In September 2009 Delek and Noble started to carry out 3D surveys in their license called whale/Leviathan.

The rights in the Leviathan license are held by Noble (39.66%), Delek Drilling and Avner (22.67% each) and Ratio (15%). Ratio is controlled by the Rothlevy and Landau families (70%) with the remaining shares held by the public. The license covers a 2,000 square km area in the sea approximately 135 km west of Haifa and at a water depth of 1,634 meters. Seismic survey at the cost of $2.25 million took place at the end of 2009.

The main target at the Leviathan structure is located at a depth of 5,095 meters including the water depth.

On 3rd June 2010 Noble came out with the preliminary results from processing and interpretation of the three dimensional seismic survey and announced that the preliminary findings from the processing and interpretation of the three dimensional seismic survey (3D), carried out on licenses “Amit”, “Rachel” and parts of the “Hannah”, “David” and “Eran Licenses (hereinafter: “Ratio Yam”) and the licenses “Alon A” and “Alon B”.

Noble initially focused on initial processing and interpretation of the seismic data covering the “Leviathan” prospect found in tertiary layers of sand (corresponding to the reservoir sands identified in Tamar (the “tertiary sands”)) contained in the licenses “Rachel” and “Amit”. Noble estimates, on the basis of the above information, that the gross mean recoverable resource of natural gas in the prospect is about 16 TCF (about 453 BCM), and that the probability of Geologic Success is 50% .

In addition, Noble said to the Partnership that on the basis of the 2D and/or 3D seismic data, they have identified additional tertiary prospects in other licenses, in which the Partnership owns rights and operates in a joint venture together with Noble, and including in the area of Block 12 in Cyprus (“Additional Prospects”). Noble estimates that the unrisked gross mean resource potential of the Leviathan prospect, the Other Ratio Prospects and the Additional Prospects amounts to more than 30 TCF (about 850 BCM). This estimate does not calculate the geological probability of finding hydrocarbons within these prospects.

The Sedco Express drilling rig arrived at the Leviathan structure on 12th October and will be replaced in January by the Pride North America rig, which has deeper drilling ability as indeed the surveys showed that under the natural gas there are two potential targets for oil drilling which the Sedco Express cannot reach. In addition, the Pride North America costs $275,000 per day, about half the cost of the Sedco Express because it was leased at an opportune time, with a moratorium on deep water drilling in the Gulf of Mexico in the wake of the BP oil spill disaster. The two deeper layers consist of 5,800 meters that has 17% chance of success of containing 3 billion barrels of oil and the second at 7,200 meters that has an 8% chance of containing 1.2 billion barrels of oil.

October 18, 2010 Delek Drilling and Avner published report that Noble the operator of the exploration licenses Ratio Yam (Rachel, Amit, Hannah, David and Eran) announced to that the drill rig Sedco Express arrived at the drill-site of Leviathan-1 in the Rachel license and began drilling (spudded the well on 17th Oct in the afternoon). Leviathan-1 is planned under the drilling of the Rachel license, at about 135 kilometers west of Haifa in deep water of approximately 1,634 meters. Drilling is planned to drill for three targets and to a final depth of 7,200 meters (including water depth) and is expected to take approximately five months.

Drilling started on 18th October. Td is at 5,095 m including water depth of 1,634 m. This layer is called NG10 and is located in Tertiary Oligo-miocene sands similar to the sand layer of Tamar. This layer is bound by two additional reservoir rock layers that also represent target layers for possible gas deposits: between the upper layer SAND-A and the lower layer SAND-C there is the main NG10 layer.

November 29, 2010, Noble Energy Mediterranean informed the partners that the drill has penetrated the primary target (NG10 prospect). From the initial analysis of the information gathered while drilling, it seems that the primary target has natural gas bearing sands. It shall be noted that at this stage, all information is based on initial indications only, and, as of yet, no determination can be made as to the size and/or quality and/or the commercial viability of the reservoir. It is planned that the drilling operations of the well shall continue within the primary target and that different tests shall be performed, including electrical logs. After the completion of the logs, that may take approximately two weeks, and updated notice will be given.

December 29, 2010 – from Noble Website – Noble Energy announced a significant natural gas discovery at the Leviathan exploration prospect. Drilled in the Rachel license, the well encountered a minimum of 220 feet (67 meters) of net natural gas pay in several subsalt Miocene intervals. Apparent reservoir quality is very good, and the intervals discovered are geologically similar to those intersected at Tamar.

Leviathan-1, located in approximately 5,400 feet (1,645 meters) of water, is about 80 miles (130 kilometers) offshore of Haifa and 29 miles (47 kilometers) southwest of the Tamar discovery. The results from the well confirm the pre-drill estimated resource range, with a gross mean for Leviathan of 16 trillion cubic feet (450 billion cubic meters). The Leviathan field is estimated to cover approximately 125 square miles (325 square kilometers) and, as a result of its size, will require two or more appraisal wells to further define total gas resources.

