Delek : Letter of Intent for the Export of Natural Gas from the Tamar Project to Egypt

Tel Aviv, October 19, 2014. Delek Group (TASE: DLEKG, OTCQX: DGRLY) ("the Company") Further to what was stated in section 1.7.14 (b)(1) of the Company's Periodic Report dated 31 March 2014 (ref. no. 2014-01-030843), below is an Immediate Report of the partnerships Avner Oil Exploration - Limited Partnership and Delek Drilling - Limited Partnership (each of them), concerning a contractual relationship with Dolphinus Holdings Limited in a Letter of Intent for the export of natural gas from the Tamar Project to Egypt.

Pursuant to what was stated in section 7.14.2 (a) of the Partnerships' Periodic Reports to December 31, 2013 that were published on March 18, 2014 (ref. no. 2014-01-017376) in respect of contacts and/or negotiations between the Tamar Project partners including the Partnerships ("the Tamar Partners") with various parties in respect of exporting natural gas from the Tamar Project, the Partnerships hereby announce as follows:

On October 17, 2014 a non-binding Letter of Intent was signed between the Tamar Partners and Dolphinus Holdings Limited ("Letter of Intent" and "the Buyer", respectively), in which the parties confirmed their intention to carry out exclusive negotiations on an agreement for the supply of natural gas ("the Binding Agreement") from the Tamar Project to the Buyer using the existing gas pipeline operated by East Mediterranean Gas Ltd("EMG Pipeline") for exclusive marketing to customers in Egypt.

The Letter of Intent includes several commercial conditions for the proposed transaction, which will serve as a basis for negotiating the Binding Agreement. Supply under the Binding Agreement will be of 250,000 MMBtu per day for a period of 7 years. The gas supply will be on an interruptible basis of quantities of surplus gas available to the Tamar Partners from the Tamar Project; however, the Tamar Partners undertake to supply a minimum, cumulative amount of 5 BCM (billion cubic meters) over a period of 3 years, subject to the daily limitation noted above and supply limitations of Israel Gas Lines Ltd ("IGL"). It is the parties' intention that the gas shall be transported via the IGL transport system to Ashkelon and from there to Egypt using the EMG Pipeline.

To the best of the Partnerships' knowledge, the gas to be purchased by the Buyer will mainly be supplied to industrial consumers in Egypt. However, since the supply is on an interruptible basis, the Buyer is not bound to purchase minimum quantities. The Tamar Partners estimate that if the Binding Agreement is signed and its prior conditions are fulfilled, the Buyer will purchase a significant share of the above cumulative minimum quantity. The price of gas that is set in the Letter of Intent is similar to the prices set in other agreements for the export of gas from Israel and is essentially based on linkage to the price of a barrel of Brent oil and includes a "floor price".

It is stipulated that the Letter of Intent is not binding and the potential transaction described above shall be subject to completion of negotiations between the parties and signing of the Binding Agreement. At this point the parties estimate that the Binding Agreement will be subject to several contingent conditions, including receipt of all the required authorizations from the authorities in Israel and Egypt and arrival at an arrangement between the Buyer and EMG that will allow the Buyer to transport the gas through the EMG Pipeline.

To the best of the Partnerships' knowledge, the Buyer (Dolphinus Holdings Limited) represents a consortium of major Egyptian non-governmental industrial and commercial gas consumers, gas distributors and entrepreneurs, headed by Dr. Alla Arfe.

Partners in the Tamar Project and their percentage holdings are as follows :

Noble Energy Mediterranean Ltd.36.00%

Isramco Negev 2 Limited Partnership 28.75%

Avner Oil Exploration - Limited Partnership 15.625%

Delek Drilling - Limited Partnership 15.625%

Dor Gas Exploration - Limited Partnership 4.00%

Disclaimer concerning forward looking information - the information stated above concerning the forecast signing of the Binding Agreement, the terms of the Binding Agreement and the quantities of natural gas likely to be included in it, are forward looking information in the meaning of the term in section 32a of the Securities Law, 1968, for which there can be no certainty that it will take place, in whole or in part, in the manner stated or in any other manner, and it may take place in a manner materially different from what is described above, and in particular there can be no certainty that the parties shall reach agreement on the terms of the Binding Agreement, since the Binding Agreement shall be signed according to the terms stipulated above or according to other terms, and there can be no certainty that all the contingent terms that shall be set in the Binding Agreement, if it shall be signed, will be fulfilled.

This is a convenience translation of the original HEBREW immediate report issued to the Tel Aviv Stock Exchange by the Company on October 19, 2014.

The Delek Group, Israel's dominant integrated energy company, is the pioneering leader of the natural gas exploration and production activities that are transforming the Eastern Mediterranean's LevantBasin into one of the energy industry's most promising emerging regions. Having discovered Tamar and Leviathan, two of the world's largest natural gas finds since 2000, Delek and its partners are now developing a balanced, world-class portfolio of exploration, development and production assets with total gross natural gas resources discovered since 2009 of approximately 40 TCF.

In addition, Delek Group has a number of assets in downstream energy, water desalination, and in the finance sector.

For more information on Delek Group please visitwww.delek-group.comhttp://www.delek-group.com/