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Oil Refineries Announces Financial Results for Third Quarter and Nine Months 2007
Date:11/20/2007

HAIFA, Israel, November 20 /PRNewswire-FirstCall/ --

- Third quarter Consolidated Net Income NIS 178 Million, Compared to NIS 24 Million Last Year; Third Quarter 2006 Results Adversely Affected by Northern Hostilities

- Company Publishing Today Hebrew Draft Prospectus for the Issue of Debentures Primarily for the Financing of the Strategic Plan; Debentures Were Rated AA Stable by Maalot, a Standard and Poor's Affiliation

Oil Refineries Ltd. (TASE: ORL) ("Oil Refineries" or the "Company") announced today its financial results for three and nine-month periods ending September 30, 2007.

The reported results for the third quarter and nine months 2007 exclude the results of Ashdod Refineries, which was sold at the end of the third quarter 2006, and which generated a substantial capital gain in the said third quarter. The results for the comparable period, the third quarter and nine months of 2006, are pro-forma figures and refer to the consolidated pro-forma statements.

Third Quarter Highlights

- Refining margin USD/bbl 5.7, compared to USD/bbl 7.3 in the third quarter 2006

- Company refining margin 52% higher than Mediterranean Ural Cracking Margin average of USD/bbl 3.75

- Consolidated EBITDA totaled NIS 326, compared to NIS 144 million in third quarter 2006

- Consolidated net income totaled NIS 178 million, compared to 24 million in third quarter 2006

- Quarterly results positively affected by the changes in the USD against the Israeli Shekel; Last year's third quarter results were negatively affected by the northern hostilities

Third Quarter Results

Refining margin for the third quarter totaled USD/bbl 5.7 (USD/MT 41.6), compared to the third quarter Mediterranean Ural Cracking Margin(i) average of USD/bbl 3.75(i) (USD/MT 27.4). Refining margin for the third quarter 2006 totaled USD/bbl 7.3 (USD/MT 52.9).

Consolidated EBITDA for the third quarter 2007 reached NIS 326 million, compare ______ ______ ______ ______

Total 15,000 15,749 5,469 5,320

--------- --------- --------- ---------

Gross profit

Refining 943 817 235 133

Polymers 139 54 51 (12)

Aromatics 166 86 52 12

______ ______ ______ ______

Total 1,248 957 338 133

--------- --------- --------- ---------

Sales, general and

administrative expenses

Refining 192 149 55 46

Polymers 39 26 14 7

Aromatics 80 62 31 23

______ ______ ______ ______

Total 311 237 100 76

--------- --------- --------- ---------

Operating income

Refining 751 668 180 87

Polymers 100 28 37 (19)

Aromatics 86 24 21 (11)

______ ______ ______ ______

Total 937 720 238 57

--------- --------- --------- ---------

______ ______ ______ ______

Financing (expenses) income, net (80) (92) 3 (24)

______ ______ ______ ______

Privatization grant (119) - - -

______ ______ ______ ______

Income before taxes on income 738 628 241 33

Income tax 204 181 64 9

______ ______ ______ ______

534 447 177 24

Company's share in earnings of

investee companies 22 22 2 -

______ ______ ______ ______

Net income for the period 556 469 179 24

______ ______ ______ ______

______ ______ ______ ______

(i) Source: Reuters - Refining Margin of European Urals Cracking Refineries in Mediterranean

Contacts

Company Contact:

Jacob Hirsh

CFO, Oil Refineries

Tel. +972-4-878-8117

jhirsh@orl.co.il

Investor Relations Contact:

Ehud Helft \ Fiona Darmon

GK Investor Relations

Tel. (US)+1-646-797-2868 \ (Int.) +972-54-566-3221

info@gkir.com

d to NIS 144 million pro-forma consolidated EBITDA in the third quarter of 2006.

Consolidated Operating Profit for the third quarter totaled NIS 238 million, compared to a pro-forma consolidated operating profit NIS 57 million in the third quarter of 2006.

Operating profit from the Refining segment totaled NIS 180 million, compared to NIS 87 million last year. The lower refining margins contributed to a NIS 61 million decline in operating profit over the second quarter last year, this was completely offset by a NIS 163 million contribution resulting from an increase in quantities sold, changes in the US dollar exchange rate and a decline in operating expenses. The Company's consolidated results in the third quarter last year were negatively affected by the regional hostilities.

Operating profit from the Aromatics segment (conducted through Gadiv Petrochemical Industries Ltd.) totaled NIS 21 million, compared to an operating loss of NIS 11 million in the third quarter last year.

Operating profit from the Polymers segment (conducted through Carmel Olefins) totaled NIS 37 million, compared to an operating loss of NIS 19 million in the third quarter last year.

