UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A
(Rule 14a-101)

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

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Isramco, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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ISRAMCO, INC.

1001 West Loop South, Suite 750
Houston, Texas 77027
United States of America

September 6 , 2019

Dear Stockholders:

You are cordially invited to attend a special meeting of the stockholders of Isramco, Inc., which we refer to as “Isramco” or the “Company”. The special meeting will be held at 9:00 a.m. (local time) on October 22 , 2019, at the Company’s corporate headquarters located at 1001 West Loop South, Suite 750, Houston, Texas 77027, USA.

At the special meeting, you will be asked to consider and vote upon a proposal to adopt an Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”), dated as of May 20, 2019, by and among the Company, Naphtha Israel Petroleum Corporation Ltd., an Israeli public company (“Naphtha”), Naphtha Holding Ltd., an Israeli private company and a direct wholly owned subsidiary of Naphtha (“NHL”), I.O.C. - Israel Oil Company, Ltd., an Israeli private company and a subsidiary of Naphtha (“Parent”), and Naphtha US Oil, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub” and, together with Naphtha, NHL and Parent, the “Purchaser Parties”), pursuant to which Merger Sub will be merged with and into the Company, with the Company continuing as the surviving entity and becoming a privately-held subsidiary of Parent and NHL. In the proposed merger, each share of common stock of the Company, par value $0.01 per share (referred to as the “Common Stock”), outstanding immediately prior to the effective time of the merger (other than shares owned by Isramco as treasury stock, shares owned by NHL or Parent, and shares for which appraisal rights have been properly and validly perfected and not withdrawn or lost) will be converted into the right to receive $121.40 in cash, without interest and less any applicable withholding taxes, as more fully described in the accompanying proxy statement. The $121.40 per share being paid in the merger represents a premium of approximately 18.9% over the closing price of the Common Stock of $102.10 on March 21, 2018, the last trading day prior to the public disclosure that Naphtha was in preliminary stages of evaluating the possibility of pursuing a transaction involving the acquisition of the outstanding shares of the Common Stock not already owned by Naphtha and its affiliates, a premium of approximately 10.0% over the $110.36 purchase price per share initially offered by Naphtha, a premium of approximately 8.9% over the closing price of the Common Stock of $111.50 on May 20, 2019, the last trading day prior to the public announcement of the merger, and a premium of approximately 4.6% over the 30 trading-day average price of the Common Stock as of May 20, 2019, the last trading day prior to the public announcement of the Merger Agreement.

The proposed merger is a “going private transaction” under Securities and Exchange Commission rules. Prior to the merger, Mr. Haim Tsuff, the Company’s Chairman of the Board, Co-Chief Executive Officer and President, who through various entities controls Naphtha, beneficially owns approximately 73.01% of the outstanding Common Stock. NHL, Parent and Mr. Tsuff have agreed, pursuant to the terms of a Voting and Support Agreement entered into on May 20, 2019, to vote (or cause to be voted) all the shares of Common Stock beneficially owned by such persons at the special meeting, among other matters, for the approval and adoption of the Merger Agreement.

To assist in evaluating the fairness of the merger to the Company and our stockholders other than the Purchaser Parties and any “affiliate” (within the meaning of Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of the Purchaser Parties (referred to collectively as the “Purchaser Group”) and the Section 16 officers of Isramco (determined pursuant to Rule 16a-1(f) under the Exchange Act, and referred to as the “Section 16 Officers”), our Board of Directors (our “Board”) formed a special committee (the “Special Committee”) of independent and disinterested directors to consider and negotiate the terms and conditions of the merger and to make a recommendation to our Board. The Special Committee unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the merger, are advisable and fair to, and in the best interests of, the Company and its

stockholders (other than members of the Purchaser Group and any Section 16 Officers), (ii) recommended that our Board adopt, approve, and declare advisable the Merger Agreement and the transactions contemplated thereby, including the merger, and (iii) recommended that our Board submit the Merger Agreement to the stockholders for adoption and resolve to recommend that the stockholders of the Company adopt the Merger Agreement and the transactions contemplated thereby, including the merger.

After carefully considering the unanimous recommendation of the Special Committee and other factors, our Board (with Mr. Haim Tsuff recusing himself because of his membership in the Purchaser Group), acting on the unanimous recommendation of the Special Committee, has approved the Merger Agreement and determined that the Merger Agreement and the transactions contemplated thereby are advisable and fair to, and in the best interests of, the Company and its stockholders (other than members of the Purchaser Group and any Section 16 Officers). Mr. Tsuff recused himself from the vote of the Board because of his membership in the Purchaser Group.

Our board of directors unanimously (other than Mr. Haim Tsuff) recommends that you vote “FOR” the proposal to adopt the Merger Agreement, and “FOR” the proposal to adjourn or postpone the special meeting in order to take such actions as our Board determines are necessary or appropriate, including to ensure that any necessary supplement or amendment to the proxy statement accompanying this notice is provided to the Company’s stockholders a reasonable amount of time in advance of the special meeting or to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the Merger Agreement.

The enclosed proxy statement describes the Merger Agreement, the merger and related agreements. It also provides specific information concerning the special meeting. In addition, you may obtain information about us from documents filed with the Securities and Exchange Commission. We urge you to, and you should, read the entire proxy statement carefully, including the annexes, as it sets forth the details of the Merger Agreement and other important information related to the merger and the related proposals.

Your vote is very important. The merger cannot be completed unless holders of (i) not less than 75% of the outstanding stock of the Company entitled to vote in the election of directors vote in favor of adoption of the Merger Agreement and (ii) a majority of the outstanding shares of Common Stock not beneficially owned by the Purchaser Group or any Section 16 Officer vote in favor of adoption of the Merger Agreement. If you fail to vote on the Merger Agreement, the effect will be the same as a vote against adoption of the Merger Agreement.

While stockholders may exercise their right to vote their shares in person, we recognize that many stockholders may not be able to attend the special meeting. Accordingly, we have enclosed a proxy that will enable you to vote your shares on the matters to be considered at the special meeting even if you are unable to attend. If you desire to vote in accordance with the Board’s recommendation, you need only sign, date and return the proxy in the enclosed postage-paid envelope to record your vote. Otherwise, please mark the proxy to indicate your vote; date and sign the proxy; and return it in the enclosed postage-paid envelope. You also may vote your shares by proxy using a toll-free telephone number or the Internet. We have provided instructions on the proxy card for using these convenient services.

Submitting a proxy will not prevent you from voting your shares in person if you subsequently choose to attend the special meeting.

Sincerely,

Edy Francis

Co-Chief Executive Officer / Chief Financial Officer

Neither the Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the merger, passed upon the merits or fairness of the merger or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

This proxy statement is dated September 6 , 2019 and, together with the enclosed form of proxy, is first being mailed to stockholders on or about September 6 , 2019.

ISRAMCO, INC.

1001 West Loop South, Suite 750
Houston, Texas 77027
United States of America

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To Be Held October 22 , 2019

Dear Stockholders:

On October 22 , 2019, Isramco, Inc. (the “Company”) will hold a special meeting of stockholders at its corporate headquarters located at 1001 West Loop South, Suite 750, Houston, Texas 77027, USA. The meeting will begin at 9:00 a.m. local time.

The purpose of the meeting is:

1. to consider and vote on a proposal (the “Merger Proposal”) to adopt the Agreement and Plan of Merger, dated as of May 20, 2019 (as it may be amended from time to time, the “Merger Agreement”), by and among the Company, Naphtha Israel Petroleum Corporation Ltd., an Israeli public company (“Naphtha”), Naphtha Holding Ltd., an Israeli private company and a direct wholly owned subsidiary of Naphtha (“NHL”), I.O.C. - Israel Oil Company, Ltd., an Israeli private company and a subsidiary of Naphtha (“Parent”), and Naphtha US Oil, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub” and, together with Naphtha, NHL and Parent, the “Purchaser Parties”); and

2. to approve the adjournment of the special meeting, if necessary, to ensure that any necessary supplement or amendment to the proxy statement accompanying this notice is provided to the Company’s stockholders a reasonable amount of time in advance of the special meeting or to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve adoption of the Merger Agreement, including the Majority of the Minority Stockholder Approval (as defined below) (the “Adjournment Proposal”).

Our board of directors (referred to as the “Board”) (with Mr. Haim Tsuff recusing himself because of his membership in the Purchaser Group (as defined below)), acting on the unanimous recommendation of a special committee formed by the Board, has approved the Merger Agreement and determined that the Merger Agreement and the transactions contemplated thereby are advisable and fair to, and in the best interests of, the Company and its stockholders (other than Purchaser Parties and any “affiliate” (within the meaning of Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of any of the Purchaser Parties (referred to collectively as the “Purchaser Group”) and the Section 16 officers of Isramco (determined pursuant to Rule 16a-1(f) under the Exchange Act, and referred to as the “Section 16 Officers”)). Our Board unanimously (other than Mr. Tsuff), recommends that the stockholders of the Company vote “FOR” the Merger Proposal, and “FOR” the Adjournment Proposal.

Your vote is very important, regardless of the number of shares of common stock of the Company, par value $0.01 per share (“Common Stock”) you own. The merger cannot be completed unless holders of (i) not less than 75% of the outstanding stock of the Company entitled to vote in the election of directors vote in favor of the Merger Proposal and (ii) a majority of the outstanding shares of Common Stock not beneficially owned by the Purchaser Group or any Section 16 Officer vote in favor of the Merger Proposal (the “Majority of the Minority Stockholder Approval”). If you fail to vote on the Merger Proposal, the effect will be the same as a vote “AGAINST” the Merger Proposal.

Stockholders who do not vote in favor of the Merger Proposal and who object in writing to the merger prior to the special meeting and comply with all of the applicable requirements of Delaware law, which are summarized in the section entitled “Special Factors—Rights of Appraisal” in the accompanying proxy statement and reproduced in its entirety as Annex D to this proxy statement, will be entitled to rights of appraisal to obtain the fair value of their shares of our Common Stock.

The holders of record of our Common Stock at the close of business on September 5 , 2019, are entitled to notice of and to vote at the special meeting or at any adjournment of the meeting. All stockholders of record are cordially invited to attend the special meeting in person. Even if you plan to attend the special meeting in person, we request that you complete, sign, date and return the enclosed proxy and thus ensure that your shares will be represented at the special

meeting if you are unable to attend. You also may vote your shares by proxy using a toll-free telephone number or the Internet. We have provided instructions on the proxy card for using these convenient services.

If you fail to submit a proxy and do not attend the special meeting, your shares of Common Stock will not be voted, and will have the same effect as voting “AGAINST” the Merger Proposal, but will have no effect on the Adjournment Proposal. If you sign, date and mail your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” the Merger Proposal and “FOR” the Adjournment Proposal. You may revoke your proxy at any time before the vote at the special meeting by following the procedures outlined in the enclosed proxy statement. If you are a stockholder of record, attend the special meeting and wish to vote in person, you may revoke your proxy and vote in person.

The merger is described in the accompanying proxy statement, which we urge you to read carefully. A copy of the Merger Agreement is included as Annex A to the accompanying proxy statement.

By order of the Board of Directors

ISRAMCO, INC.

Houston, Texas

September 6 , 2019

ABOUT THIS PROXY STATEMENT

This document constitutes the proxy statement of Isramco, Inc., a Delaware corporation (“Isramco” or the “Company”), under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act’). In addition, it constitutes a notice of meeting with respect to the special meeting of the stockholders of the Company to be held at 9:00 a.m. (local time) on October 22, 2019, at the Company’s corporate headquarters located at 1001 West Loop South, Suite 750, Houston, Texas 77027, USA.

The Company, Naphtha Israel Petroleum Corporation Ltd., an Israeli public company (“Naphtha”), Naphtha Holding Ltd., an Israeli private company and a direct wholly owned subsidiary of Naphtha (“NHL”), I.O.C. - Israel Oil Company, Ltd., an Israeli private company and a subsidiary of Naphtha (“Parent”), and Naphtha US Oil, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub” and, together with Naphtha, NHL and Parent, the “Purchaser Parties”), have entered into an Agreement and Plan of Merger, dated as of May 20, 2019 (as it may be amended or supplemented from time to time, the “Merger Agreement”). Pursuant to the Merger Agreement, Merger Sub will be merged with and into the Company, with the Company continuing as the surviving entity and becoming a privately-held subsidiary of Parent and NHL (the “merger”). In the proposed merger, each share of common stock of the Company, par value $0.01 per share (referred to as the “Common Stock”), outstanding immediately prior to the effective time of the merger (other than shares owned by Isramco as treasury stock, shares owned by NHL or Parent, and shares for which appraisal rights have been properly and validly perfected and not withdrawn or lost) will be converted into the right to receive $121.40 in cash, without interest and less any applicable withholding taxes, as more fully described herein. Accordingly, unless otherwise expressly stated herein, all discussions in this proxy statement concerning the merger, the Merger Agreement, and all transaction documentation, including all discussions concerning the events leading thereto, the applicable proceedings of the Special Committee of the Board of Directors (the “Board”) of the Company, the fairness opinion of the financial advisor to the Special Committee, and all other considerations, all relate to the Merger Agreement and the transactions contemplated thereby, including the merger.

You should rely only on the information contained in or incorporated by reference into this proxy statement. No one has been authorized to provide you with information that is different from that contained in or incorporated by reference into this proxy statement. This proxy statement is dated September 6, 2019 and, together with the enclosed form of proxy, is first being mailed to stockholders on or about September 6, 2019. You should not assume that the information contained in this proxy statement is accurate as of any date other than that date or, in the case of information in a document incorporated by reference, as of the date of such document, unless the information specifically indicates that another date applies. The mailing of this proxy statement to stockholders will not create any implication to the contrary.

Neither the Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the merger, passed upon the merits or fairness of the merger or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

TABLE OF CONTENTS

	Page
SUMMARY TERM SHEET RELATING TO THE MERGER	1
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER	8
SPECIAL FACTORS	12
Background of the Merger	12
Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger	21
Opinion of Duff & Phelps, Financial Advisor to the Special Committee	27
Purchaser Group Members’ Purposes and Reasons for the Merger	39
Position of the Purchaser Group as to Fairness of the Merger	40
Plans for Isramco After the Merger	43
Certain Effects of the Merger	43
Projected Financial Information	45
Financing	54
Interests of Isramco’s Directors and Executive Officers in the Merger	54
Material U.S. Federal Income Tax Consequences of the Merger	55
Regulatory Approvals	58
Delisting and Deregistration of Common Stock	58
Fees and Expenses	58
Anticipated Accounting Treatment of the Merger	59
Rights of Appraisal	59
Litigation	63
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION	64
THE PARTIES TO THE MERGER	65
Isramco, Inc.	65
Naphtha Israel Petroleum Corporation, Ltd.	65
Naphtha Holding Ltd.	65
I.O.C. – Israel Oil Company, Ltd.	65
Naphtha US Oil, Inc.	65
IMPORTANT INFORMATION REGARDING THE PURCHASER GROUP MEMBERS	65
Purchaser Group Past Transactions	71
THE SPECIAL MEETING	71
Date, Time and Place	71
Record Date and Quorum	71
Required Votes	72
Voting; Proxies; Revocation	72
Adjournments and Postponements	74
Solicitation of Proxies	74
PROPOSAL NO. 1:  THE MERGER PROPOSAL	74
THE MERGER AGREEMENT	74
Explanatory Note Regarding the Merger Agreement	74
Structure of the Merger	75
When the Merger Becomes Effective	75
Effect of the Merger on the Common Stock of Isramco and Merger Sub	75
Payment for the Common Stock in the Merger	76
Representations and Warranties	76
Conduct of Business Pending the Merger	79

Other Covenants and Agreements	81
Conditions to the Merger	85
Termination	86
Fees and Expenses	87
Amendments and Modification	87
Specific Performance	87
Governing Law; Venue; Waiver of Jury Trial	87

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Company Actions	88
PROPOSAL NO. 2 THE ADJOURNMENT PROPOSAL	88
IMPORTANT ADDITIONAL INFORMATION REGARDING ISRAMCO	88
Company Background	88
Executive Officers and Directors	89
Selected Historical Consolidated Financial Information	90
Book Value Per Share	91
Market Price of the Common Stock	91
Dividends	91
Prior Public Offerings	92
Isramco Purchases of Equity Securities	92
Security Ownership of Management and Certain Beneficial Owners	92
Transactions in Common Stock	93
Transactions Between Isramco and the Purchaser Group Members	93
AGREEMENTS WITH PURCHASER GROUP MEMBERS INVOLVING COMMON STOCK	94
Support Agreement	94
PROVISIONS FOR UNAFFILIATED STOCKHOLDERS	94
FUTURE STOCKHOLDER PROPOSALS	94
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE	95
WHERE YOU CAN FIND ADDITIONAL INFORMATION	95
ANNEX A:  AGREEMENT AND PLAN OF MERGER	A-1
ANNEX B:  OPINION OF DUFF & PHELPS, LLC	B-1
ANNEX C:  VOTING AND SUPPORT AGREEMENT	C-1
ANNEX D:  SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE	D-1

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SUMMARY TERM SHEET RELATING TO THE MERGER

This Summary Term Sheet discusses the material information regarding the merger contained in this proxy statement, but does not contain all of the information in this proxy statement that is important to your voting decision with respect to the adoption of the Merger Agreement or the other matters being considered at the special meeting. We encourage you to read carefully this entire proxy statement, its annexes and the documents referred to or incorporated by reference in this proxy statement, as this Summary Term Sheet may not contain all of the information that may be important to you. The items in this Summary Term Sheet include page references directing you to a more complete description of that topic in this proxy statement.

Throughout this proxy statement we refer to:

● Naphtha, NHL, Parent and Merger Sub as the “Purchaser Parties”;

● the Purchaser Parties and any “affiliate” (within the meaning of Rule 12b-2 under the Securities Exchange Act of 1934, as amended, referred to as the “Exchange Act”) of any of the Purchaser Parties as the “Purchaser Group” or “Purchaser Group Members”;

● Haim Tsuff, Edy Francis, Zeev Koltovskoy and Anthony James, each of whom are the officers of Isramco determined in accordance with Rule 16a-1(f) of the Exchange Act, as the “Section 16 Officers”;

● the shares of Common Stock (including the 61,679 shares directly owned by Mr. Haim Tsuff), collectively, which are not owned by the Purchaser Parties, as the “subject shares”;

● the shares of Common Stock, collectively, which are not beneficially owned by the Purchaser Group Members and the Section 16 Officers as the “unaffiliated shares”;

● the holders of Common Stock other than Purchaser Group Members and the affiliates of Isramco, including its officers and directors, as “unaffiliated stockholders”; and

● the Board’s determination that the Merger Agreement and the transactions contemplated thereby, including the merger, are advisable and fair to, and in the best interests of, Isramco and Isramco’s stockholders (other than any Purchaser Group Members and any Section 16 Officers), the Board’s approval of the Merger Agreement and the transactions contemplated thereby, including the merger; and the recommendation that the stockholders of Isramco approve the adoption of the Merger Agreement as the “Company Recommendation.”

The Parties to the Merger Agreement (Page  65 )

Isramco, Inc.
1001 West Loop South, Suite 750
Houston, Texas 77027
United States of America
Telephone: (713) 621-3882

Isramco, Inc., referred to herein as “Isramco,” the “Company,” “we,” “our” or “us,” is a Delaware corporation and an independent oil and natural gas company engaged in the exploration, development and production of oil and natural gas properties located onshore in the United States and ownership of various royalty interests in oil and gas concessions located offshore Israel. The Company also operates a well service company that provides well maintenance, workover services, well completion and recompletion services. The Company also operates a production services company that provides a full range of onshore production services U.S. oil and gas producers and a transportation company providing transport of liquefied petroleum products.

