presentation (July 2020)
31 slides from Newmed Energy Limited Partnership's investor presentation, Jul 13, 2020
Slide 1: Leviathan Gas Field
0 Leviathan Gas Field July 2020
Slide 2: Disclaimer
Disclaimer 1 The following applies to the information following this slide, and you are therefore advised to carefully read the statements below before reading, accessing or making any other use of this presentation. Disclaimer The information in this presentation has been prepared by Delek Drilling
Slide 3: Today's presenters
2 Today’s presenter s Yossi Abu Yossi Gvura Chief Executive Deputy Chief Officer Executive Officer
Slide 4: Delek Drilling – The leading E&P partnership in the East Med
Delek Drilling – The leading E&P par tner ship in the 3 East Med Partner in two world class, Largest Israeli E&P $798mm producing gas fields: Who we are entity Market Cap1 Leviathan Listed on TASE $727m and 2020E EBITDA2 Tamar Developed Discovered c.43 TCF Successfully capitalized on commercialised
Slide 5: Delek Drilling – The leading E&P partnership in the East Med (cont'd)
Delek Drilling – The leading E&P par tner ship in the 4 East Med (cont ’d) Significant track record in the East Med with c.43 TCF of gross gas resources discovered Gas discoveries1 Assets with strong regional connectivity 2011 2013 Karish Connecting pipeline to Jordan 2011 Lebanon Mediterranean Sea
Slide 6: Leviathan Gas Field – Asset overview
5 Leviathan Gas Field – Asset over view Overview Ownership structure1 ⚫ Discovered in 2010, Leviathan is one of the world’s most attractive gas assets ⚫ Situated offshore Israel: c.130 km West of Haifa with a water depth of c.1,700m Ratio Oil ⚫ Noble Energy is the operator of the field on behalf of
Slide 7: Leviathan Gas Field – H1 2020 operational update
6 Leviathan Gas Field – H1 2020 operational update COVID-19 impact on results and expected performance Leviathan H1 performance (45.34% Delek Drilling WI) Q1 2020 Q2 2020 ⚫ Following commencement of production in December 2019, the Leviathan project has been operating at average uptime levels reachi
Slide 8: Leviathan Gas Field – H1 2020 operational update (cont'd)
Leviathan Gas Field – H1 2020 operational update (cont’d) 7 Stellar uptime performance Leviathan H1 2020 uptime 100% 99.3% 98.8% 99.0% 98.7% 97% 95% 94.4% 92.6% Uptime 90% 85% 20-ינו 20-פבר 20-מרץ 20-אפר 20-מאי 20-יונ Monthly uptime % Average Uptime Achieved exceptional uptime rates thro
Slide 9: Key credit highlights
8 Key credit highlights 1 World-class asset, 50+ year life, significant reserve upside potential 2 Strategically located in the East Med, well positioned to take advantage of the Israeli energy transition and increasing regional gas demand 3 Strong contracted long-term cash flow generation with prot
Slide 10: World-class asset, 50+ year life, significant reserve upside potential
World-class asset, 50+ year life, significant reser ve upside 9 1 potential Leviathan ranks as one of the world’s most attractive gas fields Largest gas discoveries over the last decade1 (TCF Recoverable) 22.8 TCF (646 BCM) Gross 2P+2C resources4 2010 - ’13 2010 2015 2012 2017 2009 114 Vast reserve
Slide 11: World-class asset, 50+ year life, significant reserve upside potential (cont'd)
World-class asset, 50+ year life, significant reser ve upside 10 1 potential(cont ’d) Potential for significant reserve increases Tamar gross (2P) gas reserve development1 TCF Additional 7.0TCF of best estimate reserves since discovery, up 140% vs. initial reserves 11.5 11.5 12.0 12.0 9.1 9.7 10.0 1
Slide 12: Strategically located in the East Med
11 2 Strategically located in the East Med … Overview Leviathan’s key markets and connectivity Cyprus ⚫ With Leviathan, Israel is a net exporter of gas, taking a big step towards full energy independence Israel ⚫ Leviathan is key for the success of Israel’s energy transition program from coal to gas
Slide 13: Well positioned to take advantage of the Israeli energy transition and increasing regional gas demand
… well positioned to take advantage of the Israeli 12 2 energy transition and increasing regional gas demand Overview Key drivers of Israel’s gas demand growth ⚫ Israel’s increasing demand for gas is driven by strong macroeconomic fundamentals 1 Increasing electricity demand and an its accelerated e
Slide 14: Strong contracted long-term cash flow generation with protection against downside commodity price risk
Strong contracted long -term cash flow generation with 13 3 protection against downside commodity price risk Overview Current contract status2 Gross capacity: 12BCM p.a. ⚫ Robust long term contracted client base - contracted volumes range from 75% to 80%1 of gross 12BCM capacity Dolphinus, Egypt Sol
Slide 15: Strong contracted long-term cash flow generation (cont'd) – GSPAs overview
Strong contracted long -term cash flow generation with 14 3 protection against downside commodity price risk (cont ’d) Leviathan GSPAs overview GSPAs provide protection from volume and price risk whilst allowing for operational flexibility ⚫ To date, the Leviathan Partners have entered into several
Slide 16: Strong contracted long-term cash flow generation (cont'd) – Egypt Dolphinus
Strong contracted long -term cash flow generation with 15 3 protection against downside commodity price risk (cont ’d) Leviathan GSPAs overview Sovereign Rating: B2 / B Egypt – Dolphinus ⚫ Dolphinus is a special purpose company incorporated to import natural gas from Israel to Egypt1 ⚫ Dolphinus sup
Slide 17: Production and cost profile (45.34% WI)
Strong contracted long -term cash flow generation with 16 3 protection against downside commodity price risk (cont ’d) Production and cost profile (45.34% WI) Net production profile (2P)1 BCM Cumulative net production: 6.0TCF (171BCM) 8.0 4.0 8.9 9.6 10.9 10.7 11.5 11.3 10.6 10.2 10.0 9.8 9.7 9.6 9.