Consolidated net income for the third quarter of 2007 totaled NIS 178 million, compared to a pro-forma consolidated net income of NIS 24 million in the third quarter last year.

Nine-Month Results

Refining margin for the nine months totaled USD/bbl 8.4 (USD/MT 61.0), compared to the nine months Mediterraneani Ural Cracking Margin average of USD/bbl 5.6 (USD/MT 40.6). Refining margin for the nine months was also substantially higher than the USD/bbl 7.7 (USD/MT 55.9) refining margin in the nine months 2006.

Consolidated EBITDA for the nine months totaled NIS 1,194 million, compared to NIS 973 million pro-forma consolidated EBITDA in the same period last year. Consolidated Operating Profit for the nine months totaled NIS 937 million, compared to a pro-forma consolidated operating profit NIS 720 million in the same period last year.

Consolidated net income for the nine months, excluding a one-time charge totaling NIS 106 million in the first quarter 2007, totaled NIS 662 million, compared to a pro-forma consolidated net income of NIS 469 million in the nine months last year. The one-time charge, net after tax, resulted from the accounting treatment of a privatization grant paid in the first quarter 2007, by the government to the employees of Oil Refineries and its subsidiaries, following the successful privatization in February 2007. Net income for the nine months, including this one-time privatization expense, totaled NIS 556 million.

"We are very pleased that once again the Company has presented higher refining margins than the average refining margin for the Mediterranean "Ural" for the quarter, and this, despite the decline in refining margins this quarter compared to last year," commented Mr. Yashar Ben-Mordechai, Oil Refineries' CEO. "The global energy market is going through a volatile period, evident in both the fluctuations in fuel prices and currencies. This volatility continues to impact the Company's performance."

Mr. Ben-Mordechai added: "Carmel Olefins continues with its expansion strategy and, during the third quarter, fully operated its new Polypropylene unit. This unit is expected to more than double COL's Polypropylene production once it reaches full production capacity during the coming year. In addition, two weeks ago COL announced that it has signed an Intent Agreement to purchase a 49% stake in a European petrochemical company."

Mr. Yossi Rosen, Oil Refineries Chairman of the Board noted, "We recently presented our new five-year strategic plan for the Company. This extensive plan will include US$1.1 billion of investments and will focus on developing the Company's core business areas, refining and petrochemicals, while identifying complementary areas such as electricity production, trade and transport. In line with the Company's business approach, the Board of Directors decided to allocate US$270 million of the overall strategic plan, for the investment in a five year environmental plan which will improve the Company's environmental activities including continuing to develop and produce environmentally friendly products."

Mr. Rosen concluded "As the first stage in the financing of the strategic plan, during the coming month the Company intends to raise capital. Last week the Company received an AA Stable rating from the Maalot rating company, a Standard and Poor's affiliation, and is currently undertaking a series of measures, including publishing a prospectus for a local debenture issue, to raise the necessary capital, from both the banking community and the capital markets, to finance the first stage of the investment."

Conference Call

The Company will also be hosting a conference call later today at 09:00am ET. On the call, management will present a presentation reviewing the third quarter and nine months 2007 highlights and industry trends. The presentation can be downloaded from the Company's website http://www.orl.co.il : Investor Relations > Financial Reports prior to the call. To participate in the conference call, please call one of the following teleconferencing numbers. Please begin placing your calls at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.

US dial-in: +1-888-642-5032 UK dial-in: +44(0)800-051-8913

Israel dial-in: +972-3-918-0650 International dial-in: +972-3-918-0650

A replay of the call will be available, after the call, on the Company's website at http://www.orl.co.il. Alternatively, for two days following the end of the call, investors will be able to dial a replay number to listen to the call. The dial-in numbers are: +1-888-295-2634 (US); +44(0)800-917-4256 (UK); +972-3-925-5929 (Israel and International).

About Oil Refineries Ltd.

Oil Refineries Ltd. (ORL), located in the bay area of the city of Haifa, is Israel's largest oil refinery. ORL operates sophisticated and state-of-the-art industrial facilities with refining capacity of 9 million tons of crude oil per year, with a Nelson Complexity Index of 7.4, providing a variety of quality products used in industrial operation, transportation, private consumption, agriculture and infrastructure. The company is also active in the area of Aromatics and Polymers through wholly-owned Gadiv Petrochemical Industries Ltd and 50% owned Carmel Olefins Ltd. ORL is traded on the Tel Aviv Stock Exchange under the ticker ORL. For additional information please visit the Company's website: http://www.orl.co.il

Oil Refineries Ltd.