The Company’s common stock, par value $0.01 per share (“Common Stock”), is listed on the NASDAQ Capital Market under the symbol “ISRL.” On September 5 , 2019, the most recent practicable date before the printing of this proxy statement, 2,717,648 shares of Common Stock were issued and outstanding.

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Additional information about Isramco is contained in its public filings, which are incorporated by reference hereto. See “Incorporation of Certain Documents by Reference” beginning on page 95  and “Where You Can Find Additional Information” beginning on page  95 .

Naphtha Israel Petroleum Corporation, Ltd.
8, Granit Street, P. O. Box 2695
Petach Tikva, 4951407 Israel
Telephone: +972-3-922-9225

Naphtha Israel Petroleum Corporation, Ltd., referred to herein as “Naphtha,” is an Israeli public company, whose shares are listed for trading on the Tel-Aviv Stock Exchange (TLV:NFTA). The principal businesses of Naphtha are (directly and indirectly) exploration and production of oil and natural gas. Naphtha also is engaged in the field of commercial real-estate and hotel management in Israel and in Europe.

Naphtha Holding Ltd.

c/o Naphtha Israel Petroleum Corporation, Ltd.
8, Granit Street, P. O. Box 2695
Petach Tikva, 4951407 Israel
Telephone: +972-3-922-9225

Naphtha Holding Ltd., referred to herein as “NHL,” is an Israeli private company. NHL is a direct wholly owned subsidiary of Naphtha and its principal business is to hold shares of Common Stock of Isramco, of which it is the controlling stockholder.

I.O.C. – Israel Oil Company, Ltd.

c/o Naphtha Israel Petroleum Corporation, Ltd.
8, Granit Street, P. O. Box 2695
Petach Tikva, 4951407 Israel
Telephone: +972-3-922-9225

I.O.C. – Israel Oil Company, Ltd., referred to herein as “Parent,” is an Israeli private company and a direct wholly owned subsidiary of Naphtha and stockholder of Isramco. The principal businesses of Parent are (directly and indirectly) exploration and production of oil and natural gas. Parent is also engaged in the field of commercial real-estate and hotel management in Israel and in Europe.

Naphtha US Oil, Inc.

c/o Naphtha Israel Petroleum Corporation, Ltd.
8, Granit Street, P. O. Box 2695
Petach Tikva, 4951407 Israel
Telephone: +972-3-922-9225

Naphtha US Oil, Inc., referred to herein as “Merger Sub,” was incorporated under the laws of the State of Delaware and was formed by Parent solely for the purposes of effecting the merger. Merger Sub is a wholly owned subsidiary of Parent. Merger Sub has not engaged in any business other than in connection with the merger and other related transactions.

The Merger Proposal (Page 74 )

You are being asked to consider and vote upon the proposal to adopt the Merger Agreement. The Merger Agreement provides that Merger Sub will be merged with and into the Company, with the Company surviving the merger as a subsidiary of Parent and NHL, and each outstanding share of Common Stock, other than shares owned by Isramco as treasury stock, shares owned by Parent or NHL, and shares owned by the holders of Common Stock who have properly and validly perfected, and not effectively withdrawn or lost, their statutory appraisal rights under Delaware law (such shares of Common Stock referred to as “dissenting shares”), will be converted into the right to receive $121.40 in cash per share, without interest and less any required withholding taxes (the “Merger Consideration”).

If the merger is consummated, Isramco will become a privately held company, owned by Parent and NHL. Parent and NHL will be owned by Naphtha and indirectly controlled by Mr. Haim Tsuff.

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Conditions to the Merger (Page 85 )

The obligations of Isramco, on the one hand, and the Purchaser Parties, on the other hand, to consummate the merger are subject to the satisfaction (or mutual waiver by Isramco and the Purchaser Parties, if permissible under applicable law, other than the first condition below, which cannot be waived) at or before the effective time, of the following conditions:

● that holders of a majority of the outstanding shares of Common Stock (not beneficially owned by the Purchaser Group Members or Section 16 Officers) have voted in favor of adoption of the Merger Agreement (we refer to this condition as the “Majority of the Minority Stockholder Approval” requirement);

● that holders of not less than 75% of the outstanding shares of stock of the Company entitled to vote in the election of directors have voted in favor of adoption of the Merger Agreement (we refer to this condition as the “Company Stockholder Approval” requirement, and, together with the Majority of the Minority Stockholder Approval requirement, as the “Requisite Stockholder Approval” requirement); and

● that no governmental entity of any competent jurisdiction shall have enacted, issued or entered any order or law or taken any other action which is then in effect and has the effect of enjoining, restraining or otherwise prohibiting the consummation of the merger.

The obligation of Isramco to effect the merger is subject to the satisfaction or waiver by Isramco, at or before the effective time, of the following conditions:

● the continued accuracy of the representations and warranties of the Purchaser Parties in the Merger Agreement as of the closing date (except for certain representations and warranties which must remain accurate as of a specified date); and

● that each of the Purchaser Parties shall have in all material respects performed all obligations and complied with all covenants required by the Merger Agreement to be performed or complied with by it at or prior to the closing of the merger.

The obligation of the Purchaser Parties to effect the merger is subject to the satisfaction or waiver by the Purchaser Parties, at or before the effective time, of the following conditions:

● the continued accuracy of the representations and warranties of Isramco in the Merger Agreement as of the closing date (except for certain representations and warranties which must remain accurate as of a specified date);

● that Isramco shall have in all material respects performed all obligations and complied with all covenants required by the Merger Agreement to be performed or complied with by it at or prior to the effective time; and

● that no more than 8% of the outstanding shares of Common Stock as of immediately prior to the closing of the merger shall be dissenting shares.

When the Merger Will be Completed (Page 85 )

We anticipate completing the merger in the fourth quarter of 2019, subject to adoption of the Merger Agreement by Isramco’s stockholders as specified in this proxy statement, and the satisfaction of the other closing conditions.

Purposes and Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger (Page 21 )

Based in part on the unanimous recommendation of the members of a committee of independent and disinterested directors that was established by the Board (referred to as the “Special Committee”) to, among other things, evaluate and negotiate a potential transaction with the Purchase Group, the Board unanimously (with Mr. Haim Tsuff recusing himself because of his membership in the Purchaser Group) , on behalf of the Company, determined that the Merger Agreement and the transactions contemplated thereby, including the merger, are advisable and fair to, and in the best interests of, Isramco and the Isramco’s stockholders, other than the Purchaser Group and any Section 16 Officers. The Board unanimously (with Mr. Tsuff recusing himself because of his membership in the Purchaser Group) recommends

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that the stockholders of Isramco vote “FOR” the proposal to adopt the Merger Agreement, and “FOR” the proposal to adjourn the special meeting, if necessary, to ensure that any necessary supplement or amendment to the proxy statement accompanying this notice is provided to the Company’s stockholders a reasonable amount of time in advance of the special meeting or to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve adoption of the Merger Agreement, including the Majority of the Minority Stockholder Approval (the “Adjournment Proposal”). For a description of the reasons considered by the Special Committee and the Board for their recommendations, see “Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger” beginning on page 21 . For descriptions of the fairness determinations made by the Special Committee, the Board and the Purchaser Group, see “Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger” beginning on page 21  and “Special Factors—Position of the Purchaser Group as to Fairness of the Merger” beginning on page 40 .

The purpose of the merger for the Company is to enable its stockholders to realize the value of their investment in the Company through their receipt of the $121.40 in cash per share, representing a premium of approximately 18.9% over the closing price of the Common Stock of $102.10 on March 21, 2018, the last trading day prior to the public disclosure that Naphtha was in preliminary stages of evaluating the possibility of pursuing a transaction involving the acquisition of the outstanding shares of the Common Stock not already owned by Naphtha and its affiliates, and a premium of approximately 10.0% over the $110.36 purchase price per share initially offered by Naphtha, a premium of approximately 8.9% over the closing price of the Common Stock of $111.50 on May 20, 2019, the last trading day prior to the public announcement of the merger, and a premium of approximately 4.6% over the 30 trading-day average price of the Common Stock as of May 20, 2019, the last trading day prior to the public announcement of the Merger Agreement.

Opinion of Duff & Phelps, Financial Advisor to the Special Committee (See Page 27  and Annex B)

At a meeting of the Special Committee held on May 20, 2019, Duff & Phelps, LLC rendered an oral opinion, subsequently confirmed by delivery of a written opinion dated the same date, to the Special Committee to the effect that, as of such date and based upon and subject to the assumptions, qualifications and limiting conditions contained in the opinion and discussed with the Special Committee, the Merger Consideration to be received by the holders of Common Stock (other than the Purchaser Parties), was fair, from a financial point of view, to such holders (without giving effect to any impact of the merger on any particular stockholders other than in its capacity as a stockholder).

The full text of Duff & Phelps’ opinion is attached as Annex B to this proxy statement and sets forth a description of the assumptions made, procedures followed, matters considered and qualifications and limitations in rendering the opinion. Duff & Phelps’ opinion was provided for the use and benefit of the Special Committee in connection with its consideration of the merger. The opinion (i) did not address the merits of the underlying business decision to enter into the merger versus any alternative strategy or merger; (ii) did not address any transaction related to the merger; (iii) was not a recommendation as to how the Special Committee or any stockholder should vote or act with respect to any matters relating to the merger, or whether to proceed with the merger or any related transaction; and (iv) did not indicate that the Merger Consideration received is the best possibly attainable under any circumstances. The decision as to whether to proceed with the merger or any related transaction may depend on an assessment of factors unrelated to the financial analyses on which the opinion is based.

Purchaser Group Members’ Purposes and Reasons for the Merger (Page 39 )

The Purchaser Group Members believe that as a private company Isramco will have greater operating flexibility, and management will be able to more effectively concentrate on long-term growth. Moreover, Isramco will not be subject to certain obligations and constraints, and related costs, associated with having publicly traded equity securities.

Position of the Purchaser Group as to Fairness of the Merger (Page  40 )

Each of the Purchaser Group Members believes that the merger is substantively and procedurally fair to Isramco’s unaffiliated stockholders. Their belief is based on the factors described in “Special Factors—Position of the Purchaser Group as to Fairness of the Merger” beginning on page  40 .

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Certain Effects of the Merger (Page  43 )

If the conditions to the closing of the merger are either satisfied or, to the extent permitted, waived, Merger Sub will be merged with and into Isramco, the separate corporate existence of Merger Sub will cease and Isramco will continue its corporate existence under Delaware law as the surviving corporation in the merger, with all of its rights, privileges, immunities, powers and franchises continuing unaffected by the merger. Upon completion of the merger, the Common Stock, other than shares owned by Isramco as treasury stock, shares owned by Parent or NHL, and shares owned by holders of dissenting shares, will be converted into the right to receive $121.40 per share, without interest and less any required withholding taxes. Following the completion of the merger, the Common Stock will no longer be publicly traded, and stockholders (other than the stockholders of Parent and NHL through their interests in such entities) will cease to have any ownership interest in Isramco.

Treatment of Isramco Equity Awards in the Merger (Page  54 )

The Company does not have any outstanding equity awards.

Interests of Isramco’s Directors and Executive Officers in the Merger (Page  54 )

In considering the recommendations of the Special Committee and of the Board with respect to the Merger Agreement, you should be aware that, aside from Mr. Tsuff’s interests as a stockholder of Isramco, Isramco’s directors and executive officers have interests in the merger that may be different from, or in addition to, those of other stockholders of Isramco generally. In particular, Mr. Haim Tsuff, as the indirect controlling owner of Naphtha, will indirectly control Isramco following the merger. Interests of executive officers and directors that may be different from or in addition to the interests of Isramco’s stockholders include:

● A certain executive officer may receive benefits under employment agreements in the event of a termination of employment without “cause” or for “good reason” that could occur following the merger.

● Isramco’s executive officers as of the effective time of the merger will become the initial executive officers of the surviving corporation.

● Isramco’s directors and executive officers are entitled to continued indemnification and insurance coverage under the Merger Agreement, and Isramco’s directors (other than Mr. Haim Tsuff) are entitled to continued indemnification and insurance coverage under indemnification agreements.

● Members of the Special Committee are receiving compensation for their service on the Special Committee.

The Special Committee and the Board were aware of the different or additional interests described in this proxy statement and considered those interests along with other matters in recommending or approving, as applicable, the Merger Agreement and the transactions contemplated thereby.

Regulatory Matters (Page 58 )

No material federal or state regulatory approvals, filings or notices are required in connection with the merger other than the filing of this proxy statement and the related SEC Rule 13e-3 transaction statement on Schedule 13E-3 (the “Schedule 13E-3”) and the filing of a certificate of merger with the Secretary of State of the State of Delaware by the Company and Merger Sub.

Termination (Page  86 )

Isramco and Parent may terminate the Merger Agreement by mutual written consent at any time before the effective time, whether prior to or after receipt of the Requisite Stockholder Approval. In addition, either Isramco or Parent (as applicable) may terminate the Merger Agreement, subject to various exceptions described under “The Merger Agreement — Termination,” if:

● any governmental entity having competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any law or order which is then in effect or taken any other action permanently restraining, enjoining or otherwise prohibiting the consummation of the merger, and such order or other action is final and nonappealable, subject to certain exceptions;

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● the Requisite Stockholder Approval shall not have been obtained at the special meeting (after taking into account any adjournment or postponement thereof); or

● the merger has not been completed by February 27, 2020 (referred to as the “Termination Date”), subject to certain exceptions.

Parent may terminate the Merger Agreement if:

● there is a breach or failure of any representation, warranty, covenant or agreement of the Company, which breach or failure has given rise to or would reasonably be likely to give rise to the failure of a condition to the Purchaser Parties’ obligations to complete the merger, and such condition would not be capable of being satisfied prior to the Termination Date, or if capable of being satisfied, the failure of the condition is not cured within 30 days following receipt of written notice from Parent;

● prior to obtaining the Requisite Stockholder Approval, the Board or an independent committee of the Board (including the Special Committee) (an “Independent Committee”) shall have made a Change in Recommendation; or

● if at any time on or after the earlier of (A) the 14^th day following any duly held meeting of the Company’s stockholders (after taking into account any adjournment or postponement thereof) and (B) the date that is two Business Days (as such term is defined in the Merger Agreement) prior to the Termination Date, more than 8% of the outstanding shares of Common Stock would be dissenting shares if the closing of the merger were to occur at such time, provided that such termination right shall expire 10 Business Days (as such term is defined in the Merger Agreement) after the date on which such right first became exercisable.

Isramco may terminate the Merger Agreement if there is a breach or failure of any representation, warranty, covenant or agreement of the Purchaser Parties, which breach or failure has given rise to or would reasonably be likely to give rise to the failure of a condition to the Company’s obligations to complete the merger, and such condition would not be capable of being satisfied prior to the Termination Date, or if capable of being satisfied, the failure of the condition is not cured within 30 business days following receipt of written notice from the Company.

Expense Reimbursement Provisions (Page 87 )

Isramco is required to pay Parent an amount equal to $1.5 million (referred to as the “Isramco Expense Reimbursement”) under the following circumstances:

● in the event that Parent terminates the Merger Agreement following the Board or Independent Committee’s Change in Recommendation (as defined below); or

● in the event that Parent terminates the Merger Agreement and at the time of such termination, more than 10% of the outstanding shares of Common Stock are dissenting shares.

Parent is required to pay Isramco an amount equal to $1.5 million (referred to as the “Parent Expense Reimbursement”) under the following circumstances:

● in the event that the Merger Agreement is terminated by Isramco  as a result of a breach or failure of any representation, warranty or covenant of any Purchaser Party set forth in the Merger Agreement, or is otherwise terminated when terminable by Isramco for the foregoing reason; or

● in the event that the Merger Agreement is terminated by either Isramco or Parent in the event the Requisite Stockholder Approval shall not have been obtained at a special meeting of the stockholders (after taking into account any adjournment or postponement thereof) at a time when all of the mutual conditions to parties’ obligations to effect the merger and the conditions to the Purchaser Parties’ obligations to effect merger have been waived or satisfied (other than those conditions that by their nature are to be satisfied at the closing of the merger).

Specific Performance (Page 87 )

Under certain circumstances, Isramco and the Purchaser Parties are entitled to specific performance of the terms of the Merger Agreement, in addition to any other remedy at law or equity.

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Financing (Page 54 )

Isramco and the Purchaser Parties estimate that the total amount of funds required to complete the merger and related transactions and pay related fees and expenses will be approximately $100 million. The merger is not subject to any financing condition and the Purchaser Parties intend to fund this amount from cash on hand (as further described in “Special Factors—Financing”).

Material U.S. Federal Income Tax Consequences of the Merger (Page  55 )

If you are a U.S. Holder (as defined below), the receipt of cash in exchange for Common Stock pursuant to the merger will generally be a taxable transaction for U.S. federal income tax purposes. You are encouraged to consult your own tax advisors regarding the particular tax consequences to you of the exchange of Common Stock for cash pursuant to the merger in light of your particular circumstances (including the application and effect of any state, local or foreign income and other tax laws).

The Special Meeting (Page 71 )

The special meeting will be held at the Company’s corporate headquarters located at 1001 West Loop South, Suite 750, Houston, Texas 77027, USA, on October 22 , 2019, beginning at 9:00 a.m. local time.

Record Date and Quorum (Page  71 )

The holders of record of the Common Stock as of the close of business on September 5 , 2019 (the record date for determination of stockholders entitled to notice of and to vote at the special meeting) are entitled to receive notice of and to vote at the special meeting.

The presence at the special meeting, in person or by proxy, of the holders of a majority of shares of Common Stock issued and outstanding on the record date and entitled to vote will constitute a quorum, permitting the Company to conduct its business at the special meeting.

Required Votes (Page  72 )

For the Company to complete the merger, under Delaware law, stockholders holding at least a majority in aggregate voting power of the Common Stock outstanding at the close of business on the record date must vote “FOR” the adoption of the Merger Agreement. However, pursuant to the Company’s certificate of incorporation, holders of not less than 75% of the outstanding shares of stock of the Company entitled to vote in the election of directors must vote “FOR” the adoption of the Merger Agreement. In addition, it is a non-waivable condition to the consummation of the merger that stockholders holding at least a majority of shares of outstanding Common Stock at the close of business on the record date that are not owned by the Purchaser Group Members or Section 16 Officers must vote “FOR” the adoption of the Merger Agreement.

Litigation (Page  63 )

As of the date of this proxy statement, the Company is not aware of any pending litigation against the Company and/or its board of directors relating to the merger.

Dissenters’ Rights of Appraisal (Page 59  and Annex D)

Isramco stockholders who do not vote in favor of adoption of the Merger Agreement, who properly demand appraisal of their shares of Common Stock and who otherwise comply with all the requirements of Section 262 of the General Corporation Law of the State of Delaware (the “DGCL”) will be entitled to seek appraisal for, and obtain payment in cash for the judicially determined fair value of, their shares of Common Stock in lieu of receiving the Merger Consideration if the merger is completed. In addition to not voting in favor of the merger, the stockholder must deliver to Isramco a written demand for appraisal of such stockholder’s shares prior to the vote on the Merger Agreement and continue to hold such shares until the consummation of the merger.

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following questions and answers address briefly some questions you may have regarding the special meeting, the Merger Agreement and the merger. These questions and answers may not address all questions that may be important to you as a stockholder of Isramco. Please refer to the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement.