Slide 18: Strategic, longstanding partnership with a best in class operator
Strategic, longstanding par tner ship with a best in 17 4 class operator ✓ Pioneering and longstanding partnership ✓ Track record of discovery, ✓ Significant gas discoveries in the active for over 20 years5 development and operational success East Med basin Ratio 15.00% Yam Tethys Tamar Leviathan St
Slide 19: Strong management with unmatched operational track record in the East Med
Strong management with unmatched operational track 18 5 record in the East Med Delek Drilling management: Instrumental in developing the East Med oil & gas industry Yossi Gvura – Deputy CEO, Finance Yossi Abu – CEO ⚫ Mr. Abu has been with Delek since 2009 and serves as CEO since 2011 ⚫ Mr. Gvura has
Slide 20: Key credit highlights summary
19 1 World-class asset, 50+ year life, significant reserve upside potential 2 Strategically located in the East Med, well positioned to take advantage of the Israeli energy transition and increasing regional gas demand 3 Strong contracted long-term cash flow generation with protection against downsi
Slide 21: Delek Drilling financial profile
20 Delek Drilling financial profile
Slide 22: Delek Drilling: Corporate structure
21 Delek Drilling: Corporate structure 22.6% 16.8% 22.0% 45.3% 30.0% Royalties Tamar Gas Leviathan Gas Other licenses Aphrodite Karish / Tanin Field Field and assets Source: Company information, TASE
Slide 23: Delek Drilling is independent from Delek Group
22 Delek Drilling is independent from Delek Group ⚫ Delek Drilling is the largest publically traded Israeli E&P partnership (Tel Aviv Stock Exchange: DEDR.L) owned 55% by Delek Group and 45% by the public ⚫ Delek Drilling has an independent management team, distinct and separate from Delek Group ⚫ D
Slide 24: Delek Drilling – Debt structure overview
23 Delek Drilling – Debt structure over view ($mm) Balance as of March 31, 2020 Maturity Interest rate Leviathan First Lien Capex Facility (Leviathan project level) $1,6891 Feb-21 L+4.50% Tamar Secured Bonds (Tamar project level) 7202 Dec-20 / Dec-23 / Dec-25 4.44% / 5.08% / 5.41% Total Project Leve
Slide 25: Delek Drilling cash inflows and outflows
Delek Drilling cash inflows and outflows 24 Projected cash flows (USD mm) For the period Sources Apr – Dec 2020 Jan – Dec 2021 Jan – Mar 2022 Cash, cash equivalents and bank deposits, beginning of year 374 653 725 Revenues from the sale of gas and condensate, net of royalties 535 657 131 Revenues fr
Slide 26: Delek Drilling debt breakdown and key credit metrics
Delek Drilling debt breakdown and key credit metrics 25 For the Twelve Months ended Debt breakdown (USD mm) Dec 2020 Dec 2021 Mar 2022 Leviathan reservoir based debt raising 2,500 2,500 2,500 Tamar Secured Bonds (Tamar project level)1 640 - - Series A bond2 400 - - Gross debt 3,540 2,500 2,500 Less:
Slide 27: Appendix
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Slide 28: Strong contracted long-term cash flow generation with protection against downside commodity price risk
Strong contracted long -term cash flow generation with 27 protection against downside commodity price risk ⚫ Given all major offtake contracts have floor prices, Leviathan’s asset value is downside protected and has very low sensitivity to falls in Brent price ⚫ Between $25 and $50 Brent, a $1 decre
Slide 29: Overview of royalties, levy, depreciation and taxes applied to O&G assets in Israel
Over view of royalties, levy, depreciation and taxes 28 applied to O&G assets in Israel ● The financial projections include statutory and contractual royalties that are required to be paid by Delek Drilling in connection with its Working Interest and Delek Drilling’s contracted obligations ● The fin
Slide 30: Petroleum levy (Sheshinski)
29 Petroleum levy ( Sheshinski ) Levy calculation R-factor mechanism ⚫ In 2011, the Israeli parliament enacted the Taxation of Profits from Natural Resources Law Rate of the levy ⚫ The Law caused a change in the taxation principles for income of the oil and gas industry, 60% including imposing a lev
Slide 31: Key defined terms
30 Key defined terms Term Definition Term Definition 1P Proved Reserves INGL Israel Natural Gas Lines Ltd. 2P Proved + Probable Reserves IPP Independent Power Producer Bcf/d Billion cubic feet per day JOA Joint Operating Agreement BCM Billion cubic meters MMBTU Million British thermal units BCM p.a.
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