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Oil Refineries Announces Results for Fourth Quarter and Full Year 2009 --Net Income totals $349 million --Compared with Net Loss of $109 million in 2008 --ORL to distribute a dividend amount of approximately $75 million

HAIFA, Israel, March 21, 2010 /PRNewswire via COMTEX/ -- Reported consolidated operating income of $357 million in 2009 compared with an operating loss of $152 million in 2008 Reported consolidated EBITDA of $232 million in 2009 compared with a loss of $92 million in 2008 Adjusted refining margin USD/bbl 4.9, compared to USD/bbl 1.9 average Reuter's quoted Mediterranean Ural Cracking Margin Oil Refineries Ltd. (TASE: ORL.TA) (hereinafter "the Company," "ORL"), Israel's largest oil refiner, announced today its financial results for the fourth quarter and full year of 2009, ending December 31, 2009. Results are reported in US Dollars and under International Financial Reporting Standards (IFRS).

Adjusted refining margin USD/bbl 4.9, compared to USD/bbl 1.9 average Reuters' quoted Mediterranean Ural Cracking Margin Reported consolidated EBITDA of $232 million in 2009 compared with a loss of $92 million in 2008 Reported consolidated operating income of $357 million in 2009 compared with an operating loss of $152 million in 2008. Reported consolidated 2009 EBITDA includes income from revaluation of Company's holdings in Carmel Olefins (CAOL) and Haifa Basic Oils (HBO) of $77 million, and from negative goodwill created in the acquisition of 50% of the shares of Israel Petrochemicals (IPE) in CAOL of $137 million, and a loss of $7 million from the loss of material influence in IPE.

Note: 2009 saw significant volatility in the price of crude oil and its products, with crude oil beginning the year at $36 per barrel, climbing to $78 per barrel at the year's end.

As accepted by major leading international refiners and marketers of oil and its products, the results are presented as reported as well as net of the accounting provision for inventory gains or write offs, in addition to buying and selling timing and derivative accounting methods under IFRS. This is in order to enable a common base for comparison of the Company's ongoing operations.

YEAR END RESULTS 2009 Adjusted refining margin for 2009 totaled USD/bbl 4.9 (USD/ton 36), compared with the average Mediterranean Ural Cracking Margin quoted by Reuters of USD/bbl 1.9 (USD/ton 13.9). Adjusted refining margin for 2008 totaled USD/bbl 5.7 (USD/ton 41.4) compared with the average margin of USD/bbl 5.5.

During 2009, there was significant volatility in prices of crude oil and its products. Crude oil prices began the year at $36 per barrel, rising to $78 per barrel at the end of 2009. On the financial statement approval date, crude oil stood at $79 per barrel.

During this period, there were also price increases in fuels produced from the crude oil and sold by the Company. The absence of full correlation between the dates and amounts of the changes in product prices and the dates and volumes of the change in crude oil prices, results in volatility in the refining margins.

Concurrently, there was a decrease in the refining margins in 2009, due mainly to speculative demand in the crude oil market as a result of the crisis in the financial markets, which pushed up oil prices and which were not accompanied by a corresponding increase in prices of crude oil products.

Facility utilization in 2009 was 82% compared with 92% in 2008. The decrease in utilization was due mainly to the periodic turnaround and upgrade of Crude Unit 4 during June and July.

Reported consolidated EBITDA for 2009 totaled $232 million, compared with a loss of $92 million in 2008.

Adjusted EBITDA of the refining and trade segments totaled $120 million, compared with $192 million in 2008.

Financing expenses totaled $26 million, compared with $61 million in 2008. Most of the decrease stemmed from the decrease in interest and in the average amount of loans and debentures.

Consolidated net income for 2009 was $349 million, compared with a net loss of $109 million in 2008.

Key Developments in 2009 Finalization of $900 million financing program to continue carrying out the Company's strategic plan and meet its other needs for four years.

Construction began on the Hydrocracker at a cost of $500 million.

Increasing refining flexibility of Crude Unit 4 - the project was completed and activated in July 2009. The upgrade enables the refining of a very wide range of regional crudes, and it will be possible to better utilize opportunities of favorable margins.

Conversion of HVGO desulphurization plant into a mild hydrocracker - underway.

Stage 1 was activated at the end of Q2 of 2009 and Stage 2 is expected to be completed in Q2 of 2010. Activation of Stage 1 generates added value by increasing gasoil yield on crude by 2%. Stage 2 is expected to yield a similar increase in capacity.

Execution of the agreement to acquire the remaining shares in CAOL and closing of the merger between ORL and CAOL.