1.     Q:     Why am I receiving these materials?

A: On May 20, 2019, Isramco entered into the Merger Agreement pursuant to which, among other things, Merger Sub, a direct wholly owned subsidiary of Parent, will merge with and into Isramco, with Isramco continuing as the surviving corporation in the merger and a subsidiary of Parent and NHL. The Board is furnishing this proxy statement and form of proxy card to the holders of Common Stock in connection with the solicitation of proxies in favor of the proposal to adopt the Merger Agreement and the Adjournment Proposal at the special meeting or at any adjournments or postponements of the meeting.

This proxy statement, which you should read carefully, contains important information about the merger, the Merger Agreement, the special meeting and the other matter to be voted on at the meeting. The enclosed materials allow you to submit a proxy to vote your shares of Common Stock without attending the special meeting and to ensure that your shares of Common Stock are represented and voted at the special meeting.

2.     Q:     What will I receive in the merger?

A: If the merger is completed and you do not properly exercise your appraisal rights, you will be entitled to receive $121.40 in cash, without interest and less any required withholding taxes, for each share of Common Stock that you own. You will not be entitled to receive shares in the surviving corporation, Parent, Naphtha or NHL.

3.     Q:     When and where is the special meeting?

A: The special meeting will be held at 9:00 a.m. (local time) on October 22 , 2019, at our corporate headquarters located at 1001 West Loop South, Suite 750, Houston, Texas 77027, USA.

4.     Q:     Who is entitled to vote at the special meeting?

A: Record holders of our Common Stock as of the close of business on September 5 , 2019, referred to as the “record date,” are entitled to vote at the special meeting. As of the record date and as of the date of this proxy statement, 2,717,648 shares of Common Stock were outstanding. Each holder of record of Common Stock on the record date will be entitled to one vote for each share on all matters to be voted on at the special meeting.

5.     Q:     What matters will be voted on at the special meeting?

A: You will be asked to consider and vote on the following proposals:

(1) to adopt the Merger Agreement; and

(2) to approve the Adjournment Proposal

6.     Q:     What vote of our stockholders is required to adopt the Merger Agreement?

A: For the Company to complete the merger, under Delaware law, stockholders holding at least a majority in aggregate voting power of Common Stock outstanding at the close of business on the record date must vote “FOR” adoption of the Merger Agreement. However, pursuant to the Company’s certificate

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of incorporation, holders of not less than 75% of the outstanding shares of stock of the Company entitled to vote in the election of directors must vote “FOR” the adoption of the Merger Agreement. In addition, it is a non-waivable condition to completion of the merger that stockholders holding at least a majority of the outstanding shares of the Common Stock at the close of business on the record date, excluding shares beneficially owned by the Purchaser Group Members or any Section 16 Officer, vote “FOR” adoption of the Merger Agreement.

7.     Q:     What vote of our stockholders is required to approve the Adjournment Proposal?

A: The adjournment or postponement of the special meeting, if necessary or appropriate, to ensure that any necessary supplement or amendment to the proxy statement is provided to Company stockholders a reasonable amount of time in advance of the special meeting or to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt the Merger Agreement will be approved if holders of the majority of the issued and outstanding shares of the Common Stock, present in person or represented by proxy and entitled to vote at the special meeting vote in favor of such proposal.

8.     Q:     How does the Board recommend that I vote?

A: Based in part on the unanimous recommendation of the Special Committee, the Board (other than Mr. Tsuff, who recused himself because of his membership in the Purchaser Group) recommends that our stockholders vote:   “FOR” adoption of the Merger Agreement.   “FOR” the Adjournment Proposal.   See “Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger” beginning on page 21 for a discussion of the factors that the Special Committee and the Board considered in deciding to recommend and/or approve, as applicable, the Merger Agreement. See also “Special Factors—Interests of Isramco’s Directors and Executive Officers in the Merger” beginning on page 54.

9.     Q:     What effects will the Merger have on Isramco?

A: The Common Stock is currently registered under the Exchange Act, and is listed on the NASDAQ Capital Market under the symbol “ISRL.” As a result of the merger, Isramco will cease to be a publicly traded company and will be owned by Parent and NHL.   Following the consummation of the merger, the registration of the Common Stock and our reporting obligations with respect to the Common Stock under the Exchange Act will be terminated upon filings with the Securities and Exchange Commission (“SEC”). In addition, upon the consummation of the merger, the Common Stock will no longer be listed on any stock exchange.

10.     Q:   What will happen if the Merger is not consummated?

A: If the merger is not consummated for any reason, Isramco’s stockholders will not receive any payment for their shares of Common Stock in connection with the merger. Instead, Isramco will remain a public company and Isramco‘s Common Stock will continue to be listed and traded on the NASDAQ Capital Market. Under specified circumstances, Isramco will be required to pay Parent the Isramco Expense Reimbursement, which is an amount equal to $1.5 million, or Parent will be required to pay Isramco the Parent Expense Reimbursement, which is an amount equal to $1.5 million, if the Merger Agreement is terminated.

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11.     Q:   What do I need to do now?

A: We urge you to read this proxy statement carefully, including its annexes and the documents referred to as incorporated by reference in this proxy statement, and consider how the merger affects you.

If you are a stockholder of record, you can ensure that your shares are voted at the special meeting by submitting your proxy via:

• telephone, using the toll-free number listed on your proxy and voting instruction card;

• the Internet, at the address provided on your proxy and voting instruction card; or

• mail, by completing, signing, dating and mailing your proxy and voting instruction card and returning it in the envelope provided.

If you hold your shares in “street name” through a broker, bank or other nominee, you should follow the directions provided by it regarding how to instruct it to vote your shares.

12.     Q:   What will happen if I abstain from voting or fail to vote on the proposals presented at the special meeting?

A: If you vote “ABSTAIN” by proxy or in person at the special meeting, it will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement. For the Adjournment Proposal, we will treat abstentions as shares present or represented and entitled to vote on the proposal. Accordingly, an abstention on this proposal will have the same effect as a vote “AGAINST” the proposal.   If you fail to submit a proxy and do not attend the special meeting, your shares of Common Stock will not be voted, and will have the same effect as voting “AGAINST” the proposal to adopt the Merger Agreement, but will have no effect on the Adjournment Proposal.

13.     Q:   Can I change my vote after I have delivered my proxy?

A: Yes. If you are a stockholder of record, you can change your vote at any time before your proxy is voted at the special meeting by properly delivering a later-dated proxy either by mail, the Internet or telephone or attending the special meeting in person and voting (but simply attending the special meeting will not cause your proxy to be revoked). You also may revoke your proxy by delivering a notice of revocation to the Company’s corporate secretary prior to the vote at the special meeting. If your shares of Common Stock are held in street name, you must contact your broker, dealer, commercial bank, trust company or other nominee to revoke your proxy.

14.     Q:   Should I send in my stock certificates or other evidence of ownership now?

A: No. After the merger is completed, you will be sent a letter of transmittal with detailed written instructions for exchanging your shares of Common Stock for the per share Merger Consideration. If your shares of Common Stock are held in “street name” by your broker, bank or other nominee, you may receive instructions from your broker, bank or other nominee as to what action, if any, you need to take to effect the surrender of your “street name” shares in exchange for the per share Merger Consideration. Do not send in your certificates now.

15.     Q:   What happens if I sell my shares of Common Stock before completion of the merger?

A: If you transfer your shares of Common Stock, you will have transferred your right to receive the Merger Consideration in the merger. In order to receive the Merger Consideration, you must hold your shares of Common Stock through completion of the merger.

The record date for stockholders entitled to vote at the special meeting is earlier than the date on which the merger will be consummated. As such, if you transfer your shares of Common Stock after the record date but before the special meeting, you will have transferred your right to receive the Merger Consideration in the merger, but retained the right to vote at the special meeting.

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16.     Q:   Who can help answer my other questions?

A: If you have more questions about the merger, or require assistance in submitting your proxy or voting your shares or need additional copies of the proxy statement or the enclosed proxy and voting instruction card(s), please contact D.F. King & Co., Inc., which is acting as the proxy solicitation agent and information agent in connection with the merger.

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, NY 10005

Banks and Brokers Call: (212) 269-5550 

All Others Call Toll-Free: (866) 745-0267

Email: isramco@dfking.com

If your broker, bank or other nominee holds your shares, you can also call your broker, bank or other nominee for additional information.

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SPECIAL FACTORS 

Background of the Merger 

Over the course of approximately eleven months, the Special Committee held numerous meetings (telephonically and in person) related to the merger and the other transactions contemplated thereby and led negotiations with the Purchaser Group, and the following chronology summarizes the key events and contacts that led to the signing of the Merger Agreement. It does not, however, purport to catalogue every conversation among the Special Committee, members of our management or the Special Committee’s representatives and other parties with respect to the merger.

Naphtha is an Israeli public company whose shares are listed for trading on the Tel Aviv Stock Exchange. Naphtha, its board of directors and its management team regularly review their investments and their corporate structure. Naphtha holds controlling interests in an Israeli public entity (Isramco Negev 2 Limited Partnership (“Isramco Negev 2”)) and in the Company. In November 2017, Mr. Haim Tsuff, Chairman of the Board of each of Naphtha, Equital, JOEL, Isramco Negev 2 and Isramco, Director of each of Parent, NHL and Merger Sub, and Co-Chief Executive Officer and President of Isramco, Mr. Eran Saar, Chief Executive Officer of Naphtha, and Mrs. Noa Lendner, General Counsel and Corporate Secretary of Naphtha, held a meeting with Baker Botts L.L.P (“Baker Botts”) to discuss preliminary U.S. legal considerations in the event that Naphtha were to decide to pursue a transaction to acquire the shares of the Company not already owned by the Purchaser Parties.

On March 6, 2018, Naphtha formally retained Baker Botts to serve as its U.S. legal counsel in connection with the potential transaction.

On March 12, 2018, representatives of Naphtha held a meeting with representatives of Baker Botts to discuss U.S. legal considerations related to a potential transaction, including Naphtha’s U.S. disclosure obligations should the Naphtha board determine to formally evaluate a potential transaction involving the Company.

On March 20, 2018, the Naphtha board held a meeting at which it determined to formally instruct its management to evaluate a potential transaction involving the Company.

On March 21, 2018, Naphtha filed a disclosure with the Tel Aviv Stock Exchange disclosing that it and certain of its affiliates were in the preliminary stages of evaluating the possibility of pursuing a transaction involving the acquisition of the unaffiliated shares of the Company or other going-private transactions involving the Company.

On March 21, 2018, Naphtha and certain of its affiliates filed an amendment to their Schedule 13D disclosing that they were in the preliminary stages of evaluating the possibility of pursuing a transaction involving the acquisition of the unaffiliated shares of the Company or other going-private transactions involving the Company.

On May 24, 2018, Naphtha delivered a letter to our Board indicating that its board of directors had approved engaging with our Board to explore the possibility of a transaction involving the acquisition by Naphtha for cash of all of the outstanding shares of the Company’s common stock not already owned by Naphtha. In this section, this letter from Naphtha is sometimes referred to as the “indication of interest” and the transaction described in such indication of interest is sometimes referred to as the “potential transaction.” The indication of interest stated that Naphtha and its applicable affiliates were only interested in acquiring the unaffiliated shares, and that they had no interest in selling their holdings in the Company to a third party and did not expect, in their capacity as stockholders of the Company, to vote in favor of any sale, merger or other similar transaction involving any third party. The indication of interest further advised our Board that Naphtha had expected our Board to appoint a special committee of independent directors to engage in the process and make a recommendation to our Board with respect to the potential transaction and that Naphtha had engaged Baker Botts as its U.S. legal advisor in connection with the potential transaction. The indication of interest included a copy of a draft confidentiality agreement for the Company to sign in connection with the potential transaction. The indication of interest did not discuss any pricing or economic terms with respect to any potential transaction.

On June 5, 2018, our Board (other than Mr. Tsuff, who recused himself) met telephonically to discuss the indication of interest. Following discussion, our Board concluded that it was in the best interests of the Company and the Company’s stockholders, and specifically, the unaffiliated stockholders, to form a special committee of independent directors to review, evaluate and negotiate a potential transaction. Our Board then created the Special Committee consisting of Messrs. Max Pridgeon, Asaf Yarkoni and Nir Hasson. The Special Committee was authorized to retain independent

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legal and financial advisors, to negotiate on behalf of the stockholders and to take all such other actions as the Special Committee considered necessary or appropriate to carry out its mandate.

Following the formation of the Special Committee, during the remainder of June and the first week of July, the Special Committee telephonically interviewed numerous law firms, some of whom the Special Committee invited to make written proposals to act as the Special Committee’s independent legal advisor. During this period in which the Special Committee interviewed potential independent legal advisors, Mr. Anthony James, our General Counsel and Corporate Secretary, in consultation with the Special Committee, reviewed the form confidentiality agreement Naphtha included in the indication of interest, on behalf of the Company.

On July 9, 2018, after completing its review process of potential independent legal advisors, including reviewing written proposals from each law firm invited to make such proposals, the Special Committee selected Norton Rose Fulbright US, LLP (“NRF”) to serve as its independent legal advisor.

Following NRF’s engagement as independent legal advisor to the Special Committee through the end of July, NRF assumed primary responsibility for reviewing and negotiating the form confidentiality agreement with representatives from Baker Botts.

On August 3, 2018, the Company executed and delivered the confidentiality agreement to Naphtha, which included “standstill” and indemnification provisions which the Special Committee had requested.

On August 8, 2018, representatives from Baker Botts and NRF met telephonically to discuss the status of the potential transaction. Baker Botts indicated that Naphtha was still in the process of evaluating whether it would make a proposal. NRF indicated that the Special Committee intended to begin considering potential independent financial advisors.

Following the earlier telephonic meeting, the Special Committee and representatives from NRF met telephonically on August 8, 2018, to discuss, among other things, the process for the selection of an independent financial advisor. During the remainder of August through the first week of October, the Special Committee telephonically interviewed numerous financial firms, some of whom the Special Committee invited to make a written proposal, to act as the Special Committee’s independent financial advisor.

On October 4, 2018, representatives from Baker Botts and NRF met telephonically to discuss the status of the potential transaction. During that meeting, NRF advised Baker Botts that the Special Committee was fully committed to considering a potential transaction and intended to imminently engage an independent financial advisor. Later that day, Baker Botts met telephonically with Mr. James to inform Mr. James that, given other competing year-end priorities, Naphtha was unlikely to submit a proposal in connection with the potential transaction for at least another month or more.

On October 5, 2018, after completing its review process of potential independent financial advisors, including reviewing written proposals from each financial firm invited to make such proposals, the Special Committee selected Duff & Phelps Securities, LLC (“DPS”) and Duff & Phelps, LLC (“DPLLC” and, together with DPS, “Duff & Phelps”) to serve as its independent financial advisor. The Special Committee engaged Duff & Phelps based on Duff & Phelps’ qualifications, reputation, experience in the valuation of businesses and their securities, and its experience in valuing companies in the oil and gas industry. As a leading global independent provider of financial advisory and investment banking services, Duff & Phelps is regularly engaged in the valuation of businesses and securities and the preparation of opinions in connection with mergers, acquisitions, spin-offs, financings, and other strategic transactions (including “going-private” transactions like the Merger). In connection with Duff & Phelps’ engagement, the Special Committee requested that Duff & Phelps prepare and submit a preliminary report on the value of the Company to the Special Committee.

From its engagement through the last week of November, Duff & Phelps worked on a preliminary analysis of the potential valuation of the Company for the Special Committee. Representatives from Duff & Phelps conducted significant financial due diligence on the various segments of the Company, including multiple telephonic meetings with Mr. Edy Francis, our Co-Chief Executive Officer and Chief Financial Officer, and Mr. James.

On November 26, 2018, Duff & Phelps submitted preliminary findings on the potential valuation of the Company to the Special Committee, including an update on publicly available market conditions, preliminary valuation methodologies and related questions and a preliminary analysis of the historical trading range of the Common Stock. Later that day,

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representatives from Duff & Phelps met telephonically with the Special Committee and representatives from NRF to discuss such preliminary findings. Duff & Phelps noted the difficulty in providing an appropriate range of values for the Company given the uncertainty surrounding the outcome of the arbitration proceedings related to the Company’s overriding royalty interests in the Tamar and Dalit gas fields (collectively the “Tamar Field”) offshore Israel and the potential effects on the Company’s profitability. For additional information regarding these proceedings, see the disclosure related to the Tamar Field arbitration set forth in the Legal Proceedings section included in Part I, Item 3 of our Annual Report on Form 10-K for the year ended December 31, 2018. Additionally, Duff & Phelps advised the Special Committee that it needed additional information to properly assess the Company’s projections of oil and gas production in the Tamar Field. For additional information regarding these projections, see Special Factors—Projected Financial Information” beginning on page 45 .

On January 7, 2019, the Naphtha board met to consider whether to make a proposal with respect to a potential transaction. At the meeting, the Naphtha board approved making an offer to the Special Committee, which was delivered to the Special Committee the following day.

On January 8, 2019, the Special Committee received a written non-binding proposal from Naphtha to pursue a potential negotiated acquisition of the subject shares for $110.36 per share in cash (the “Initial Proposal”). The Initial Proposal reflected a premium of 11.53% over the closing price of the Common Stock on March 20, 2018, the date prior to Naphtha’s disclosure filed with the Tel Aviv Stock Exchange that it was in the preliminary stages of evaluating the possibility of pursuing a potential transaction, and an 8.09% premium to the closing share price on March 21, 2018, following which Naphtha also provided such disclosure in an amendment to its Schedule 13D. The Initial Proposal stated, among other things, that Naphtha would not move forward with the potential transaction unless it was approved by the Special Committee and that the transaction would be subject to a non-waivable condition requiring approval of holders of a majority of the unaffiliated shares. In addition, the Initial Proposal stated that Naphtha and its affiliates were only interested in acquiring the subject shares, that they had no interest in selling their holdings in the Company to a third party, and that they did not expect, in their capacity as stockholders of the Company, to vote in favor of any sale, merger or other similar transaction involving any third party. Prior to the Initial Proposal, there had been no discussions or communications between the Company or the Special Committee (or their advisors), on the one hand, and Naphtha or its advisors, on the other, regarding the economic terms or pricing of a potential transaction.

On January 9, 2019, representatives of each of Baker Botts and NRF discussed the Initial Proposal and preliminary process considerations. Representatives of Baker Botts also informed NRF that Naphtha would be making the Initial Proposal public by an amendment to its Schedule 13D, which Naphtha filed with the SEC later that day.