Drilling at Leviathan-1 will continue to a planned total depth of 23,600 feet (7,200 meters) to evaluate two additional intervals. Current well depth is 16,960 feet (5,170 meters). Results from the deeper tests, which have a low chance of success, are expected over the next coup.

9th March 2011 TASE announcement that Leviathan 1 will cost closer to $190 million and not $150 due to two months extension in work program mainly due to need for more stringent HSSE regulations and technical issues.

On same day, Leviathan 2 drilling – Leviathan fields extends over very large surface of 325 sq km and thus the need to carry out 2 appraisal wells or more in order to continue and estimate the scope of the natural gas reserves in the main target area NG10. In light of the above, it was decided to carry out Leviathan 2 appraisal well planned in the Amit license at a distance of about 14 km from Leviathan 1 to a depth of 5,400 meters including water deph of 1,700 m with the Pride North America which is due to start in a week and to last 3 weeks and cost a total of $70 million. The budget and time for the drilling do not include production testing if such should be decided and if yes they will last another 2-3 weeks at a cost of $34 million. It is hereby clarified that Leviathan 2 well was planned as said originally as an appraisal well for NG10 only and therefore it should not be influenced by the results of Leviathan 1 to the deeper secondary target layers.

On 21st March 2011, the Israeli partners in the Leviathan well report that their US partner, Noble Energy informed them yesterday that the Pride North America rig has begun drilling the Leviathan 2 well at the Amit license.

Netherland Sewell & Associates estimated on 29th March 2011 that the gross 100% contingent gas resources in Leviathan based on the PRMS guidelines and classified as development pending and are contingent upon project sanctioning that includes an approved development plan and reasonable expectations for gas sales are low estimate (1C) of 10.54 tcf, best estimate (2C) 15.89 tcf and high estimate (3C) 21.07 tcf

Delek Drilling 2010 Report Leviathan 1C 321 bcm and 3C 596.95 bcm.

15th May 2011 – Delek, Avner, Ratio TASE announcement re Leviathan 2 drilling that Noble informed them that they decided to stop the drilling operations on Leviathan 2 and to carry out an alternative appraisal drilling at an adjacent location. The Leviathan 2 drilling reached a depth of about 4,570 meters, hundreds of meters above the target depth (NG-10). During the course of the drilling a flow of water was found in the wellhead behind the casing pipe on the sea bed. The operator estimates, the alternative drilling is expected to start within a month and to last 3 months for a total estimated cost (100%) of about $70 million. The accumulative cost of the Leviathan 2 drilling to date is about $42 million.

The well started on the 15th March of this year and was stopped on the 8th May 2011 at a depth of 4,548 meters due to the leakage of water in the well. On 14th May Noble informed the MNI of the reason of the incident and stopped drilling. According to Noble’s report, it stemmed from the lack of carrying out all the technical issues required in the cementing during the process of inserting the drilling pipes. On the 26th May the Petroleum Commissioner sent Noble a letter in which he ordered them to stop their plans to carry out another well in Leviathan and the continuation of operations will now depend on the results of the analysis of the incident that occurred in the drilling of Leviathan 2 and getting the approval of the Petroleum Commissioner after he has examined their detailed report

Noble Energy informed its partners that on 24.6.2011 it has started to drill Leviathan 3 with the Pride North America and that L-3 is an appraisal well to replace Leviathan 2 that was stopped and will be carried out about 4.4 km from L-2 and about 9.6 km from Leviathan 1. Drilling will be down to a depth of about 5,300 m including water depth of 1,670 m and is expected to last for about 3 months at a total (100%) estimated cost of $70 million. This estimated budget and timetable do not include the production tests if these are to take place which will last about 2-3 weeks at an estimated budget of $34 million (100%)

3rd July 2011 – Drilling of L-3 had stopped at the stated depth of 2,600 m after problems were encountered with the BOP. Leviathan 3 is located 4.4 km from Leviathan 2 that was stopped and at 9.6 km from Leviathan 1.

When L-3 will be completed the Pride is due to go back to L-1 to drill down to strata that have not yet been drilled to with results due by end of 2011

Significant Dates in Leviathan:

18.1.2010 – Spudding of Leviathan 1
20.12.2010 – Discovery announced
9.3.2011 – Stopped drilling of Leviathan 1 towards the oil strata due to technical problems with Sedco Express. Well will be resumed with Homer Ferrington end of 2011 after block 12 has been drilled in Cyprus
20.3.2011 – Started appraisal Leviathan 2 and drilled down to 5300 m
15.5.2011 – Stopped drilling of Leviathan 2 due to water penetration
24.6.2011 – Leviathan 3 re-started
3.7.2011 – Leviathan 3 stopped ue to problems with BoP
9.10.2011 – Sedco express rig in position at Leviathan 3 – appraisal well that will serve as production well in the future. Results due in November