Carried out various projects in the areas of the environment as well as the reliability, safety and security of the facilities, totaling approximately $39 million. Total investments in environmental projects thus far have amounted to $104 million.

FOURTH QUARTER 2009 RESULTS Adjusted refining margin for Q4 2009 totaled USD/bbl 4.9 (USD/ton 36.2), compared with the average Mediterranean Ural Cracking Margin quoted by Reuters of USD/bbl 1.3 (USD/ton 13.9). Adjusted refining margin for Q4 2008 totaled USD/bbl 5.5 (USD/ton 40.3) compared with the average margin of USD/bbl 5.3.

Reported consolidated operating income totaled $190 million in Q4 2009, compared with a loss of $317 million in Q4 2008.

Adjusted EBITDA of the refining and trade segments totaled $120 million, compared with $192 million in 2008.

Financing expenses totaled $26 million in the fourth quarter, compared with $56 million in Q4 2008.

Other income totaled $214 million in the fourth quarter of 2009, compared with $0 in 2008. The increase was due to this year's revenue from revaluation of Company's holdings in CAOL and HBO of $77 million and to negative goodwill created in the acquisition of 50% of IPE's shares in CAOL of $137 million.

Consolidated net income for Q4 2009 was $182 million, compared with a net loss of $182 million in Q4 2008 - due mainly to one-off revenues.

Mr. Yashar Ben Mordechai, CEO of Oil Refineries: "Oil Refineries closes 2009 presenting consistently higher refining margins than the average Mediterranean Ural Cracking Margin quoted by Reuters, even though this year there was strong volatility in the prices of crude oil and its products. The planning and implementation of a long range of measures that we recently announced in our strategic plan, enabled ORL to present favorable results, neutralize the effects of fluctuations over time and assure the Company's profitability throughout the year. The recent measures we adopted, including the conversion and upgrade of facilities, contributed greatly to the flexibility and increased value added of the Company's facilities which, combined with the completion of the merger of our facilities at the end of 2009, provide ORL with the strength and status of leadership in the Eastern Mediterranean." Mr. Ben Mordechai added: "The acquisition of CAOL enables us to immediately leverage synergies through the optimization of all our operations including optimal long-term investment planning. The unique integration of our fuels industry with the aromatic and polymer industries, offers us a leading position in the competitive landscape. This optimization, together with the construction of the hydrocracker, which is expected to be operational in mid-2012, will enable ORL to maximize the advantage and flexibility of its facilities and to take maximum advantage of the opportunities created by the real economic recovery".

Mr. Yossi Rosen, Chairman of the Board of Oil Refineries: "During 2009, Oil Refineries demonstrated its ability to operate in a highly volatile market, standing strong in both its flexibility and response time in all areas of purchasing, trade and manufacturing optimization. Despite the difficult economic conditions in the market this past year, the Company still managed to present profitability and growth. In light of the company's performance, a dividend in the amount of approximately $75 million will be distributed. In its preparations for the future, the Company approved a $900 million financing plan for the investment in the hydrocracker, at a projected cost of $500 million, as well as refinancing the Company's debt. This is the largest real investment plan implemented in the Israeli economy this year. The plan is intended for implementation of the strategic plan and to assure the Company's other needs in the coming four years. Construction of the hydrocracker, together with completion of the merger of CAOL into ORL, will convert Oil Refineries into a unique refinery in the Eastern Mediterranean, integrating the capabilities of its petrochemical industries with its refining capability.

Mr. Rosen further added: "The financing of these investments was approved by experienced bodies which examined the Company as well as its long term, growth-driven, strategic plans. This approved financing plan enjoys full backing of ORL's shareholders, the Israel Corporation and Israel Petrochemical Enterprises. ORL's expected transition to the use of natural gas constitutes an important facet of the plan's implementation, in order to enable construction of the hydrocracker, and ORL is ready, after investing $45 million in preparations for its integration. We thank the Prime Minister and the Director-General of his Office for their actions in bringing about the end of the delays in connection of the natural gas pipeline to the Haifa Bay.

Additional Announcements: The Company has also made the following announcements: The BOD's decision to appoint Mr. Eran Schwartz and Mr. Arie Ovadia as directors in the BOD of the Company. For the updated list of the current Company's directors, view the Company's website, www.orl.co.il, under "Investor Relations," "About Us," "Board of Directors." A detailed announcement with regard to the dividend.

The BOD's decision to grant CEO Yashar Ben Mordechai a bonus.

The convening of the annual and special general meeting on April 26 2010, with regard to the following subjects Reappointment of KPMG as the auditors of the Company until the next general meeting and authorizing the BOD to determine their fees.