On January 10, 2019, the Special Committee, along with representatives from each of NRF and Duff & Phelps, met telephonically to discuss the material terms of the Initial Proposal. The Special Committee and its advisors discussed various financial analyses performed by Duff & Phelps in its presentation to the Special Committee, including a preliminary analysis of the historical trading range of the Common Stock and a preliminary analysis of the premiums paid in selected merger and acquisition transactions announced since January 1, 2016, involving a majority stockholder acquiring the remaining shares in the applicable company. The Special Committee and its advisors discussed the assumptions underlying those methodologies and the results of such analyses in comparison to the Initial Proposal. Duff & Phelps also informed the Special Committee that its preliminary financial analyses expressed some uncertainties that it had yet to resolve. The Special Committee determined that upon its initial review, the price of $110.36 per share appeared to undervalue the Company. The Special Committee also reviewed potential responses to the Initial Proposal with its advisors. Ultimately, the Special Committee determined the appropriate course of action was for Duff & Phelps to obtain additional information to help resolve the open issues identified in its preliminary financial analyses of the Company before responding to the Initial Proposal and to gather insight into the assumptions and methodologies used by Naphtha in formulating its internal valuation of the Company. The Special Committee also discussed whether it was appropriate or useful to reach out to other potential investors in connection with a potential acquisition of the Company or the subject shares. Given the statement by Naphtha in the Initial Proposal that Naphtha and its affiliates were interested only in acquiring the subject shares, and that they were not interested in selling their shares of Common Stock to a third party and did not expect, in their capacity as stockholders of the Company, to vote in favor of any sale, merger or other similar transaction involving any third party, Duff & Phelps was of the view, and the Special Committee, after discussion with its advisors, agreed that, based on the statement from Naphtha, the fact that any potential purchaser would only be able to acquire the unaffiliated shares, the limited trading volume of the Common Stock, and the current and historical market prices for the Common Stock, any efforts to reach out to other third parties to determine whether those third parties might be interested in an acquisition of the Company or the unaffiliated shares would be futile and not

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a prudent use of Company resources. The Special Committee, in consultation with its advisors, determined that the more prudent approach instead would be to obtain the most favorable price that could be obtained for the unaffiliated shares through negotiations with the Purchaser Group.

On January 14, 2019, representatives from Baker Botts and representatives from NRF met telephonically to discuss the Special Committee’s preliminary assessment of the Initial Proposal. Representatives from NRF conveyed to Baker Botts that it was requesting certain information to assist Duff & Phelps in its assessment of the Company and the Initial Proposal. Following that meeting, through Baker Botts, representatives from Naphtha agreed to provide a presentation to the Special Committee and its advisors that would clarify the assumptions and methodologies used by Naphtha in formulating its internal valuation of the Company and answer any questions the Special Committee and its advisors may have in connection with their valuation analysis of the Company. The Special Committee and its advisors agreed to schedule a meeting for January 29, 2019 to discuss this presentation.

On January 22, 2019, Naphtha provided the Special Committee and its advisors with a draft of Naphtha’s presentation for the January 29 meeting. The presentation provided additional detail regarding the assumptions and methodologies used by Naphtha in formulating its internal valuation of the Company.

On January 27, 2019 (using a presentation dated January 25, 2019) and January 28, 2019, Duff & Phelps made preliminary presentations to the Special Committee. The January 25, 2019 presentation contained, among other things, an update on publicly available market conditions, a review of the Initial Proposal, and a preliminary financial analysis of the Company utilizing a sum-of-the parts analysis and the January 28, 2019 presentation contained, among other things, an update to the net debt and SG&A figures utilized in the equity value calculations, based on Naphtha’s responses to Duff & Phelps’ written questions. From January 24, 2019 through January 28, 2019, after reviewing the draft presentation, representatives from Duff & Phelps, at the direction of the Special Committee, submitted written questions to Naphtha regarding the draft presentation and their independent financial review of the Company. Naphtha subsequently provided written responses to Duff & Phelps’ written questions.

On January 29, 2019, the Special Committee and representatives from each of NRF and Duff & Phelps met telephonically with representatives of Naphtha, including Mr. Saar, Mr. Eran Lendner, Vice President of Business Development of Naphtha, Mr. Eitan Volach, Director of Finance of Naphtha, and representatives of Baker Botts, to discuss Naphtha’s presentation, Duff & Phelps’ written questions and Naphtha’s written responses thereto. During the meeting the parties discussed various matters including the arbitration proceedings related to the Tamar Field, the Company’s projections related to production of Tamar Field, and public companies similarly situated to the Company.

On January 31, 2019, the Special Committee held a telephonic meeting, which representatives from each of NRF and Duff & Phelps attended, to discuss the Special Committee’s response to the Initial Proposal in light of the January 29, 2019 meeting with Naphtha. Representatives of Duff & Phelps indicated to the Special Committee that they still had open questions regarding their financial analysis of the Company and the Initial Proposal. Specifically, Duff & Phelps needed to conduct additional diligence regarding the potential financial impact of the arbitration proceedings related to the Tamar Field and the Company’s projections related to production in the Tamar Field. The Special Committee requested that representatives from Duff & Phelps reach out to representatives from Naphtha to ask for additional information needed for Duff & Phelps to resolve these open issues. Representatives from NRF also suggested that representatives from Duff & Phelps discuss the arbitration proceedings related to the Tamar Field with Gornitzky & Co (“Gornitzky”), the Israeli law firm representing the Company in the arbitration proceedings related to the Tamar Field. Later that day, at the direction of the Special Committee, representatives from Duff & Phelps, along with Mr. Asaf Yarkoni, reached out to representatives from Naphtha regarding these open matters in their financial analysis of the Company.

During the week of February 3, 2019, representatives from Naphtha provided representatives from Duff & Phelps with additional documents related to the Company’s projections related to production of the Tamar Field. Representatives from NRF and Duff & Phelps also discussed the arbitration proceedings related to the Tamar Field with Gornitzky. Although Duff & Phelps determined the additional documents regarding the Tamar Field were sufficient for the purposes of its financial analysis, after further discussing the arbitration proceedings related to the Tamar Field with representatives from NRF, Duff & Phelps recommended to the Special Committee that because Gornitzky was affiliated with both the Company and Naphtha in the arbitration proceedings related to the Tamar Field, the Special Committee should engage independent Israeli counsel to review Gornitzky’s assessment of the matter. Following this recommendation, the Special Committee engaged Pearl Cohen Zedek Latzer Baratz LLP (“Pearl Cohen”) to advise the

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Special Committee on the arbitration proceedings related to the Tamar Field and other Israeli legal matters in connection with the potential transaction.

On February 11, 2019, the Special Committee and representatives from each of Pearl Cohen, Duff & Phelps and NRF met telephonically with representatives from Gornitzky for the purpose of allowing representatives from Pearl Cohen to discuss the arbitration proceedings related to the Tamar Field with representatives from Gornitzky in order for Pearl Cohen to independently assess Gornitzky’s analysis.

On February 13, 2019, the Special Committee held a telephonic meeting, which representatives from each of Pearl Cohen, Duff & Phelps and NRF attended, for the purpose of allowing representatives from Pearl Cohen to debrief the Special Committee and its advisors on their analysis of the arbitration proceedings related to the Tamar Field. During the meeting, representatives from Pearl Cohen advised the Special Committee and its advisors that they were largely in agreement with Gornitzky regarding the likely results of the proceedings. Based on Pearl Cohen’s assessment, representatives from Duff & Phelps indicated to the Special Committee that they had sufficient information to move forward with their valuation analysis of the Company.

On February 17, 2019, after Duff & Phelps updated its financial analysis of the Company, the Special Committee held a telephonic meeting, which representatives from Duff & Phelps and NRF attended to review and discuss Duff & Phelps’ financial analysis and a potential response to the Initial Proposal. Representatives from Duff & Phelps discussed with the Special Committee certain assumptions and valuation methodologies contained in its valuation analysis of the Company and the Initial Proposal. The Special Committee then discussed the longer-term prospects of the Company, including the uncertainty regarding the results of the arbitration proceedings related to the Tamar Field and the Company’s projections regarding production in the Tamar Field. The Special Committee also considered, among other things, how the Initial Proposal compared to the current and historical trading price of the Common Stock, that the Initial Proposal would provide the Company’s unaffiliated stockholders with certainty of value and liquidity, that the Initial Proposal likely represented the starting point for negotiations and that the final price per share at which Naphtha may offer could be significantly higher. In addition, the Special Committee, after discussions with its advisors, concluded that an acquisition of the Company or the unaffiliated shares by a third party was not viable due to the fact that Naphtha and its affiliates would be required to sell their ownership interest in the Company (which Naphtha had stated that they were unwilling to do) and a sale of the unaffiliated shares to a third party would be highly improbable without the cooperation of Naphtha. After discussion and taking into account the foregoing, the Special Committee determined that the Initial Proposal’s offer of $110.36 per share undervalued the Company and that Naphtha would likely increase its offer price. The Special Committee weighed the advantages and disadvantages of various approaches to formulating a response (or no response) to the Initial Proposal. The Special Committee determined to make a counterproposal to Naphtha. In weighing these advantages and disadvantages, the Special Committee considered both making no response to the Initial Proposal and rejecting the Initial Proposal without making a counteroffer, but concluded, after taking into account, among other factors, the limited trading volume of the Common Stock, the Special Committee’s familiarity and understanding of the Company’s business and competitive dynamics impacting the Company, the duration and tenor of negotiations since the Initial Proposal, and the uncertainty concerning the Company’s financial performance and prospects, that responding with a counterproposal would be in the best interests of the Company and the unaffiliated stockholders. The Special Committee resolved to further consider Duff & Phelps’ financial analysis and deliberate on the Initial Proposal and possible counterproposal.

On February 20, 2019, the Special Committee held a telephonic meeting, which representatives from each of Duff & Phelps and NRF attended, to review and discuss a counterproposal. The Special Committee discussed issues, which Duff & Phelps identified in its analysis, with respect to the various assumptions and valuation methodologies used by Naphtha in its internal valuation of the Company and discussed with representatives from Duff & Phelps the magnitude of such issues and the strength of the Special Committee’s potential criticism of such valuation methodologies and potential alternative assumptions and valuation methodologies the Special Committee could suggest. Specifically, representatives from Duff & Phelps discussed with the Special Committee that (i) Naphtha’s internal valuation analysis omitted potential tax advantages Naphtha might realize in connection with a potential transaction and (ii) Duff & Phelps initially disagreed with Naphtha’s internal valuation analysis with respect to selected public companies used by Naphtha to formulate the various discount rates used in discounting the Company’s financial projections for each of the Company’s segments, which could result in a lower valuation of the Company. The Special Committee further considered with its advisors what price for the subject shares to include in its counterproposal. The Special Committee resolved to further review Duff & Phelps’ financial analysis of the Company, the Initial Proposal and to continue to consider its options.

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On February 21, 2019, the Special Committee held a telephonic meeting, which representatives from each of Duff & Phelps and NRF attended, to finalize the price to include in its counterproposal. After considering its options, the Special Committee determined to make a counterproposal that Naphtha and its affiliates acquire the subject shares for $145.00 per share in cash. The Special Committee determined that even though such price was significantly higher than what Naphtha was likely to accept, based on the views of Naphtha’s assumptions and internal valuation methodologies discussed with Duff & Phelps in the February 20, 2019 telephonic meeting, counter-proposing with such a high offer could be an effective negotiating tactic to elicit an increased offer price from Naphtha. As part of that negotiating strategy, various arguments were developed to support the counterproposal, including (i) the potential tax advantages to Naphtha in connection with the potential transaction, and (ii) the characteristics regarding selected public companies used by Duff & Phelps in formulating an internal discount rate with respect to the Company’s financial projections. That same day, in accordance with directives of the Special Committee, representatives from Duff & Phelps conveyed by email the principal terms of the Special Committee’s counterproposal to Baker Botts along with an assessment of the key issues identified by the Special Committee with the assumptions and valuation methodologies Naphtha used in its internal valuation of the Company.

On February 27, 2019, the Special Committee and representatives from each of NRF and Duff & Phelps met telephonically with representatives of Naphtha and representatives of Baker Botts, to discuss the issues with Naphtha’s assumptions and internal valuation methodologies identified by representatives of Duff & Phelps in their email to representatives from Baker Botts. The purpose of this discussion was for Duff & Phelps to help Naphtha’s representatives understand, from a technical perspective, the potential reasons for the valuation gap between Naphtha’s internal valuation analysis of the Company and the Special Committee’s counterproposal, including with respect to the arguments noted above.

On February 28, 2019, representatives from Baker Botts, on behalf of Naphtha, emailed representatives from Duff & Phelps requesting that (i) the Special Committee revisit its analysis on some of the issues identified by representatives from Duff & Phelps in their email conveying the Special Committee’s counterproposal as it relates to perceived tax advantages to Naphtha in connection with the potential transaction, (ii) Duff & Phelps provide additional information with respect to the cost of capital used in Duff & Phelps’ analysis, and (iii) the Special Committee revise its counterproposal.

On March 7, 2019, the Special Committee held a telephonic meeting, which representatives from Duff & Phelps and NRF attended, to discuss the Special Committee’s response to Baker Botts’ February 28, 2019 email. After discussing with its advisors, the Special Committee determined that the best course of action for continuing the negotiations was to not submit a revised counterproposal. That same day, at the direction of the Special Committee representatives from Duff & Phelps responded to Baker Botts, emailing the information Baker Botts requested and noting the Special Committee was not prepared to revise its February 21, 2019 counterproposal.

On March 11, 2019, representatives from Baker Botts, on behalf of Naphtha, responded to the March 7, 2019 email from Duff & Phelps’ representatives by requesting that the Special Committee and its advisors meet with representatives from Naphtha and its advisors in-person in Houston, Texas to negotiate the differences in valuation between the Initial Proposal and the Special Committee’s counterproposal. Baker Botts also provided the Special Committee and its advisors with a tax ruling from Israeli authorities with respect to the tax treatment of any sale by the Company of its interest in the Tamar Field.

On March 13, 2019, the Special Committee held a telephonic meeting, which representatives from each of Duff & Phelps and NRF attended, to discuss various valuation arguments raised by Naphtha.

On March 15, 2019, representatives of Duff & Phelps, at the direction of the Special Committee, emailed representatives of Naphtha and Baker Botts acknowledging Naphtha’s view that any tax benefit to the Company from a step-up in basis in a subsequent sale of its interests in the Tamar Field would have offsetting tax consequences but reaffirmed that the Special Committee’s position on valuation remained largely unchanged.

On March 19, 2019, representatives from Baker Botts, on behalf of Naphtha, responded to Duff & Phelps’ March 15, 2019 email, reiterating Naphtha’s willingness to move forward with the proposed transaction and belief that in-person negotiations would be the most efficient means to reach agreement on valuation. In that email, Baker Botts also provided additional information to the Special Committee and its advisors concerning Naphtha’s views on the appropriate discount rate to apply to any valuation of the Company and reaffirmed Naphtha’s views with respect to certain tax matters.

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On March 21, 2019, the Special Committee indicated to representatives from Naphtha that the Special Committee would not agree to meet in-person unless Naphtha agreed to materially increase its Initial Proposal offer of $110.36 per share for the subject shares.

On March 22, 2019, representatives from Naphtha responded to the Special Committee’s email by revising the Initial Proposal, offering to acquire the subject shares for $115.00 per share in cash (the “Revised Proposal”) and again requested that the Special Committee and its advisors meet with Naphtha and its advisors in Houston.

On March 23, 2019, the Special Committee held a telephonic meeting, which representatives from Duff & Phelps and NRF attended, to review the Revised Proposal and discuss the Special Committee’s potential response thereto, including whether to accept the invitation to meet in Houston. The Special Committee discussed the advantages and disadvantages of the Revised Proposal and whether to accept Naphtha’s invitation to attend in-person meetings to negotiate the terms of a potential transaction based on the price offered in the Revised Proposal. After extensive discussion, the Special Committee determined, based on the duration and tenor of the negotiations and that Naphtha had already materially increased its offer, that Naphtha was not likely to further increase its offer unless the Special Committee met with representatives from Naphtha in-person. The Special Committee then determined to respond to the Revised Proposal by agreeing to schedule in-person meetings with representatives from Naphtha in Houston during the first week of April.

On March 25, 2019, the Special Committee and representatives from Naphtha agreed that they and their respective advisors would meet at Duff & Phelps’ Houston offices on April 3 and 4, 2019 to negotiate the per share price and other material terms of the potential transaction.

On March 28, 2019, the Special Committee held a telephonic meeting, which representatives from each of Duff & Phelps and NRF attended, to discuss various topics related to the in-person negotiations to be held on April 3 and 4, 2019 in Houston, Texas.

On April 2, 2019, the Special Committee met with representatives from each of Duff & Phelps and NRF ahead of the in-person negotiations with Naphtha to discuss various topics related to the in-person negotiations.

On April 3, 2019, the Special Committee and representatives from each of NRF and Duff & Phelps met with representatives from Naphtha, including Messrs. Saar and Lendner, and representatives from Baker Botts at Duff & Phelps’ Houston offices. At the meeting, representatives from Naphtha made a presentation of their valuation analysis in arriving at the Revised Proposal, emphasizing that it reflected valuation assumptions, particularly with respect to the outcome of the arbitration proceedings related to the Tamar Field, that were reasonable to the Company. Naphtha’s April 3, 2019 presentation to the Special Committee included the Company’s forecasts for the Company’s production services segments projecting an EBITDA of $3.8 million and $5.8 million for fiscal years 2019 and 2020, respectively.  Such forecasts are referred to in the section of this proxy statement titled “Special Factors—Opinion of Duff & Phelps, Financial Advisor to the Special Committee” as the “Naphtha Projections.” Naphtha’s presentation also responded to the Special Committee’s positions with respect to the assumptions and valuation methodologies used by Naphtha in its internal valuation of the Company arguing that (i) as an Israeli taxpayer, the potential tax advantages outlined by Duff & Phelps were unlikely to be applicable and (ii) the comparable royalty interest public companies suggested by Duff & Phelps used in calculating a discount rate for Tamar Royalties were not appropriate since, among other things, each was a United States company focused on U.S. onshore oil and gas assets, as opposed to an Israeli company focused on a single offshore Israel natural gas asset, although Duff & Phelps’ discount rate calculation included a specific country risk premium for Israel to account for this fact. Representatives from Naphtha concluded their presentation by expressing their unwillingness to further increase Naphtha’s offer. At the direction of the Special Committee, representatives from Duff & Phelps gave a presentation to the representatives from Naphtha providing an analysis of the valuation of the Company, and the assumptions and valuation methodologies used in Naphtha’s internal valuation. Representatives from Duff & Phelps suggested $140.00 per share as the appropriate price for the valuation of the Company, as previously unanimously authorized by the Special Committee, believing that it would likely cause Naphtha to materially raise its offer price. Following Duff & Phelps’ presentation, each side agreed to break for the evening and return the next day to continue negotiations.

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On April 4, 2019, the in-person meetings continued, and Naphtha increased its offer to $121.40 per share in cash for the subject shares (the “Final Proposal”). The Final Proposal represented a premium of 18.9% over the closing price of the Common Stock of $102.10 on March 21, 2018, the last trading day prior to the public disclosure that Naphtha was in preliminary stages of evaluating the possibility of pursuing a transaction involving the acquisition of the outstanding shares of the Common Stock not already owned by Naphtha and its affiliates, and an increase of approximately 10% over the Initial Proposal. In connection with the Final Proposal, Naphtha’s representatives emphasized their belief that their assumptions and valuation methodologies were more reflective of the Company, responded in good faith to the issues identified by Duff & Phelps with Naphtha’s internal assumptions and valuation methodologies, and informed the Special Committee and its advisors that Naphtha had, since the date of the Revised Proposal, several developments regarding the natural gas market in Israel had occurred, bearing potentially adverse effects for the Tamar Field, including (i) Tamar Partners had lost a significant bid for a contract to sell gas from the Tamar Field to the Israel Electric Corporation in 2020 until mid-2021 and (ii) the Parliament of Jordan had recently called the Jordanian government to terminate the Jordanian electric company gas purchase agreement from the Leviathan field. Naphtha’s representatives also emphasized that the Final Proposal was their best and final offer, stating that as an Israeli public company, the protracted negotiations over the potential transaction had created significant market uncertainty that Naphtha needed to resolve, and, therefore, if the Company did not timely accept the Final Proposal it could be withdrawn without Naphtha making another offer for the foreseeable future.

