State of Israel – Ministry of National Infrastructures –
Natural Resources Licensing Administration.
Announcement of the Petroleum Commissioner.

Applications for the meeting of the Petroleum Board no. 2/10
March 09, 2010

1. Applications for petroleum rights for the meeting of the Petroleum Board no. 2/10 in accordance with the Petroleum Law should be submitted to the Petroleum Commissioner till May 20, 2010. An application submitted after this date, an application which is not fully compliant with this announcement, or incomplete application will not be accepted and will be dealt as not submitted.

2. Applications should be submitted in three original copies signed by the authorized persons on behalf of the applicants, along with an approval by lawyer that it was signed by the authorized persons in accordance with the Petroleum Law, 1952, and Petroleum Regulations, 1953, and in accordance with the type and essence of the application.

3. An application must include certificate of company incorporation and original certification of the signature rights; only originals of all these documents must be submitted. To prove financial capacity the applicant must attach to application the last financial reports of the applicant companies audited by accountant.

4. An application should include all the relevant details and documents in accordance with the Petroleum Law and Petroleum Regulations. Notwithstanding the generality of the aforesaid, an application for a preliminary permit should include all the details in accordance with the Petroleum Law Regulations (paragraph 1). An application for a priority right shall include also all the details in accordance with the Petroleum Law (paragraph 7A), and the Petroleum Law Regulations (paragraph 5A). An application for license should include all the details in accordance with the Petroleum Law (paragraph 15) and Petroleum Regulations (paragraph 6). All the applications for offshore rights should be submitted also in accordance with the Offshore Petroleum Regulations, 2006 (Principles for Offshore Petroleum Exploration and Production). Notwithstanding the generality of the aforesaid, applications for petroleum rights (including permits) shall include, among other documents:

a. list of coordinates in New Israel Grid and map of the requested area;

b. geophysical/geological background for the application;

c. the work program with stages timetable;

d. expected cost of the work program;

e. professional background of the applicant – the group submitting the application shall include:

i. company or group including at least one specialist with relevant experience at least of 10 years in one of the following fields: geology, geophysics, exploration, well engineering, reservoir and production engineering;
ii. operator (company or group) with experience in managing and performing of at least one project in the field of oil or gas exploration or production of 10 million dollars onshore (for onshore application) and 100 million dollars offshore (for offshore application);

f. the applicant shall provide signed agreements between application partners which include commitment to carry out the project which is the subject of the application and consent about the operator which is one of the partners;

g. letter of intent with the geophysical contractor (if the geophysical survey is part of the work program) or with the drilling contractor (if the work program include well drilling);

h. proof of the financial capacity and available financial resources of the applicant (see the following paragraph 7);

i. application for license shall include prospect for drilling in the requested area.

j. application for priority right shall include commitment for executing the work program and for the investments necessary for oil exploration in accordance with the Petroleum Law (paragraph 7A).

5. Applications which are submitted in accordance with paragraph 76 of the Petroleum Law shall explain application background and type. The application will be signed by the transferee and the transferor of the petroleum right and will include, among others, original certification of the applicants signature rights (the transferee and the transferor, beneficiaries of any liens, companies subject to any liens etc., in accordance with the type of application). If the application is submitted by one of the petroleum right partners, the consent of other partners shall be attached to the application.

6. It is clarified here, that for applications for petroleum rights transfer in accordance with paragraph 76 of the Petroleum Law, professional and financial ability of the applicant will be checked again for the new group of companies forming the applicant group after petroleum right transfer. In accordance with it, all the documents necessary for proving professional and financial ability shall be attached to the application, as if it is the first application for the petroleum right.

7. Lien agreement should be attached to the request for the lien.
(signed agreement approved by the Petroleum Commissioner or the final draft approved by the bank) and lien terms. Please note that approval for lien does not permit the realization of the lien.

8. Proven financial capacity:
a. for onshore preliminary permit with priority right or license an applicant must prove the financial capacity to cover the full estimated cost of executing the work program and half of the estimated cost of drilling one well. Estimated average cost of drilling onshore well is 10 million dollars;
b. for offshore preliminary permit with priority rights or license an applicant must prove financial capacity in accordance with Offshore Petroleum Regulations, 2006. Estimated average cost of drilling offshore well is 100 million dollars. It means that the applicant submitting application for offshore preliminary permit with priority rights or license must prove the financial capacity to cover the full estimated cost of executing the work program and half of the estimated cost of drilling offshore well.
c. The company or the group submitting the application must demonstrate that it has liquid assets (cash, deposits, securities) in accordance with the above paragraphs 7a or 7b and equity value of these amounts.
d. While checking the applicant financial capacity, existing commitments for other permits/licenses which were granted to the applicant in accordance with the Petroleum Law, and other commitments discovered in financial reports will be deducted from the presented liquid assets and equity. Additional applications submitted by the applicant to the Petroleum Board will also be taken into the consideration.

9. Incomplete applications and applications which are not fully compliant with the Petroleum Law, Petroleum Regulations and this announcement will be returned to the applicants.

10. Nothing stated in this notice shall derogate from any requirements under law, even if said requirements was not referred to herein.

11. If several applications submitted for the overlapping areas, they will be checked according to the following criterions, with the aim to reach the best results for the petroleum right:
a. experience of the companies or groups submitting the applications;
b. execution of work program in accordance with the Petroleum Law by the applicant in the past;
c. the work program, including geological background, timetable, scope and resolution of the planned surveys, estimated investment;
d. Factors pertaining to the welfare of the overall economy, including competition consideration.

12. An application submission does not mean that the Petroleum Board must consider an application, if the Petroleum Commissioner, as per his authority, concluded that there is no place to discuss the application, or if the applicant does not meet minimal requirements for financial or professional ability according to above paragraphs 4 and 8.
13. The Hebrew language version of this announcement shall be binding.