Reappointment of all the directors to the company: Mr. Yossi Rosen, Chairman of the Board, Mr. David Federman, Vice Chairman of the Board, Mr. Arie Silberberg, Mr. Ori Slonim, Prof. Arie Ovadia, Mr. Avisar Paz, Mr. Ran Croll, Ms. Nehama Ronen and Mr. Eran Schwartz, except for serving external directors (Prof. Yachin Cohen and Dr. Dafna Schwartz).

Re-appointment of external directors who serve on the Board: Prof. Yachin Cohen and Dr. Dafna Schwartz.

The approval of a special compensation for a director who serves as chairman of a Sector's Council, who is not related to the controlling shareholder of the Company, is not an independent nor external director, and is not employed by the Company.

The granting of payment to Chairman of the Board, Mr Yossi Rosen.

Bonus payment to Mr. David Federman, Vice Chairman of the Board and (indirectly) part of the controlling shareholders.

Discussion of the financial reports of the Company's Board of Directors report for the year ended 31/12/2009, including the auditor's fee, included therewith.

The forecasted liabilities schedule.

Convenience translation of the announcement of items 2 to 5, above, will be available on the Company's website, under "Investors Relations" from March 25th, 2010.

Conference Call The Company will also be hosting a conference call tomorrow, March 22, 2010, at 13:00 GMT, 9:00 EDT, 6:00 PDT and 15:00 Israeli Time.

On the call, management will present a presentation reviewing the fourth quarter and full year 2009 highlights and industry trends. The presentation is available for download from the Company's website www.orl.co.il: Investor Relations > Financial Reports.

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 number.

US Dial-in Numbers: 1 888 668 9141 UK Dial-in Number: 0 800 917 5108 Israel Dial-in Number: 03 918 0644 International Dial-in Number: 972 3 918 0644 at: 13:00 GMT, 9:00 EDT, 6:00 PDT, 15:00 Israel time. A replay of the call will be available after the call on the Company's website at www.orl.co.il.

The conference call will be accompanied by a presentation available for download from the Company's website, www.orl.co.il, under investor relations on March 22, 2010.

About Oil Refineries Ltd.

Oil Refineries Ltd. (ORL), located in the bay area of the city of Haifa, operates Israel's largest oil refinery. ORL runs sophisticated and state-of-the-art industrial facilities with a refining capacity of 9.8 million tons of crude oil per year and 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 Polymers and Aromatics through its holdings in Carmel Olefins Ltd and Gadiv Petrochemical Industries Ltd. The Company's shares are listed on the Tel Aviv Stock Exchange under the ticker ORL. For additional information please visit www.orl.co.il.

The above noted in this release includes forward-looking statements based on Company data, as well as Company plans and estimations based on this data. The activity, results and other data may be substantially different in reality given uncertainty and various risks, including those discussed under risk factors in the Company's financial statements and Director's reports.