Following its receipt of the Final Proposal, the Special Committee and its advisors from NRF and Duff & Phelps excused themselves from the meeting so that they could consider the Final Proposal privately. The Special Committee discussed, with input from the representatives from NRF and Duff & Phelps, the Final Proposal and the accompanying presentation by Naphtha’s representatives. In evaluating the Final Proposal, the Special Committee members discussed, among other factors, that (i) they believed a transaction at such a price would provide the Company’s unaffiliated stockholders with certainty of value and liquidity, particularly in light of the relatively limited trading volume of the Common Stock, (ii) the proposed acquisition of the subject shares by Naphtha and its affiliates had been subject from the time of the Initial Proposal to approval by the Special Committee and a non-waivable condition requiring the approval by holders of a majority of the unaffiliated shares, (iii) their belief that while there was room for disagreement with the issues identified by Duff & Phelps with Naphtha’s assumptions and valuation methodologies used in its internal valuation of the Company, Naphtha’s position on each of such issues was reasonable, (iv) their agreement, after consulting with their advisors, that many of Naphtha’s internal assumptions and valuation methodologies were fair and in fact favorable to the Company, (v) they believed, based on a number of factors, including the statements from Naphtha’s representatives and the duration and tenor of negotiations, the Final Proposal was the highest price that Naphtha would be willing to offer, and that further negotiation ran the risk that Naphtha might be unable or unwilling to enter a proposed transaction, in which event the unaffiliated stockholders would lose the opportunity to accept the premium being offered. Following this discussion, the Special Committee approved proceeding with negotiations on definitive agreements on the basis of the Final Proposal. The Special Committee, representatives from each of Duff & Phelps and NRF then returned to the meeting, advised representatives from Naphtha of the Special Committee’s decision and the parties collectively discussed process and next steps.

On April 11, 2019, the Special Committee held a telephonic meeting, which representatives from each of Duff & Phelps and NRF attended, to discuss Duff & Phelps’ preparation of its fairness analysis and timeline for delivering its fairness opinion. The Special Committee also held a telephonic meeting among themselves to discuss the in-person negotiations held earlier with Naphtha and the Final Proposal.

On April 12, 2019 and April 16, 2019, Baker Botts sent NRF an initial draft of the Merger Agreement and an initial draft of the Support Agreement, respectively.

On May 2, 2019 and May 4, 2019, the Special Committee, along with representatives from each of NRF and Duff & Phelps met telephonically to discuss Baker Botts’ initial drafts of the Merger Agreement and Support Agreements. Representatives from NRF reviewed with the Special Committee the key provisions of the Merger Agreement. The Special Committee asked questions of NRF throughout the meeting and suggested revisions to the Merger Agreement. The Special Committee’s questions included inquiries regarding the mechanics of the Merger Agreement and how the draft from Baker Botts compared to merger agreements in comparable transactions. The Special Committee directed NRF to send the revised versions of each of the Merger Agreement and Support Agreement to Baker Botts as soon as NRF completed its revisions and incorporated the Special Committee’s comments.

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On May 8, 2019, representatives from NRF sent the revised Merger Agreement to Baker Botts. The following day representatives from NRF sent Baker Botts the revised Support Agreement.

On May 9, 2019, representatives from NRF discussed certain provisions of the revised Merger Agreement with representatives from Baker Botts, including, among other things, NRF’s addition of (i) a representation by the Purchaser Parties with respect to certain disclosures made to the Special Committee in connection with the negotiations, (ii) a corresponding indemnity for liabilities arising out of any inaccuracies or breach of such representation and (iii) a condition to the Company’s obligation to close being subject to payment of certain transaction expenses. During that telephonic meeting, representatives from Baker Botts also indicated that NRF’s comments to the Support Agreement were acceptable in all material respects. On May 10, 2019, representatives from Baker Botts met telephonically with Messrs. Lendner and Saar and Mrs. Lendner to discuss NRF’s draft of the Merger Agreement. Based on the discussions with the representatives from NRF and the representatives from Naphtha, Baker Botts sent a revised draft of the Merger Agreement to representatives from NRF which, among other revisions, removed the added representation and related indemnification obligation of the Purchaser Parties and replaced the added closing condition with a new covenant obligating payment of the transaction expenses by the Company and the Purchaser Parties.

Throughout the week of May 13, 2019, the Special Committee extensively reviewed the terms of the Merger Agreement and NRF, as counsel to the Special Committee, and Baker Botts, as counsel to Naphtha, continued to negotiate the terms of the Merger Agreement. Included in these negotiations were negotiations regarding the terms of the no-shop provision, the definition and scope of both “intervening event” and “superior proposal”, the ability of the Company to effect a “change in recommendation,” the closing condition relating to appraisal rights and the termination provisions. Based on the negotiations, Baker Botts delivered revised drafts of the Merger Agreement to NRF on each of May 15, 2019 and May 17, 2019. The Company’s Bylaws provided for the indemnification of the members of the Board to the maximum extent authorized by the DGCL, which permits contracts between the Company and its directors with respect to indemnification, and since each member of the Board would be a third party beneficiary to the Merger Agreement, in recognition of and in addition to such indemnification, on May 17, 2019, representatives from NRF informed Baker Botts that the members of the Board (other than Mr. Tsuff) had requested that the Company and Purchaser Parties enter into a stand-alone indemnification agreement with, and for the benefit of, each such member, to provide for indemnification and advancement of expenses on terms substantially similar to those already provided in the Merger Agreement. NRF subsequently provided a draft of the form of indemnification agreement to Baker Botts which provided for certain ongoing indemnification obligations of Parent, NHL and the surviving corporation, and coverage under directors’ and officers’ liability insurance policies for the director party thereto, on terms substantially similar to those provided in the Merger Agreement. On May 18, 2019, representatives from Baker Botts confirmed to representatives of NRF that the proposed indemnification agreements were acceptable to Naphtha. For a summary of the indemnification agreements, see “Special Factors—Interests of Isramco’s Directors and Executive Officers in the Merger—Indemnification/Insurance” beginning on page 55 .

Throughout May 18, 2019 and May 19, 2019, NRF and Baker Botts finalized the disclosure schedules of the Merger Agreement. On May 19, 2019, Baker Botts provided Naphtha copies of the final form of the Merger Agreement, the Support Agreement and the form of indemnification agreement and NRF provided the same to the Special Committee and our Board along with a summary of the key terms of the Merger Agreement for their review. For a detailed summary of the Merger Agreement, see “The Merger Agreement” beginning on page 74 , for a detailed summary of the Support Agreement, see “Agreements With Purchaser Group Members Involving Common Stock—Support Agreement” beginning on page 94 .

On May 20, 2019, Mr. Saar, on behalf of the Purchaser Parties, confirmed to the Special Committee and representatives NRF and Duff & Phelps, an email confirming that the information provided by the Purchaser Parties in the course of the negotiation with respect to the Company’s overriding royalty interest (“ORRI”) in Tamar and the market risks and challenges for Tamar was provided in good faith and, that to the Purchaser Parties’ knowledge, (a) represented accurate information as of its date and (b) did not omit any material information in their possession that would have reasonably supported a higher valuation. Mr. Saar also clarified that such information included market and industry data and forecasts, some of which had been derived from industry and other third party sources and that since Naphtha was not operating the Tamar Field and it relied on the operator for information with respect to the field, which was not independently verified by Naphtha.

On May 20, 2019, the Special Committee, along with its legal and financial advisors, met telephonically and discussed, among other things, the status of negotiations with Naphtha. Duff & Phelps reviewed with the Special Committee

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its financial analysis of the Merger Consideration and delivered an oral opinion, confirmed by delivery of a written opinion dated May 20, 2019, to the Special Committee to the effect that, as of that date and based on and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Duff & Phelps in preparing its opinion, the Merger Consideration to be received by holders of Common Stock (other than the Purchaser Parties, and without giving effect to any impact of the merger on any particular stockholder other than in its capacity as a holder of Common Stock) pursuant to the Merger Agreement was fair, from a financial point of view, to such unaffiliated holders. Representatives from NRF reviewed the principal terms of the Merger Agreement, and the Support Agreement with the Special Committee. The Special Committee and representatives from NRF also discussed that the Merger Agreement included a closing condition requiring that the Merger Agreement be approved by the holders of a majority of the unaffiliated shares.

Following this review and discussion, the Special Committee expressed its unanimous view that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the merger, were advisable and fair to, and in the best interests of, the Company and the Company’s stockholders, other than the Purchaser Group and any Section 16 Officers, and thus that it would recommend approval of the Merger Agreement and the transactions contemplated thereby, including the merger, by the Company’s Board. For the basis of the Special Committee’s determination in this regard, please see “Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger—The Special Committee” beginning on page  21 .

Following the meeting of the Special Committee, our Board (with Mr. Tsuff recusing himself) met telephonically with representatives from NRF, and Messrs. Francis and James, to receive and discuss the Special Committee’s recommendation concerning the Final Proposal. At this meeting, Messrs. Francis and James and representatives from NRF reviewed with our Board the terms of each of the definitive Merger Agreement and Support Agreement as well as resolutions to be considered by our Board. The Special Committee recommended to our Board that it approve the Merger Agreement, the transactions contemplated by the Merger Agreement and related matters. Messrs. Francis and James then removed themselves from the meeting. Following the Special Committee’s recommendation and the Board’s own discussions and deliberations, the Board approved the Merger Agreement and the transactions contemplated thereby, including the merger. The Board determined , on behalf of the Company, that the Merger Agreement and the transactions contemplated thereby, including the merger, were advisable and fair to, and in the best interests of, the Company and the Company’s stockholders, other than the Purchaser Group and any Section 16 Officers, and resolved to recommend to the Company’s stockholders that they approve the adoption of the Merger Agreement. For the basis of the Board’s determination in this regard, please see “Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger—Recommendation of the Board” beginning on page 26 .

Contemporaneously with the meeting of the Board, the board of directors of Naphtha met to review and discuss the final forms of the Merger Agreement and the Support Agreement, and the transactions contemplated thereby, including the merger. Following such discussion, the Naphtha board approved the Merger Agreement, the Support Agreement and the transactions contemplated thereby, including the merger.

Later that day, the Merger Agreement was executed by the Company and the Purchaser Parties, the Support Agreement was executed by the Company, NHL, Parent, and Mr. Tsuff, and each director of the Company (other than Mr. Tsuff) entered into an indemnification agreement with the Company and the Purchaser Parties. Following the closing of trading on the U.S. public stock markets, the Company issued a press release announcing the execution of the Merger Agreement, the Support Agreement and the entry into the indemnification agreements.

Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger 

Both the Special Committee and our Board believe, based on their consideration of the factors described below, that the Merger Agreement and the transactions contemplated by it, including the merger, are substantively and procedurally fair to the Company’s unaffiliated stockholders.

The Special Committee

The Special Committee, with the advice and assistance of its independent legal and financial advisors, evaluated the merger, the terms and conditions of the Merger Agreement and the transactions contemplated thereby. Over the course 

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of approximately 11 months, the Special Committee held numerous meetings (telephonically and in person) related to the merger and the other transactions contemplated thereby and led negotiations with the Purchaser Group. At a meeting held on May 20, 2019, the Special Committee , on behalf of the Company, unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the merger, are advisable and fair to, and in the best interests of, the Company and its stockholders (other than members of the Purchaser Group and any Section 16 Officers). The Special Committee also unanimously recommended that the Board (i) approve, adopt and declare advisable the Merger Agreement and the transaction documents and the transactions contemplated thereby, including the merger, and (ii) recommend that the stockholders of Company approve the adoption of the Merger Agreement.

In evaluating the merger, the Merger Agreement and the other transactions contemplated thereby, the Special Committee consulted with the Special Committee’s independent legal and financial advisors, consulted with the Company’s management and considered a number of factors, including, but not limited to, the following potentially positive factors (which are not intended to be exhaustive and are not listed in any relative order of importance):

● the fact that the Merger Consideration consists solely of cash, providing the Company’s unaffiliated stockholders with certainty of value and liquidity upon consummation of the merger, particularly in light of the limited trading volume of the Common Stock and the risks and uncertainties relating to the Company’s prospects and the market, economic and other risks, including uncertainties and risks regarding the arbitration proceedings related to the Tamar Field, and uncertainties inherent in owning an equity interest in a public company;

● the Special Committee’s understanding, following discussions with the Company’s management, of the Company’s business, assets, financial condition and results of operations, its competitive position, its strategic options and prospects and the risks involved in achieving those prospects, its historical and projected financial performance and the nature of the industry in which the Company competes, and current industry, economic and market conditions, both on a historical basis and on a prospective basis, which, in the Special Committee’s belief, made the potential transaction desirable at this time;

● the current and historical market prices for the Common Stock, including the market performance of the Common Stock relative to those of other participants in the Company’s industry and general market indices, including the fact that the Merger Consideration of $121.40 per share represents an approximate premium of:

o 18.9% over the closing price of the Common Stock of $102.10 on March 21, 2018, the last trading day prior to the public disclosure that Naphtha was in preliminary stages of evaluating the possibility of pursuing a transaction involving the acquisition of the outstanding shares of the Common Stock not already owned by Naphtha and its affiliates;

o 10.0% over the $110.36 purchase price per share initially offered by Naphtha;

o 8.9% over the closing price of the Common Stock of $111.50 on May 20, 2019, the last trading day prior to the public announcement of the Merger Agreement; and

o 4.6% over the 30 trading-day average price of the Common Stock as of May 20, 2019, the last trading day prior to the public announcement of the Merger Agreement;

● the extensive negotiations with respect to the Merger Consideration which led to an increase from $110.36 per share to $121.40 per share, and the Special Committee’s determination that $121.40 per share was the highest price that Naphtha would be willing to offer, with the Special Committee basing its belief on a number of factors, including the duration and tenor of negotiations and the experience of the Special Committee and its advisors, and that further negotiation ran the risk that Naphtha might determine to revoke or reduce its offer, or be unable or unwilling to enter into the Merger Agreement and the transactions contemplated thereby, including the merger, in which event the unaffiliated stockholders would lose the opportunity to accept the premium being offered;

● the belief of the Special Committee that the Merger Consideration being offered by Naphtha was the most favorable price that could be obtained for the unaffiliated shares, taking into account that the Company had not received any offer from any third party since it’s receipt of the proposal letter from Naphtha, which was announced via press release on January 8, 2019 and filed with the SEC on the same date and that such offer

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would be unlikely because such unaffiliated shares represent a minority of the shares outstanding, which is less attractive to investors when the majority owners have stated that it is not willing to sell its “controlling” position;

● the financial analysis reviewed by Duff & Phelps with the Special Committee as well as the oral opinion of Duff & Phelps rendered to the Special Committee on May 20, 2019 (which was confirmed by delivery of Duff & Phelps’ written opinion, dated May 20, 2019, to the Special Committee), as to the fairness, from a financial point of view and as of such date, of the Merger Consideration to be received by holders of Common Stock (other than the Purchaser Parties, and without giving effect to any impact of the merger on any particular stockholder other than in its capacity as a holder of Common Stock), which financial analysis and conclusion the Special Committee adopts as its own. See “—Opinion of Duff & Phelps, Financial Advisor to the Special Committee”;

● the Special Committee’s review of the structure of the Merger Agreement, and the financial and other terms of the Merger Agreement, including, among others, the following specific terms of the Merger Agreement:

o the non-waivable requirement that the Merger Agreement be adopted by the holders of a majority of outstanding shares of Common Stock not beneficially owned by any member of the Purchaser Group or any Section 16 Officer;

o the limited and customary conditions to the parties’ obligations to complete the merger, and the commitment by Company, Naphtha, NHL and Parent to use their reasonable best efforts to take or cause to be taken all actions to consummate and make effective the merger and the other transactions contemplated by the Merger Agreement, including all actions necessary to obtain applicable regulatory approvals;

o the fact that in the event of the failure of the merger to be completed under certain circumstances, Parent will pay the Company a $1.5 million expense reimbursement, as described in the section entitled “The Merger Agreement—Fees and Expenses—Expense Reimbursement Provisions”;

o subject to compliance with the terms of the Merger Agreement and prior to the Requisite Stockholder Approval, the ability of the Company to participate in discussions or negotiations with, or provide non-public information to, any person in response to an unsolicited Acquisition Proposal that is or could lead to a Superior Proposal, as further described in the section entitled “The Merger Agreement—Other Covenants and Agreements—No Solicitation”;

o the ability of the Board or an Independent Committee, subject to certain conditions, to change its recommendation that the Company’s stockholders adopt the Merger Agreement, as described in the section entitled “The Merger Agreement—Other Covenants and Agreements—No Solicitation”;

o the customary nature of the representations, warranties and covenants of Naphtha, NHL, Parent and Merger Sub in the Merger Agreement;

o the fact that the Purchaser Parties are required to deliver sufficient funds for timely payment of Merger Consideration to the paying agent immediately prior to the effective time of the merger; and

o the absence of a financing condition in the Merger Agreement and the likelihood that the Purchaser Parties will be able to obtain funds sufficient to fund the Merger Consideration upon the Closing;

● the fact that under the Support Agreement, NHL, Parent, and Mr. Haim Tsuff have agreed to vote (or cause to be voted) all shares of Common Stock beneficially owned by them in favor of the approval and adoption of the Merger Agreement and the transactions contemplated thereby, as further described in the section entitled “Agreements with Purchaser Group Members Involving Common Stock—Support Agreement”;

● the fact that the Company’s management did not negotiate or enter into any contracts (including as to post-closing employment) with Naphtha or its affiliates in connection with the execution of the Merger Agreement or during the course of the Special Committee’s negotiations with Naphtha;

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● the strategic review and discussion undertaken by the Special Committee with the assistance of their independent legal and financial advisors, which involved the evaluation of multiple options, including Isramco’s stand-alone business plan and the risks related to the Tamar Field cash flow, as well as the uncertainties surrounding the arbitration proceedings regarding the payout of the Tamar Field; and

● the availability of appraisal rights under Delaware law to the Company’s stockholders who do not vote in favor of the proposal to adopt the Merger Agreement, properly demand appraisal of their shares of Common Stock and otherwise comply with all of the requirements under Section 262 of the DGCL, which provides those eligible stockholders with an opportunity to have a Delaware court determine the fair value of their shares, which may be more than, less than, or the same as the amount such stockholders would have received under the Merger Agreement.

The Special Committee also considered a number of factors that are discussed below relating to the procedural safeguards that it believes were and are present to ensure the fairness of the merger and to permit the Special Committee to represent effectively the interests of the unaffiliated stockholders. These procedural safeguards, which are not intended to be exhaustive and are not listed in any relative order of importance are discussed below:

● the Special Committee consisted and consists of solely independent directors not affiliated with Naphtha or any member of the Purchaser Group;

● in considering the merger and the other transactions contemplated by the Merger Agreement, the Special Committee acted solely to represent the interests of the unaffiliated stockholders, and the Special Committee had independent control of the extensive negotiations with Naphtha and its legal advisors on behalf of such unaffiliated stockholders;

● the Special Committee was empowered to consider, attend to and take any and all actions in connection with the written proposal from Naphtha and the transactions contemplated by the Merger Agreement or any alternative to the Naphtha proposal, including any decision not to enter into any transaction at all, from the date the Special Committee was established, and no evaluation, negotiation or response regarding the transactions or any documentation in connection therewith from that date forward was considered by the Board for approval unless the Special Committee had recommended such action to the Board;

● the Special Committee’s independent legal and financial advisors were involved throughout the process and updated the Special Committee directly and regularly;

● the recognition by the Special Committee that it had no obligation to recommend the approval of the merger proposal by the Purchaser Group or any other transaction;

● the fact that Naphtha conditioned its January 8, 2019 offer on the approval of the merger by the Special Committee before moving forward with the merger;

● the fact that, as a condition to the closing of the merger, the Merger Agreement must be adopted not only by the affirmative vote of the holders of not less than 75% of the outstanding shares of stock of the Company entitled to vote in the election of directors, but also by the holders of a majority of outstanding shares of Common Stock not beneficially owned by any member of the Purchaser Group or any Section 16 Officer, which allows for an informed vote by the stockholders on the merits of the merger;

● the fact that the Company may under certain circumstances terminate the Merger Agreement in order to enter into an agreement relating to a Superior Proposal, as described in the section entitled “The Merger Agreement—Other Covenants and Agreements—No Solicitation”; and

● the fact that the Special Committee met numerous times to evaluate the Naphtha proposal, the merger and related matters, and during these meetings, the Special Committee extensively deliberated and discussed the advantages and disadvantages of the merger.