Consolidated Pro-Forma Balance Sheet

In thousands of reported NIS

September 30, December 31,

2007 2006

Actual Pro forma

Unaudited Audited

Current assets

Cash and cash equivalents 78,346 141,570

Trade accounts receivable 1,591,932 1,604,299

Accounts receivable and debit balances 444,256 454,701

Inventory 3,237,905 2,760,546(ii)

_________ _________

5,352,439 4,961,116

-------------- -------------

Long-term investments and loans

Investee companies 169,847 191,002

Loan to Haifa Early Pensions Ltd. 303,664 300,000

Long-term loans and other debit balances 52,555 7,409

Excess of funded amounts over the liability

for employee termination benefits, net 36,400 45,458

_________ _________

562,466 543,869

----------------------------

Fixed assets

Property, plant and equipment 3,682,683 3,701,744

Materials and spare parts 169,759 178,147(ii)

Fund for investment in fixed assets 429,057 414,749

_________ _________

4,281,499 4,294,640

-------------- --------------

Other assets and deferred expenses 50,892 48,100

-------------- --------------

10,247,296 9,847,725

_________ _________

_________ _________

Current liabilities

Credit from banking institutions and other

credit providers 1,118,226 899,142

Suppliers and service providers 1,500,022 1,561,723

Accounts payable and credit balances 508,477 785,309

Proposed dividend 280,000 20,000

_________ _________

3,406,725 3,266,174

-------------- --------------

Long-term liabilities

Debentures 974,246 854,799

Loans and liabilities 1,934,173 2,205,647

Long-term derivative instrument 4,280 -

Deferred taxes 539,697 498,352

Liability in respect of financing lease 29,187 29,275

Liability for employee termination benefits,

net 254,204 278,801

_________ _________

3,735,787 3,866,874

-------------- --------------

Total liabilities 7,142,512 7,133,048

-------------- --------------

Shareholders' equity 3,104,784 2,714,677

-------------- --------------

10,247,296 9,847,725

_________ _________

_________ _________

(ii) Reclassified.

Oil Refineries Ltd.

Consolidated Pro-Forma Profit and Loss Statements

In thousands of reported NIS, except per share amounts

Nine month period Three month period Year ended

ended September 30, ended September 30, December 31,

2007 2006 2007 2006 2006

Actual Pro forma Actual Pro forma Pro forma

Unaudited Unaudited Audited

Revenues 16,248,209 16,705,845 5,807,214 5,452,608 21,734,553

Cost of sales,

refining and

services 14,999,682 15,748,614 5,468,311 5,320,488 20,584,260

_________ _________ _________ _________ _________

Gross profit 1,248,527 957,231 338,903 132,120 1,150,293

Selling expenses 96,965 70,245 37,020 23,624 94,634

General and

administrative

expenses 215,121 167,253 64,789 52,614 222,104

_________ _________ _________ _________ _________

Operating income 936,441 719,733 237,094 55,882 833,555

Financing (income)

expenses, net 80,309 91,814 (3,266) 23,333 106,589

_________ _________ _________ _________ _________

856,132 627,919 240,360 32,549 726,966

Privatization

Grant (118,529) - - - -

_________ _________ _________ _________ _________

Income before

taxes on income 737,603 627,919 240,360 32,549 726,966

Taxes on income 204,202 180,564 64,220 8,491 221,539

_________ _________ _________ _________ _________

533,401 447,355 176,140 24,058 505,427

Company's share

in income (losses)

of affiliated

companies 22,165 21,501 2,002 (129) 32,570

_________ _________ _________ _________ _________

Net income for the

period 555,566 468,856 1 78,142 23,929 537,997

_________ _________ _________ _________ _________

_________ _________ _________ _________ _________

Earnings per

share, par value

NIS 1 each

(in NIS) 0.29 0.23 0.10 0.01 0.27

_________ _________ _________ _________ _________

_________ _________ _________ _________ _________

Oil Refineries Ltd.

Selected Pro-forma Consolidated Data from the Report of the Board of

Directors on the State of the Corporation's Affairs for the Period

In millions of NIS In millions of NIS

Unaudited Unaudited

Nine months ended Three months ended

September 30, September 30,

2007 2006 2007 2006

Actual Pro forma Actual Pro forma

Revenues

Refining 14,555 15,013 5,133 4,985

Polymers 971 715 347 177

Aromatics 1,615 1,386 589 419

Cancellation of intercompany

transactions (893) (408) (262) (128)

______ ______ ______ ______

Total 16,248 16,706 5,807 5,453

--------- --------- --------- ---------

Cost of sales, refining and

services

Refining 13,612 14,196 4,898 4,852

Polymers 832 661 296 189

Aromatics 1,449 1,300 537 407

Cancellation of intercompany

transactions (893) (408) (262) (128)


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SOURCE Oil Refineries Ltd
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