Company Contact: Investor Relations Contact: Rony Solonicof Ehud Helft / Porat Saar Chief Economist and Head of Investor Relations CCG Israel Tel. (US) 1 646 233 2161 /(Int.) Tel. 972 4 878 8152 972 52 776 3687 Contact IREn@orl.co.il info@ccgisrael.com Consolidated Statements of Financial Position USD thousands December 31 2009 2008 Current assets Cash and cash equivalents 34,961 14,840 Deposits 77,637 25,000 Financial derivatives - 15,374 Investments in other financial assets at fair value through comprehensive income 107,034 101,509 Trade receivables 360,876 253,215 Other receivables and debt balances 62,495 82,642 Inventory 1,016,453 569,407 Current tax assets 3,957 42,047 ---- ----- Total current assets 1,663,413 1,104,034 Non-current assets Investments in equity-accounted investees 13,673 36,005 Investments in available-for-sale financial assets 10,909 - Loan to Haifa Early Pensions Ltd. 76,053 84,740 Long term loans and debit balances 3,951 2,606 Financial derivatives 120,671 64,369 Employee benefit plan assets 9,993 5,007 Property, plant and equipment 1,889,763 1,083,446 Deferred expenses, net 3,262 2,322 Intangible assets, net 93,187 22,848 ------ ------ Total non-current assets 2,221,462 1,301,343 -------- -------- Total assets 3,884,875 2,405,377 ======== ======== Consolidated Statements of Financial Position USD thousands December 31 2009 2008 Current liabilities Loans and borrowings 603,685 380,339 Trade payables 542,025 270,594 Other payables and credit balances 105,903 70,971 Financial derivatives 28,051 1,853 Provisions 11,582 12,949 ----- ----- Total current liabilities 1,291,246 736,706 Non-current liabilities Debentures 853,205 726,554 Bank loans 358,310 233,749 Liabilities for finance lease 8,768 8,448 Other long-term liabilities 15,973 7,394 Financial derivatives 3,111 6,900 Employee benefits 63,871 67,930 Deferred tax liabilities 138,464 65,827 ------ ----- Total non-current liabilities 1,441,702 1,116,802 -------- -------- Total liabilities 2,732,948 1,853,508 -------- -------- Equity Non-controlling interests 17,183 - ----- --- Share capital 586,390 472,478 Share premium 100,242 - Reserves 35,571 20,953 Retained earnings 412,541 58,438 ------ ----- Total equity attributed to equity holders of the Company 1,134,744 551,869 --------- ------- Total equity 1,151,927 551,869 -------- ------ Total liabilities and equity 3,884,875 2,405,377 ======== ======== Consolidated Statements of Comprehensive Income USD thousands Year ended December 31 2009 2008 2007 Revenue 5,141,480 8,257,458 5,234,483 Cost of sales, refinery and services 4,850,744 8,324,149 4,816,511 Revaluation of open positions in derivatives on prices of goods and margins, net 38,606 (7,465) 13,626 ------ ------ ------ Total cost of sales 4,889,350 8,316,684 4,830,137 Gross profit (loss) 252,130 (59,226) 404,346 Selling expenses (44,509) (40,582) (35,010) General and administrative expenses (57,794) (67,061) (59,360) Negative goodwill created in a business combination 137,000 14,535 - Profit from revaluation of a prior holding due to increase in control 77,561 - - Loss from the loss of material impact in a former equity- accounted investee (7,091) - - Privatization grant - - (28,360) --- -- ------- Operating profit (loss) 357,297 (152,334) 281,616 Financing income 61,223 64,979 12,361 Financing expenses (86,866) (126,034) (114,284) ------- -------- -------- Financing expenses, net (25,643) (61,055) (101,923) Company's share in profits (losses) of equity-accounted investees (net of tax) 4,892 (3,111) 6,913 ----- ------ ----- Profit (loss) before taxes on income 336,546 (216,500) 186,606 ------- -------- ------- Tax benefits (taxes on income) 12,698 107,292 (44,937) ----- ------- ------- Profit (loss) for the period 349,244 (109,208) 141,669 ====== ======== ====== The following tables present selected information compared to last year Petrochemicals Refining Trade Polymers Aromatics Year ended December 31 2009 2008 2009 2008 2009 2008 2009 2008 Revenue 3,859 6,939 506 356 414 475 362 487 Inter- company operations 468 680 40 -27 - - 40 57 --- --- --- --- --- --- --- --- Total sales 4,327 7,619 546 383 414 475 402 544 Cost of sales 4,116 7,629 549 370 210 256 14 61 Inter- company operations 40 57 - - 169 255 333 449 --- --- --- --- --- --- --- --- Total cost of sales 4,156 7,686 549 370 379 511 347 510 Gross profit (loss) 171 (66) (3) 13 35 (36) 55 34 Selling, general and administrative expenses 47 54 4 2 25 30 26 26 Inter- company operations - - - - 2 - 2 - --- --- --- --- --- --- --- --- Operating profit (loss) for segments 124 (120) (7) 11 8 (66) 27 8 Negative goodwill arising on acquisition Profit from revaluation of investees Loss from the loss of material impact in a former equity- accounted investee Operating profit Financing expenses, net Share in the profit (loss) of investees Profit (loss) before taxes on income Tax benefits Profit (loss) for the period Adjustments to consolidated Consolidated 2009 2008 2009 2008 Revenue - - 5,141 8,258 Inter- company operations (548) (764) - - ---- ---- --- --- Total sales (548) (764) 5,141 8,258 Cost of sales - - 4,889 8,316 Inter- company operations (542) (761) - - ---- ---- --- --- Total cost of sales (542) (761) 4,889 8,316 Gross profit (loss) (6) (3) 252 (58) Selling, general and administrative expenses - (4) 102 108 Inter- company operations (4) - - - ---- --- --- --- Operating profit (loss) for segments (2) 1 150 (166) Negative goodwill arising on acquisition 137 14 Profit from revaluation of investees 77 - Loss from the loss of material impact in a former equity- accounted investee (7) - --- --- Operating profit 357 (152) Financing expenses, net (26) (61) Share in the profit (loss) of investees 5 (3) --- --- Profit (loss) before taxes on income 336 (216) Tax benefits 13 107 --- --- Profit (loss) for the period 349 (109) === ==== SOURCE Oil Refineries Ltd.

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