The Special Committee also considered a variety of uncertainties, risks and potentially negative factors in its deliberations concerning the merger, including the factors discussed below, concerning the Merger Agreement and the merger (which are not intended to be exhaustive and are not listed in any relative order of importance):

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● the fact that subsequent to the merger, the Company will no longer exist as an independent public company and that the nature of the transaction as a cash transaction would prevent our stockholders (other than members of the Purchaser Group) from participating in any value creation the business may generate, as well as any future appreciation in our value;

● the fact that Purchaser Group, which collectively beneficially holds approximately 73.01% of the total outstanding shares of the Common Stock, expressed an unwillingness to consider a sale of such shares to any third party or to vote in favor of any alternative sale, merger or similar transaction involving the Company, which (i) made the Special Committee believe that it was less likely that any transaction with a third party could be completed at this time, (ii) may have discouraged, and may in the future discourage, third parties from submitting competing transaction proposals with terms and conditions, including price, that may be superior to the merger and (iii) influenced the decision of the Special Committee not to conduct an auction process or solicit interest from third parties for the acquisition of the Company;

● the fact that the Company may be required, under certain circumstances, to pay Parent an expense reimbursement fee of $1.5 million, as described in the section entitled “The Merger Agreement—Fees and Expenses—Expense Reimbursement Provisions”;

● the fact that we will be prohibited from soliciting, initiating, or knowingly facilitating or knowingly encouraging the submission of an alternative acquisition proposal (however, the Company will be able to respond to and engage in discussions of certain unsolicited acquisition proposals, subject to certain conditions, if the Board or an Independent Committee determines in good faith that such proposals are or could lead to superior proposals, such proposals did not result from the Company’s material breach of its obligations under such non-solicitation provisions of the Merger Agreement (other than any such breach caused by a Purchaser Party) and, if the Board or an Independent Committee determines, after consultation with its counsel, that the failure to take action concerning such proposals would be inconsistent with its fiduciary duties under applicable law);

● the fact that the Purchaser Parties’ obligation to consummate the merger is subject to the condition that no more than 8% of the outstanding shares of Common Stock immediately prior to the closing of the merger are dissenting shares;

● the fact that the Company’s directors, officers and employees have expended and will expend extensive efforts attempting to complete the transactions contemplated by the Merger Agreement and such persons have experienced and will experience distractions from their work during the pendency of such transactions;

● the fact that we have incurred and will continue to incur substantial expenses related to the merger, including in connection with potential litigation related to the merger;

● the fact that under the terms of the Merger Agreement, we have agreed that we will conduct our business in the ordinary course consistent with past practices, and that subject to Parent’s consent, we will not take a number of specific actions related to the conduct of our business and the possibility that these terms may limit our ability to pursue business opportunities that we would otherwise pursue;

● the taxability of an all cash transaction to the Company’s unaffiliated stockholders that are U.S. holders for U.S. federal income tax purposes;

● the possibility that the Purchaser Group may be unable or unwilling to complete the merger; and

● the risk that, while the merger is expected to be completed, there can be no assurance that all conditions to the parties’ obligations to complete the merger will be satisfied, and as a result, it is possible that the merger may not be completed even if approved by the Company’s stockholders.

After considering the foregoing potentially negative and potentially positive factors, the Special Committee concluded that the uncertainties, risks and potentially negative factors relevant to the merger were outweighed by the potential benefits that it expected the holders of unaffiliated shares would achieve as a result of the merger.

The foregoing discussion of information and factors considered by the Special Committee is not intended to be exhaustive and may not include all of the factors considered by the Special Committee. In view of the wide variety of

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factors considered by the Special Committee, the Special Committee found it impracticable to quantify or otherwise assign relative weights to the foregoing factors in reaching its conclusions. In addition, individual members of the Special Committee may have given different weights to different factors and may have viewed some factors more positively or negatively than others. The Special Committee adopted Duff & Phelps’ opinion and analyses, among other factors considered, in reaching its determination as to the fairness of the transactions contemplated by the Merger Agreement, including the merger. The Special Committee recommended that the Board approve, and the Board approved, the Merger Agreement based upon the totality of the information presented to it. It should be noted that this explanation of the reasoning of the Special Committee and certain information presented in this section is forward-looking in nature and should be read in light of the factors set forth in the section entitled “Cautionary Statement Concerning Forward-Looking Statements.”

The Special Committee did not consider the liquidation value of the Company’s assets because the Special Committee considers the Company to be a viable going concern business that will continue to operate regardless of whether the merger is consummated, where value is derived from cash flows generated from its continuing operations. In addition, the Special Committee believes that the value of the Company’s assets that might be realized in a liquidation would be significantly less than its going concern value for various reasons, including that liquidation sales generally result in proceeds substantially less than the sales of a going concern and that an ongoing operation has the ability to continue to earn profit, while a liquidated company does not, such that the “going-concern value” will be higher than the “liquidation value” of a company because the “going concern value” includes the liquidation value of a company’s tangible assets as well as the value of its intangible assets, such as goodwill. Furthermore, the Company has no intention of liquidation and the merger will not result in the liquidation of the Company. The Special Committee believes the analyses and additional factors it reviewed provided an indication of the Company’s general going concern value. The Special Committee also considered the historical market prices of the Common Stock. The Special Committee did not seek to determine a specific pre-merger going concern value for the Common Stock to determine the fairness of the Merger Consideration to the Company’s unaffiliated stockholders. The Special Committee considered the financial analyses regarding Isramco prepared by Duff & Phelps and reviewed and discussed by Duff & Phelps with the Special Committee as an indication of the general going concern value of the Company; however, no specific going concern value was calculated and no specific going concern value was considered to determine the fairness of the Merger Consideration to the unaffiliated stockholders. However, to the extent the pre-merger going concern value was reflected in the pre-announcement price of the Common Stock, the Merger Consideration represented a premium to the going concern value of the Company. The Special Committee was not aware of any firm offer made by any unaffiliated person, during the two years prior to the date of Merger Agreement for (i) the merger or consolidation of the Company with another company, or vice versa, (ii) the sale or transfer of all or any substantial part of the Company’s assets, or (iii) a purchase of the Company’s securities that would enable such person to exercise control of the Company. Further, the Special Committee did not consider net book value, which is an accounting concept, as a factor because it believes that net book value is not a material indicator of the value of the Company as a going concern but rather is indicative of historical costs and because net book value does not take into account the prospects of the Company, market conditions, trends in the industry in which the Company operates or the business risks inherent in that industry.

Neither the Special Committee nor a majority of the directors of the Company who are not employees of the Company retained an unaffiliated representative to act solely on behalf of the unaffiliated stockholders for purposes of negotiating the terms of the Merger Agreement and the merger. The Special Committee and the directors of the Company who are not employees of the Company believe that it was not necessary to retain an unaffiliated representative because the Special Committee was charged with representing the interests of the unaffiliated stockholders and the Company, the Special Committee consisted solely of directors who are not officers or controlling stockholders of Isramco or any of the Purchaser Group Members, the Special Committee engaged its own financial and legal advisors to act on its behalf and was actively involved in deliberations and negotiations regarding the merger on behalf of the unaffiliated stockholders.

Recommendation of the Board

The Board consists of six directors. On May 20, 2019, based in part on the unanimous recommendation of the Special Committee, as well as on the basis of the other factors described above, the Board unanimously (with Mr. Haim Tsuff recusing himself because of his membership in the Purchaser Group) on behalf of the Company:

● determined that the Merger Agreement and the transactions contemplated thereby, including the merger, are advisable and fair to, and in the best interests of, Isramco and Isramco’s stockholders, other than the Purchaser Group and any Section 16 Officers;

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● approved the Merger Agreement and the transactions contemplated thereby, including the merger, and

● resolved to recommend that Isramco’s stockholders approve the adoption of the Merger Agreement.

The Board (with Mr. Haim Tsuff recusing himself because of his membership in the Purchaser Group) unanimously recommends that you vote “FOR” the adoption of the Merger Agreement.

Our Board , on behalf of the Company, believes, based on their considerations of the factors described above, that the Merger Agreement and the transactions contemplated by it, including the merger, are substantively and procedurally fair, to the Company’s unaffiliated stockholders. In adopting the Special Committee’s recommendations and concluding , on behalf of the Company, that the Merger Agreement and the transactions contemplated by it, including the merger, are in the best interests of the Company and the unaffiliated stockholders, our Board consulted with outside legal advisors, considered and relied upon the same factors and considerations that the Special Committee relied upon, as described above, and adopted as its own analysis the Special Committee’s analyses and conclusions in their entirety (including Duff & Phelps’ opinion and analyses which were adopted by the Special Committee). The Board is not aware of any firm offer made by any unaffiliated person, during the two years prior to the date of Merger Agreement for (i) the merger or consolidation of the Company with another company, or vice versa, (ii) the sale or transfer of all or any substantial part of the Company’s assets, or (iii) a purchase of the Company’s securities that would enable such person to exercise control of the Company.

Opinion of Duff & Phelps, Financial Advisor to the Special Committee

The Company engaged Duff & Phelps to serve as an independent financial advisor to the Special Committee (solely in its capacity as such) to (i) provide independent financial advisory services to the Special Committee and (ii) render an opinion as to the fairness, from a financial point of view, of the Merger Consideration to be received by the holders of the Company’s Common Stock (other than the Purchaser Parties), other than (i) Common Stock to be cancelled pursuant to Section 3.1(c) of the Merger Agreement, (ii) Common Stock owned by NHL or Parent, and (iii) dissenting shares in the merger (without giving effect to any impact of the merger on any particular stockholder, other than in its capacity as a holder of Common Stock).

On May 20, 2019, Duff & Phelps delivered its oral opinion, subsequently confirmed in writing, on such date (which was subsequently orally communicated to the full Board of Directors of the Company (excluding Haim Tsuff, who recused himself from the process because of his membership in the Purchaser Group)) that, as of such date and based upon and subject to the assumptions, qualifications and limiting conditions contained in the opinion and discussed with the Special Committee, the Merger Consideration to be received by the holders of Common Stock (other than the Purchaser Parties), other than (i) Common Stock to be cancelled pursuant to Section 3.1(c) of the Merger Agreement, (ii) Common Stock owned by NHL or Parent, and (iii) dissenting shares in the merger was fair, from a financial point of view, to such holders (without giving effect to any impact of the merger on any particular stockholders other than in its capacity as a stockholder).

The full text of Duff & Phelps’ opinion is attached as Annex B to this proxy statement and is incorporated herein by reference. The full text of the opinion sets forth a description of the assumptions made, procedures followed, matters considered and qualifications and limitations in rendering the opinion. We urge you to read Duff & Phelps’ opinion carefully and in its entirety.

Duff & Phelps’ opinion was furnished for the use and benefit of the Special Committee in connection with its consideration of the merger. The opinion (i) did not address the merits of the underlying business decision to enter into the merger versus any alternative strategy or merger; (ii) did not address any transaction related to the merger; (iii) was not a recommendation as to how the Special Committee or any stockholder should vote or act with respect to any matters relating to the merger, or whether to proceed with the merger or any related transaction; and (iv) did not indicate that the Merger Consideration received is the best possibly attainable under any circumstances. The decision as to whether to proceed with the merger or any related transaction may depend on an assessment of factors unrelated to the financial analyses on which the opinion is based. The opinion should not be construed as creating any fiduciary duty on the part of Duff & Phelps to any party. Duff & Phelps did not review or advise the Special Committee with respect to any alternative transaction.

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In connection with its opinion, Duff & Phelps made such reviews, analyses and inquiries as it deemed necessary and appropriate under the circumstances. Duff & Phelps also took into account its assessment of general economic, market and financial conditions, as well as its experience in securities and business valuation, in general, and with respect to similar transactions, in particular. Duff & Phelps’ procedures, investigations, and financial analyses with respect to the preparation of the opinion included, but were not limited to, the items summarized below:

1.     Reviewed the following documents:

a) The Company’s annual reports, including its audited financial statements, on Form 10-K filed with the SEC for the years ended December 31, 2013 through December 31, 2018 and the Company’s unaudited interim financial statements for the three months ended March 31, 2019 included in the Company’s Form 10-Q filed with the SEC;

b) Unaudited segment and pro forma financial information for the Company for the three months ended March 31, 2019, which the Company’s management identified as being the most current financial statements available;

c) A reserve report, prepared by Netherland, Sewell & Associates, Inc., estimating the proved, probable, and possible reserves and future revenue, to the Isramco Negev 2 Limited Partnership working interest in certain gas properties located in Tamar and Tamar Southwest Fields, Tamar Lease I/12, offshore Israel, as of December 31, 2018 (the “Tamar Reserve Report”);

d) A reserve report, prepared by Cawley, Gillespie & Associates, Inc., including estimates of proved developed producing reserves and forecasts of economics attributable to Isramco Energy, LLC, Isramco Resources, LLC, and Jay Petroleum, L.L.C., as of December 31, 2018 (the “Cawley Reserve Report”);

e) A report prepared by Pearl Cohen Zedek Latzer Barata LLP for the Special Committee, reviewing the arbitration between Isramco and Isramco Negev 2, dated as of March 26, 2019;

f) Other internal documents relating to the history, current operations, and probable future outlook of the Company, including various segment-level and subsidiary-level financial projections, provided to Duff & Phelps by management of the Company, including Tamar Royalties, LLC (the “Tamar Royalties Projections”), Isramco Energy, LLC (the “Isramco Energy Projections”), Isramco Resources, LLC (the “Isramco Resources Projections”), Jay Petroleum, L.L.C., (the “Jay Petroleum Projections”), and the Company’s Production Services segment (the “Production Services Projections”, and together with the Tamar Royalties Projections, the Isramco Energy Projections, the Isramco Resources Projections, and the Jay Petroleum Projections, the “Isramco Projections”) and financial projections provided to Duff & Phelps by representatives of Naphtha (the “Naphtha Projections”); and

g) A draft of the Merger Agreement, dated May 20, 2019;

2. Discussed the information referred to in 1.a, 1.b, 1.c, 1.d, 1.e, and 1.f above with management of the Company;

3. Reviewed the historical trading price and trading volume of the Common Stock, and the publicly traded securities of certain other companies that Duff & Phelps deemed relevant;

4. Performed certain valuation and comparative analyses including a discounted cash flow analysis and analysis of selected public companies that Duff & Phelps deemed relevant;

5. Conducted an analysis of the proposed financial terms of the merger with the financial terms of selected transactions that Duff & Phelps deemed relevant; and

6. Conducted such other analyses and considered such other factors as Duff & Phelps deemed appropriate.

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In its analyses, and rendering its opinion with respect to the merger, Duff & Phelps, with the Company’s and the Special Committee’s consent:

● Relied upon and assumed the accuracy, completeness, and fair presentation of all financial, tax, legal, regulatory, accounting, and other information, data, advice, opinions and representations obtained from public sources or provided to it from private sources, including Company management, and did not independently verify such information;

● Assumed that any estimates, evaluations, forecasts, the Isramco Projections and the Naphtha Projections furnished to Duff & Phelps were reasonably prepared and based upon the best currently available information and good faith judgment of the person furnishing the same, and Duff & Phelps expressed no opinion with respect to such Isramco Projections or such Naphtha Projections or the underlying assumptions and notes that projecting future results of any company is inherently subject to uncertainty;

● Assumed that the final versions of all documents, including the Merger Agreement, conform in all material respects to the draft versions reviewed by Duff & Phelps;

● Assumed that all of the conditions required to implement the merger will be satisfied and that the merger would be completed in accordance with the Merger Agreement without any amendments thereto or any waivers of any terms or conditions thereof, in either case that would be material to the opinion; and

● Assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the merger would be obtained without any adverse effect on the Company or the contemplated benefits expected to be derived in the merger.

In Duff & Phelps’ analyses and in connection with the preparation of its opinion, Duff & Phelps has made numerous assumptions with respect to industry performance, general business, market and economic conditions and other matters, many of which are beyond the control of any party involved in the merger.

Duff & Phelps delivered its written opinion on May 20, 2019. The opinion was necessarily based upon the information made available to Duff & Phelps as of the date of the opinion and market, economic, financial and other conditions as they existed and could be evaluated as of such date, and Duff & Phelps disclaimed any undertaking or obligation to advise any person of any change in any fact or matter affecting the opinion which may come or be brought to the attention of Duff & Phelps after the date of the opinion, or to update, revise, or reaffirm the opinion after the date of the opinion.

Duff & Phelps did not evaluate the Company’s solvency or conduct an independent appraisal or physical inspection of any specific assets or liabilities (contingent or otherwise). Duff & Phelps was not requested to, and did not, initiate any discussions with, or solicit any indications of interest from, third parties with respect to the sale of all or any part of the Company or any other alternative transactions to the merger.

Duff & Phelps did not express any opinion as to the market price or value of the Common Stock (or anything else) before or after the announcement or the consummation of the merger. Duff & Phelps’ opinion should not be construed as a valuation opinion, credit rating, solvency opinion, an analysis of the Company’s credit worthiness, as tax advice, or as accounting advice. Duff & Phelps has not made, and assumes no responsibility to make, any representation, or render any opinion, as to any legal, tax, or accounting matter.

In rendering its opinion, Duff & Phelps did not express any opinion with respect to the amount or nature or any other aspect of any compensation to any of the Company’s officers, directors, or employees, or any class of such persons, relative to the Merger Consideration to be received by the holders of shares of Common Stock (other than the Purchaser Parties), or with respect to the fairness of any such compensation. In addition, the opinion did not address the fairness to, or any other consideration of, the holders of any class of securities, creditors or other constituencies of the Company, other than the holders of shares of Common Stock.

Summary of Financial Analyses by Duff & Phelps

Set forth below is a summary of the material analyses performed by Duff & Phelps in connection with providing its opinion to the Special Committee. This summary is qualified in its entirety by reference to the full text of the opinion,

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attached hereto as Annex B. While this summary describes the analyses and factors that Duff & Phelps deemed material in its May 20, 2019 presentation to the Special Committee, it is not a comprehensive description of all analyses and factors considered by Duff & Phelps. The preparation of a fairness opinion is a complex process that involves various determinations as to appropriate and relevant methods of financial analyses and the application of these methods to the particular circumstances. Therefore, neither the opinion nor Duff & Phelps’ underlying analysis is susceptible to partial analyses or summary description. In arriving at its opinion, Duff & Phelps did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Duff & Phelps’ analyses must be considered as a whole and selecting portions of its analyses and of the factors considered by it in rendering the opinion, without considering all analyses and factors, could create a misleading or incomplete view of the evaluation process underlying the opinion. The conclusion reached by Duff & Phelps was based on all analyses and factors taken as a whole, and also on the application of Duff & Phelps’ own experience and judgment.

Duff & Phelps’ analyses were prepared using the Isramco Projections provided by management of the Company as the basis of its opinion. For more information regarding the use of projections, please see “Special Factors—Projected Financial Information” beginning on page 45 .

The financial analyses summarized below include information presented in tabular format. In order for Duff & Phelps’ financial analyses to be fully understood, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses undertaken by Duff & Phelps. Considering the data below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Duff & Phelps’ financial analyses.

Sum-of-the-Parts Analysis

Based on its professional experience, Duff & Phelps performed a sum-of-the-parts valuation analysis of the Company using various valuation methodologies, as described below.

Tamar Royalties

Isramco, through its fully-owned subsidiary, Tamar Royalties, owns an ORRI from Isramco Negev 2’s 28.75% working interest in the Tamar Field, equivalent to 1.5375%, which will increase to 2.7375% after payout, in each case subject to wellhead adjustment. An ORRI is an ownership interest in the oil and gas leasehold estate equating to a certain percentage of production or production revenues, calculated free of the costs of production and development of the underlying lease(s), but subject to its proportionate share of certain post production costs. An ORRI is a non-possessory interest in the oil and gas leasehold estate and, accordingly, Isramco has no control over the operations, drilling, expenses, timing, production, sales, or any other aspect of development or production of the Tamar Field.

Duff & Phelps performed a discounted cash flow analysis based on the Tamar Royalties Projections, specifically excluding selling, general, and administrative (“SG&A”) expenses, using the projected unlevered free cash flows of Tamar Royalties for the fiscal years (“FY”) ending December 31, 2019 through December 31, 2058 to derive the estimated asset value for Tamar Royalties. Duff & Phelps defined “free cash flow” as cash that is available to distribute to all security holders of Tamar Royalties. The discounted cash flow analysis was used to determine the net present value of projected unlevered free cash flows utilizing an appropriate cost of capital for the discount rate, which reflects the relative risk associated with the Tamar Royalties Projections cash flows as well as the rates of return that investors could expect to realize on alternative investment opportunities with similar risk profiles to Tamar Royalties.

Duff & Phelps calculated Tamar Royalties’ projected unlevered free cash flows for each of its (i) Proved Reserves, (ii) Probable Reserves, and (iii) Possible Reserves by taking their respective projected ORRI revenues before petroleum levy, subtracting the petroleum levy to arrive at the projected ORRI revenues after petroleum levy, and subtracting corporate taxes at the Israeli statutory rate of 23.0%. The resulting unlevered free cash flows were discounted at a weighted average cost of capital (“WACC”) range of 7.25% to 9.25%, including a specific country risk premium attributable to Israel, and utilizing 14 publicly traded companies in the Oil and Gas Exploration and Production industry, consisting of Royalty Interest Public Companies and Israeli Public Companies, that Duff & Phelps deemed relevant to its analysis. The companies which were utilized in the calculation of the WACC for Tamar Royalties were:

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Royalty Interest Public Companies:

● Black Stone Minerals, L.P.

● Dorchester Minerals, L.P.

● Permian Basin Royalty Trust

● Sabine Royalty Trust

● San Juan Basin Royalty Trust

● Viper Energy Partners LP

Israeli Public Companies:

● Alon Natural Gas Exploration Ltd.

● Delek Drilling – Limited Partnership

● Delek Royalties (2012) Ltd

● Energean Oil & Gas plc

● Isramco, Inc.

● Isramco Negev 2 Limited Partnership

● Naphtha Israel Petroleum Corp. Ltd.

● Tamar Petroleum Ltd

Duff & Phelps’ discounted cash flow analyses indicated the following asset values for each of the Proved, Probable, and Possible Reserves of Tamar Royalties, on both an unrisked and a risked basis:

	Unrisked									Risked
($ in thousands)	Low		Mid		High		Risking (1)			Low		Mid		High
Proved Reserves	$	277,000	$	295,000	$	316,000		100.0	%	$	277,000	$	295,000	$	316,000
Probable Reserves		28,000		35,000		44,000		50.0	%		14,000		17,500		22,000
Possible Reserves		12,000		16,000		22,000		10.0	%		1,200		1,600		2,200
Total Asset Value – Tamar Royalties	$	317,000	$	346,000	$	382,000				$	292,200	$	314,100	$	340,200

(1) Risking per Society of Petroleum Engineers (“SPE”) guidelines and discussions with Company management

Tamar Arbitration

The Tamar Arbitration relates to a disagreement between the Company and Isramco Negev 2 as to which costs should be included in the calculation of the payout of the Tamar Field, after the occurrence of which Isramco Negev 2 is entitled to a higher percentage of the ORRI. The disagreement stems from the fact that the agreements governing the creation of the ORRI were formulated in the 1980s and do not have a clear and unequivocal definition as to what costs should be included in the calculation of the payout.

Isramco Negev 2 estimates that the total scope of the ORRI, as at December 31, 2018, in disagreement is approximately $73 million, before taxes. Under the terms of the agreements creating the ORRI, the dispute is subject to arbitration in Israel. The Company believes the claims of Isramco Negev 2 are contrary to generally accepted industry practice and expects that the matter will be resolved favorably through the arbitration process; however, the Company cannot be assured of a favorable result. Accordingly, Isramco continues to receive royalty payments at the lower rates as if the Investment Repayment Date (as defined under the Company’s term loan credit agreement with Deutsche Bank Trust Company Americas, as facility agent for the lenders and as collateral agent for the secured parties, and with the lenders party thereto), which is referred to as the payout date, has not occurred. Isramco believes the payout date to be around the middle of 2015, while Isramco Negev 2 believes it to be around early 2019.

Duff & Phelps did not make any assessment with respect to the likelihood of any particular outcome of the arbitration, and assumed a range of total potential proceeds to the Company from the arbitration of $0 to $56.2 million, after taxes, with a midpoint of $28.1 million, based on the estimated total amount of the ORRI subject to the disagreement of $73.0 million provided by the Company and deducting taxes at the Israeli statutory rate of 23.0%.

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U.S. Oil and Gas Exploration and Production Segment

Duff & Phelps performed discounted cash flow analyses for each of Isramco Resources, Isramco Energy, and Jay Petroleum, which collectively comprise Isramco’s U.S. Oil and Gas Exploration and Production Segment, based on the Isramco Resources Projections, the Isramco Energy Projections, and the Jay Petroleum Projections, respectively. The Isramco Resources Projections, Isramco Energy Projections, and Jay Petroleum Projections were based on the Company’s forecasts, as of December 31, 2018, for future prices of oil, gas, and natural gas liquids (“NGL”), which fluctuate on both a long- and short-term basis. The discounted cash flow analyses were used to determine the net present value of projected unlevered free cash flows utilizing a cost of capital for the discount rate, which reflects the relative risk associated with these respective cash flows as well as the rates of return that investors could expect to realize on alternative investment opportunities with similar risk profiles to each of Isramco Resources, Isramco Energy, and Jay Petroleum.

Duff & Phelps calculated unlevered free cash flows for each of Isramco Resources, Isramco Energy, and Jay Petroleum by taking estimated earnings before interest and taxes and subtracting capital expenditures, for (i) the period from FY2019 through FY2037 and (ii) a separate subtotal for “After”, based on the Cawley Reserve Report. Duff & Phelps utilized a tax rate of 0.0% as many of the prospective buyers for assets such as Isramco Resources, Isramco Energy, or Jay Petroleum are other pass-through entities and working capital requirements of 0.0%, as provided by Company management. The resulting cash flows were discounted at a WACC range of 8.25% to 10.25%, utilizing nine publicly traded companies in the Oil and Gas Exploration and Production industry that Duff & Phelps deemed relevant to its analysis, which companies were:

Oil and Gas Exploration and Production Public Companies:

● Abraxas Petroleum Corporation

● Carrizo Oil & Gas, Inc.

● EP Energy Corporation

● Laredo Petroleum, Inc.

● Lonestar Resources US Inc.

● Matador Resources Company

● Parsley Energy, Inc.

● Penn Virginia Corporation

● SM Energy Company

The indicated asset value for Isramco’s U.S. Oil and Gas Exploration and Production Segment, inclusive of each of Isramco Resources, Isramco Energy, and Jay Petroleum, resulting from Duff & Phelps’ discounted cash flow analyses is detailed below:

	Indicated Present Value Range
($ in thousands)	Low		Mid		High
Isramco Resources	$	18,400	$	19,400	$	20,500
Isramco Energy		9,900		10,400		10,900
Jay Petroleum		1,250		1,300		1,350
Total U.S. Oil and Gas Exploration and Production	$	29,550	$	31,100	$	32,750

Production Services

Duff & Phelps performed a selected public company analysis for the Company’s Production Services operations. Although none of the selected public companies are directly comparable to the Company’s Production Services segment, Duff & Phelps analyzed the companies set forth below based on their relative similarity to the Company’s Production Services segment, primarily in terms of business model and primary customer end markets.

Oil and Gas Equipment and Services and Oil & Gas Drilling Industries:

● Basic Energy Services, Inc.

● C&J Energy Services, Inc.

● Key Energy Services, Inc.

● Patterson-UTI Energy, Inc.

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● RPC, Inc.

● Select Energy Services, Inc.

● Superior Energy Services, Inc.

● TETRA Technologies, Inc.

The table below summarizes observed historical and projected financial performance of the Company’s Production Services segment and the selected public companies, as well as multiples of enterprise value to LTM EBITDA, estimated FY2019 EBITDA, estimated FY2020 EBITDA, and LTM Revenue for the selected public companies, in each case as of May 10, 2019. The revenue and EBITDA estimates for FY2019 and FY2020 in the table below for the selected public companies were derived based on information for the twelve months ending closest to the Company’s FY2019 and FY2020 for which information was available. For purposes of its analysis, Duff & Phelps used certain publicly available historical financial data and equity analyst estimates for the selected public companies, and information provided by the Company for the Company’s Production Services segment. Duff & Phelps determined, in its professional judgment, that certain metrics were not meaningful (which is referred to as NM) with respect to the Company’s Production Services segment.

	Selected Public Companies – Financial Performance
	Production Services			Mean			Median
Revenue Growth
3-YR CAGR		12.7	%		7.8	%		7.3	%
LTM		76.1	%		16.8	%		11.3	%
FY2019E		23.5	%		-6.5	%		-9.5	%
FY2020P		24.1	%		11.3	%		10.5	%
EBITDA Growth
3-YR CAGR		NM			22.8	%		26.5	%
LTM		NM			31.8	%		24.4	%
FY2019E		158.8	%		-2.6	%		-7.7	%
FY2020P		58.1	%		44.0	%		26.6	%
EBITDA Margin
3-YR Average		-7.3	%		7.9	%		10.0	%
LTM		4.4	%		13.8	%		15.2	%
FY2019E		9.3	%		14.4	%		15.2	%
FY2020P		11.8	%		17.0	%		17.6	%

	Selected Public Companies – Valuation Multiples
	Mean	Median
Enterprise Value as a Multiple of
LTM EBITDA	6.8x	6.1x
FY2019E EBITDA	7.1x	5.9x
FY2020P EBITDA	4.9x	4.8x
LTM Revenue	0.82x	0.82x
Source: S&P Capital IQ, SEC Filings, Annual and Interim Reports

Duff & Phelps also reviewed the target companies involved in six selected merger and acquisition transactions listed in the below table. The selection of these transactions was based on, among other things, the target company’s industry, the relative size of the transaction compared to the merger, and the availability of public information related to the selected transaction. The selected transactions indicated (i) enterprise value to LTM EBITDA multiples ranging from 4.1x to 18.8x, with a mean of 9.2x and a median of 8.0x, and (ii) enterprise value to LTM revenue multiples ranging from 1.50x to 5.92x, with a mean of 3.58x and a median of 3.10x.

Date of Announcement	Target	Acquiror
March 20, 2019	Red Bone Services LLC	KLX Energy Services Holdings, Inc.
October 22, 2018	Motley Services LLC	KLX Energy Services LLC
July 17, 2018	Seitel, Inc.	Centerbridge Partners, L.P.
January 2, 2018	Archrock Partners, L.P.	Archrock, Inc.
April 24, 2017	Flowchem Ltd.	KMG Chemicals, Inc.
December 12, 2016	Seventy Seven Energy LLC	Patterson-UTI Energy, Inc.
Source: S&P Capital IQ and SEC filings

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Duff & Phelps applied multiples of 7.0x to 8.0x and 4.5x to 5.5x to the estimated EBITDA of the Company’s Production Services segment for FY2019 and FY2020 of $3.7 million and $5.8 million, respectively, based on the Production Services Projections provided by the Company, which implied a value for the Production Services segment of $25.8 million to $29.5 million and $26.3 million to $32.1 million for FY2019 and FY2020, respectively. Duff & Phelps averaged these values to arrive, after rounding, at an estimated value for the Company’s Production Services segment of $26.0 million to $31.0 million.

Tamar and Corporate SG&A Expenses

Isramco’s SG&A expenses, consisting of both (i) Tamar Royalties’ SG&A expenses (which SG&A expenses were specifically excluded from the valuation of Tamar Royalties) and (ii) corporate functions, excluding estimated public company costs, which include part of the Audit Fees, part of Sarbanes-Oxley Consultants, part of Legal Fees, Directors’ Fees, Directors’ Insurance, Nasdaq Fees, Public Company Accounting Oversight Board, and 10-Q Filing Fees, for FY2018 of approximately $4.0 million were provided to Duff & Phelps by management of the Company.

In order to determine the ongoing value attributable to Isramco’s SG&A expenses, Duff & Phelps analyzed the below selected public companies, which are referred to herein as the “selected public companies,” in the Oil and Gas Exploration and Production and Integrated Oil and Gas industries.

Oil and Gas Exploration and Production and Integrated Oil and Gas Companies:

● Black Stone Minerals, L.P.

● Delek Group Ltd.

● Diamondback Energy, Inc.

● Dorchester Minerals, L.P.

● Falcon Minerals Corporation

● Freehold Royalties Ltd.

● Panhandle Oil and Gas Inc.

● PrairieSky Royalty Ltd.

● Viper Energy Partners LP

Although none of these selected public companies are directly comparable to the Company, Duff & Phelps analyzed these companies based on their relative similarity to the Company, primarily in terms of business model and primary customer end markets. Duff & Phelps, using publicly available historical financial data and equity research analyst estimates as compiled by Capital IQ, observed multiples of enterprise value to LTM EBITDA, estimated FY2019E EBITDA, estimated FY2020P EBITDA, and LTM Revenue, respectively, for each of the selected public companies. The table below summarizes such analysis.

	Selected Public Companies – Valuation Multiples
	Mean	Median
Enterprise Value as a Multiple of
LTM EBITDA	11.8x	11.2x
FY2019E EBITDA	11.5x	10.4x
FY2020P EBITDA	9.8x	9.6x
LTM Revenue	8.60x	8.00x

Duff & Phelps applied a multiple range of 5.5x to 6.5x to the Company’s FY2018A SG&A expenses of approximately $4.0 million, arriving at an implied value range of $22.0 million to $26.0 million for the Company’s SG&A expenses.

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Summary of Sum-of-the-Parts Analysis

The range of indicated total asset values for the Company derived from Duff & Phelps’ sum-of-the-parts analysis was approximately $307,771 thousand to approximately $416,181 thousand, as detailed in the table below:

Asset Value
($ in thousands)	Low			Mid			High
Tamar Royalties (1)	$	292,200		$	314,100		$	340,200
Estimated Potential Arbitration Proceeds, After-Tax (2)		0			28,105			56,210
Isramco Resources		18,400			19,400			20,500
Isramco Energy		9,900			10,400			10,900
Jay Petroleum		1,250			1,300			1,350
Production Services		26,000			28,500			31,000
Arrow Assets (3) (4)		4,200			4,200			4,200
Plug and Abandon (4)		(22,179	)		(22,179	)		(22,179	)
Tamar and Corporate SG&A Expenses		(22,000	)		(24,000	)		(26,000	)
Total Asset Value	$	307,771		$	359,826		$	416,181
(1) Excludes SG&A expenses
(2) Assumes range of total potential proceeds to the Company of $0 to $73.0 million, with a midpoint of $36.5 million, and deducts corporate taxes at the Israeli statutory rate of 23.0%.
(3) $4.2 million represents the amount the Company has invested in working capital and the purchase of equipment for a new subsidiary, Arrow Midstream LLC, which is focused on the transportation of liquefied petroleum products, including but not limited to, butane, propane, and similar products.
(4) As of March 31, 2019

Based on the range of indicated total asset value, Duff & Phelps estimated the range of aggregate equity value of the Company to be approximately $271,842 thousand to approximately $380,252 thousand by adjusting the range of total asset values as follows:

● adding the Company’s cash and restricted equivalents of approximately $33,230 thousand as of March 31, 2019, as provided by the Company’s management;

● adding the Company’s other net assets of approximately $8,543 thousand as of March 31, 2019, as provided by the Company’s management; and

● subtracting the Company’s debt of approximately $77,702 thousand, including accrued interest of approximately $1,012 thousand, as provided by the Company’s management as of March 31, 2019.

Summary Conclusion

Based on the foregoing analyses and the number of outstanding shares of Common Stock as of May 20, 2019 of 2,717,648, as provided by the Company’s management, and subject to the assumptions, qualifications, and limiting conditions described in its opinion letter attached hereto as Annex B, the implied value of each share of Common Stock was $100.03 to $139.92, as compared to the Merger Consideration of $121.40. Duff & Phelps noted that the Merger Consideration to be received by the holders of shares of Common Stock (other than the Purchaser Parties, and other than (i) shares of Common Stock to be cancelled pursuant to Section 3.1(c) of the Merger Agreement, (ii) Common Stock owned by NHL or Parent, and (iii) dissenting shares) pursuant to the Merger Agreement was within the range of the per share value indicated by its analyses.

Duff & Phelps’ opinion and financial analyses were only one of the many factors considered by the Special Committee in their evaluation of the merger and should not be viewed as determinative of the views of the Special Committee.

Premiums Paid Analysis

Duff & Phelps provided a premiums paid analysis to the Special Committee as a supplementary analysis for informational purposes, and not as part of Duff & Phelps’ financial analyses that supported its opinion. Duff & Phelps reviewed the premiums paid by acquirers over the public market trading prices in merger and acquisition transactions

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involving a majority stockholder purchasing the remaining shares that were announced after January 1, 2016 and involved target companies with businesses deemed relevant by Duff & Phelps, based on the closing stock price one-day, one-week, and one-month prior to the announcement of the applicable transaction. The following table summarizes the results of the review:

		Stock Price Premium (Median)
Criteria:	Number of Transactions	1-Day Prior (%)	1-Week Prior (%)	1-Month Prior (%)
Oil, Gas, and Consumable Fuels and Energy Equipment and Services	15	31.1%	31.1%	31.7%
All deals with Enterprise Value < $500 million	145	16.7%	19.4%	22.4%
All United States Deals	14	21.6%	32.0%	29.4%
All Israeli Deals	6	19.8%	23.7%	33.8%
All Deals with Majority Stockholder Purchasing Remaining Shares	217	18.2%	19.4%	21.5%
Source: S&P Capital IQ

Duff & Phelps noted that the premiums paid analysis indicated that the Merger Consideration of $121.40 per share to be received by the holders of Common Stock of the Company pursuant to the Merger Agreement implied a 18.9% premium to the Company’s Common Stock closing price of $102.10 per share on March 21, 2018, the trading day prior to the date of the filing of a Schedule 13D with the SEC announcing that the Reporting Persons (as defined in the Schedule 13D) were in the preliminary stages of evaluating the possibility of pursuing a transaction involving the acquisition of the outstanding shares of Common Stock of Isramco not already owned by the Reporting Persons.

Previous Presentations to the Special Committee

In addition to the May 20, 2019 financial presentation to the Special Committee summarized above, in its capacity as financial advisor and in connection with assisting the Special Committee in negotiating the best price, Duff & Phelps also made preliminary presentations to the Special Committee on each of November 26, 2018, January 10, 2019, January 27, 2019 (using a presentation dated January 25, 2019), January 28, 2019, February 17, 2019 (using a presentation dated February 14, 2019), March 12, 2019, and April 2, 2019. A summary of these preliminary presentations is also provided below. Copies of these preliminary presentations, as well as a copy of the May 20, 2019 presentation, are attached as exhibits to the Schedule 13E-3. The summaries of the presentations made to the Special Committee set forth in this proxy statement are qualified in their entirety by the full text of such materials. None of these presentations, alone or together, constitute or form the basis of an opinion of Duff & Phelps with respect to the adequacy or fairness, from a financial point of view, of the Merger Consideration.

● The November 26, 2018, presentation contained among other things, for reference only, (i) an update on publicly available market conditions, (ii) preliminary valuation methodologies and related questions, and (iii) a preliminary analysis of the historical trading range of the Common Stock.

● The January 10, 2019, presentation contained among other things, for reference only, (i) a preliminary analysis of the historical trading range of the Common Stock, and (ii) a preliminary analysis of the premiums paid in selected merger and acquisition transactions announced since January 1, 2016, involving a majority stockholder acquiring the remaining shares in the applicable company.

● The January 25, 2019 presentation contained, among other things, (i) an update on publicly available market conditions, (ii) a review of the Initial Proposal, and (iii) a preliminary financial analysis of the Company utilizing a sum-of-the parts analysis. A comparison of the key financial analysis contained in the January 25, 2019 presentation to that contained in the May 20, 2019 presentation is provided below.

● The January 28, 2019 presentation contained, among other things, an update to the net debt and SG&A figures utilized in the equity value calculations, based on Naphtha’s responses to Duff & Phelps’ written questions. 

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A comparison of the key financial analysis contained in the January 28, 2019 presentation to that contained in the May 20, 2019 presentation is provided below.

● The February 14, 2019 presentation contained, among other things, (i) a review of the Special Committee proposal compared to the Initial Proposal, including a summary of certain differences in methodology between the Special Committee proposal and the Naphtha valuation analysis, and (ii) an updated preliminary financial analysis of the Company, including a discussion of changes from the January 28, 2019 presentation to take account of the passage of time, including the availability of more recent reserve reports provided by the Company for each of (a) Tamar Royalties and (b) the Company’s U.S. Oil and Gas Exploration and Production Segment. A comparison of the key financial analysis contained in the February 14, 2019 presentation to that contained in the May 20, 2019 presentation is provided below.

● The March 12, 2019 presentation contained, among other things, (i) a review of the Special Committee proposal compared to the Naphtha valuation analysis, including a summary of certain differences in methodology between the Special Committee proposal and the Naphtha valuation analysis, and (ii) an updated preliminary financial analysis of the Company excluding any tax benefit related to a step-up in basis to a purchaser of the Company’s assets and incorporating a revised discount rate range, based on an updated set of selected public companies. A comparison of the key financial analysis contained in the March 12, 2019 presentation to that contained in the May 20, 2019 presentation is provided below.

● The April 2, 2019 presentation contained, among other things, (i) a review of the Special Committee proposal compared to the Revised Proposal, and (ii) an updated preliminary financial analysis of the Company to take account of the passage of time and value of the Company’s Tamar and Corporate SG&A expenses.

The preliminary financial analyses included in the January 25, 2019, February 14, 2019, March 12, 2019 and April 2, 2019 presentations were based on the proposed terms of the proposed transaction (including the consideration proposed to be paid to holders of Common Stock), the Company’s capitalization, and financial, economic, market, tax and other conditions and circumstances as in effect on, and the information made available to Duff & Phelps as of, the respective dates of such presentations. The preliminary financial analyses contained in the presentations made to the Special Committee on each of January 27, 2019, January 28, 2019, February 17, 2019, March 12, 2019 and April 2, 2019 were based on preliminary iterations of the Isramco Projections, and the financial analyses contained in the May 20, 2019 presentation were based on the Isramco Projections. Accordingly, the results of such preliminary financial analyses differ from the financial analyses contained in the May 20, 2019 financial presentation as a result of, among other things, the Isramco Projections relied upon and interim changes in the proposed terms of the proposed transaction, the Company’s capitalization and financial, economic, market, tax and other conditions, circumstances and information.

The primary preliminary financial analyses presented in the January 25, 2019, February 14, 2019, March 12, 2019 and April 2, 2019 presentations were sum-of-the-parts analyses of the Company, utilizing discounted cash flow analyses for each of Tamar Royalties and the Company’s U.S. Oil and Gas Exploration and Production Segment, which is comprised of Isramco Resources, Isramco Energy, and Jay Petroleum, and a combined selected public companies / M&A transactions analysis for the Company’s Production Services segment, both on a pre-Tamar Arbitration estimated proceeds and post-Tamar Arbitration estimated proceeds basis, substantially similar to the sum-of-the-parts analysis based on the projections contained in the Isramco Projections and contained in the May 20, 2019 presentation summarized above.

The preliminary sum-of-the parts analysis contained in the January 25, 2019 presentation yielded the following ranges of implied equity value and per share value of the Company’s Common Stock: (i) $280,044 thousand to $349,923 thousand and $103.05 to $128.76, respectively, excluding the hypothetical tax benefit of a step-up in basis to a purchaser of the Company’s assets and excluding the potential proceeds from the Tamar Arbitration; and (ii) $334,714 thousand to $404,593 thousand and $123.16 to $148.88, respectively, excluding the hypothetical tax benefit of a step-up in basis to a purchaser of the Company’s assets and including $71.0 million pre-tax estimated proceeds from the Tamar Arbitration.

The preliminary sum-of-the parts analysis contained in the January 28, 2019 presentation yielded the following ranges of implied equity value and per share value of the Company’s Common Stock: (i) $286,456 thousand to $356,335 thousand and $105.41 to $131.12, respectively, excluding the hypothetical tax benefit of a step-up in basis to a purchaser of the Company’s assets and excluding the potential proceeds from the Tamar Arbitration; and (ii) $341,126 thousand to $411,005 thousand and $125.52 to $151.24, respectively, excluding the hypothetical tax benefit of a step-up in basis to a purchaser of the Company’s assets and including $71.0 million pre-tax estimated proceeds from the Tamar Arbitration.

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The preliminary sum-of-the parts analysis contained in the February 14, 2019 presentation yielded the following ranges of implied equity value and per share value of the Company’s Common Stock: (i) $311,712 thousand to $410,712 thousand and $114.70 to $151.13, respectively, including the hypothetical tax benefit of a step-up in basis to a purchaser of the Company’s assets and excluding the estimated potential proceeds from the Tamar Arbitration; (ii) $339,047 thousand to $438,047 thousand and $124.76 to $161.19, respectively, including the hypothetical tax benefit of a step-up in basis to a purchaser of the Company’s assets and including $35.5 million pre-tax estimated proceeds from the Tamar Arbitration, (iii) $366,382 thousand to $465,382 thousand and $134.82 to $171.24, respectively, including the hypothetical tax benefit of a step-up in basis to a purchaser of the Company’s assets and including $71.0 million pre-tax estimated proceeds from the Tamar Arbitration, (iv) $282,712 thousand to $359,712 thousand and $104.03 to $132.36, respectively, excluding the hypothetical tax benefit of a step-up in basis to a purchaser of the Company’s assets and excluding the potential proceeds from the Tamar Arbitration; (v) $310,047 thousand to $387,047 thousand and $114.09 to $142.42, respectively, excluding the hypothetical tax benefit of a step-up in basis to a purchaser of the Company’s assets and including $35.5.0 million pre-tax estimated proceeds from the Tamar Arbitration, and (vi) $337,382 thousand to $414,382 thousand and $124.14 to $152.48, respectively, excluding the hypothetical tax benefit of a step-up in basis to a purchaser of the Company’s assets and including $71.0 million pre-tax estimated proceeds from the Tamar Arbitration.

The preliminary sum-of-the parts analysis contained in the March 12, 2019 presentation yielded the following ranges of implied equity value and per share value of the Company’s Common Stock, in each case excluding the hypothetical tax benefit of a step-up in basis to a purchaser of the Company’s assets: (i) $302,712 thousand to $370,712 thousand and $111.39 to $136.41, respectively, excluding potential proceeds from the Tamar Arbitration; and (ii) $330,047 thousand to $398,047 thousand and $121.00 to $146.00, respectively, including $35.5 million pre-tax estimated proceeds from the Tamar Arbitration.

The preliminary sum-of-the parts analysis contained in the April 2, 2019 presentation yielded the following ranges of implied equity value and per share value of the Company’s Common Stock, in each case excluding the hypothetical tax benefit of a step-up in basis to a purchaser of the Company’s assets: (i) $308,003 thousand to $366,003 thousand equity value of the Company, excluding potential proceeds from the Tamar Arbitration; and (ii) $335,338 thousand to $393,338 thousand and $123.00 to $145.00, respectively, including $27.3 million pre-tax estimated proceeds from the Tamar Arbitration.

In addition to the preliminary sum-of-the part analyses summarized above, each of the January 25, 2019, February 14, 2019, March 12, 2019, and April 2, 2019 presentations included, for reference only, (i) a preliminary analysis of the historical trading range of the Common Stock, and (ii) a preliminary analysis of the premiums paid in selected merger and acquisition transactions announced since January 1, 2016, involving a majority stockholder acquiring the remaining shares in the applicable company, in each case, as of the date of such presentation.

Miscellaneous

The issuance of Duff & Phelps’ opinion was approved by its fairness review committee.

Duff & Phelps is a premier global valuation and corporate finance advisor that is regularly engaged to provide financial advisory services, including fairness opinions, in connection with mergers and acquisitions, leveraged buyouts, going-private transactions and recapitalization transactions. Since 2005, Duff & Phelps has rendered over 865 fairness opinions in transactions aggregating more than $335 billion and is regularly engaged in the valuation of businesses and securities in the preparation of fairness opinions in connection with mergers, acquisitions and other strategic transactions.

Pursuant to the Special Committee’s engagement letter with Duff & Phelps, in connection with Duff & Phelps’ financial advisory services, the Company agreed to pay, Duff & Phelps, a nonrefundable upfront retainer of $175,000 payable upon its engagement by the Special Committee and a transaction fee, which is contingent upon the merger of approximately $492,000. As compensation for Duff & Phelps’ services in connection with the rendering of its opinion, the Company agreed to pay Duff & Phelps a fee of $250,000, consisting of a nonrefundable retainer of $125,000 payable upon its engagement by the Special Committee and $125,000 payable upon Duff & Phelps informing the Special Committee that it was prepared to render and deliver the opinion. No portion of Duff & Phelps’ professional fee for the opinion was refundable or contingent upon either the conclusion expressed in the opinion or whether or not the merger is successfully consummated. The Company also agreed to pay Duff & Phelps’ reasonable out-of-pocket expenses and to provide customary indemnification. The terms of the fee arrangements with Duff & Phelps, which the Company believes are customary in transactions of this nature, were negotiated at arm’s length, and the Special Committee is aware of these fee arrangements.

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According to information supplied to the Company by Duff & Phelps, other than its engagement in connection with the merger, during the two years preceding the date of its opinion, Duff & Phelps has not had any material relationship with any party to the merger for which compensation has been received or is intended to be received, nor is any such material relationship or related compensation mutually understood to be contemplated. Duff & Phelps may seek to, in the future, provide financial advisory services to the Company or the Purchaser Parties or entities that are affiliated with any of them, for which it would expect to receive compensation.

Duff & Phelps expressly consented to the inclusion in their entirety of its opinion and the materials it presented to the Special Committee as exhibits to the Schedule 13E-3, and to the attachment of its opinion as Annex B to this proxy statement. These materials will also be available for any interested stockholder of the Company (or any representative of a stockholder who has been so designated in writing) to inspect and copy as set forth herein. However, neither the opinion of Duff & Phelps nor its presentations to the Special Committee constitute a recommendation to any stockholder of the Company as to how such stockholder should vote with respect to the merger or any other matter.

Purchaser Group Members’ Purposes and Reasons for the Merger

Under the SEC rules governing “going private” transactions, each Purchaser Group Member is deemed to be engaged in a “going private” transaction and, therefore, is required to express his, her or its reasons for the merger to the unaffiliated stockholders, as defined in Rule 13e-3 of the Exchange Act. Each Purchaser Group Member is making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act.

For each Purchaser Group Member, the primary purpose of the merger is to acquire, through Parent and NHL, all shares of Common Stock not owned by them to benefit from any future earnings and growth of the Company after the merger of Merger Sub with and into the Company, making the Company a privately held subsidiary of Parent and NHL. The Purchaser Group believes that structuring the transaction in such manner is preferable to other transaction structures because (i) it will enable Parent and NHL to directly acquire all of the outstanding shares of the Company at the same time, (ii) it will allow the Company to cease to be a publicly registered and reporting company and (iii) it represents an opportunity for the Company’s stockholders other than the Purchaser Group to immediately realize the value of their investment in the Company. Further, the Purchaser Group believes that structuring the transaction as a merger transaction provides a prompt and orderly transfer of ownership of the Company in a single step, without the necessity of financing separate purchases of the Common Stock in a tender offer and implementing a second-step merger to acquire any Common Stock not tendered into any such tender offer, and without incurring any additional transaction costs associated with such activities.

The Purchaser Group also believes, in light of the risks and uncertainties relating to the Company’s prospects and the market, economic and other risks, that it is in the best interests of the Company to operate as a privately-held entity. As a privately-held entity, the Company will have greater operational and business flexibility to pursue alternatives, and management will be able to concentrate on long-term growth, reducing the focus on the quarter-to-quarter performance often emphasized by the public equity market’s valuation of Company Stock.

In addition, as a privately-held entity, the Company will be relieved of many of the other expenses, burdens and constraints imposed on companies that are subject to the public reporting requirements under the federal securities laws of the United States, including the Exchange Act and Sarbanes-Oxley Act of 2002.

The Purchaser Group also considered a variety of potentially negative factors to it concerning the Merger Agreement and the merger, which are listed below, although not listed in any relative order of importance:

● all of the risk of any possible decreases in the Company’s revenues, free cash flow or value following the merger will be borne by the Purchaser Group;

● risks associated with pending legal proceedings and possible adverse regulatory changes against the Company will be borne by the Purchaser Group;

● the business risks facing the Company, including increased competition, will be borne by the Purchaser Group;

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● an investment in the surviving corporation by the Purchaser Group following the merger will involve substantial risk resulting from the limited liquidity of such an investment; and

● following the merger, there will be no trading market for the surviving corporation’s equity securities.

The foregoing discussion of the information and factors considered by the Purchaser Group is not intended to be exhaustive, but includes the material factors considered by the Purchaser Group. In view of the variety of factors considered in connection with their evaluation of the merger, the Purchaser Group did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching their determination. The Purchaser Group did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support their ultimate determination. The Purchaser Group based its determination on the totality of the information presented.

Position of the Purchaser Group as to Fairness of the Merger

Under SEC rules governing going private transactions, each of the Purchaser Group Member is required to express his, her or its belief as to the fairness of the merger to the unaffiliated stockholders. Each of the Purchaser Group Members is making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act.

The Purchaser Group has interests in the merger that are different from those of the other stockholders of the Company by virtue of its continuing interests in the surviving corporation after the completion of the merger. The Purchaser Group attempted to negotiate with the Special Committee the terms of a transaction that would be most favorable to the Purchaser Group, and not necessarily to the Company’s unaffiliated stockholders, and, accordingly, did not negotiate the Merger Agreement with a goal of obtaining terms that were fair to such unaffiliated stockholders. The Special Committee consists of three directors of the Company who are not affiliated with the Purchaser Group Members, are not employees of the Company or any of its affiliates and have no financial interest in the merger different from, or in addition to the interests of the Company’s unaffiliated stockholders other than their interests described under “Special Factors—Interests of Isramco’s Directors and Executive Officers in the Merger” beginning on page 54 . Accordingly, the Purchaser Group believes that the members of the Special Committee are independent and disinterested directors of the Company.

The Purchaser Group did not participate in the deliberations of the Special Committee regarding, or receive any advice from the Special Committee’s independent legal or financial advisors as to, the substantive or procedural fairness of the merger to the Company’s unaffiliated stockholders. The Purchaser Group has not performed, or engaged a financial advisor to perform, any valuation or other analysis for the purposes of assessing the fairness of the merger to the Company’s unaffiliated stockholders. No financial advisor provided the Purchaser Group with any analysis, opinion or appraisal with respect to the fairness of the Merger Consideration to the unaffiliated stockholders.

Based on its knowledge and analysis of available information regarding the Company, as well as the factors considered by, and the analyses and resulting conclusions of, the Special Committee and the Board discussed under “Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger” beginning on page 21 , each Purchaser Group Member believes that the merger is substantively and procedurally fair to the unaffiliated stockholders based on its consideration of the following factors, which are not listed in any relative order of importance:

● the Special Committee, consisting entirely of independent directors who are not officers or employees of the Company and who are not affiliated with any member of the Purchaser Group, was established and given authority to, among other things, review, evaluate and negotiate the terms of the merger and to recommend to the Board what action should be taken by the Company, including not to engage in the merger;

● members of the Special Committee do not have any interests in the merger different from, or in addition to, those of the unaffiliated stockholders, other than (i) the directors’ receipt of board compensation in the ordinary course, (ii) the Special Committee members’ compensation in connection with its evaluation of the merger (which is not contingent upon the completion of the merger or recommendation of the merger by the Special Committee or the Board) and (iii) the directors’ indemnification and liability insurance rights under the Merger Agreement and their corresponding indemnification agreements;

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● the Special Committee retained and was advised by its legal and financial advisors who are experienced in advising committees such as the Special Committee in similar transactions;

● the Special Committee was deliberate in its process, taking over eleven months to determine whether the merger was in the best interest of the Company’s unaffiliated stockholders and to analyze, evaluate and negotiate the terms of the merger;

● the Purchaser Group did not participate in or seek to influence the deliberative process of, or the conclusions reached by, the Special Committee or the negotiating positions of the Special Committee;

● the Special Committee and the Board had no obligation to recommend the approval and adoption of the Merger Agreement and the transactions contemplated thereby, including the merger, or any other transaction;

● the Special Committee and Board was fully informed about the extent to which the interests of certain stockholders of the Company who are also Purchaser Group Members in the merger differed from those of the unaffiliated stockholders;

● the Special Committee and, acting upon the unanimous recommendation of the Special Committee, the Board , on behalf of the Company, determined that the Merger Agreement and the transactions contemplated thereby, including the merger, are advisable and fair to, and in the best interests of, the unaffiliated stockholders;

● the current and historical market prices of the Common Stock, including the fact that the Merger Consideration represents a premium of approximately 18.9% over the closing price of the Common Stock of $102.10 on March 21, 2018, the last trading day prior to the public disclosure that Naphtha was in preliminary stages of evaluating the possibility of pursuing a transaction involving the acquisition of the outstanding shares of the Common Stock not already owned by Naphtha and its affiliates, and a premium of approximately 10.0% over the $110.36 purchase price per share initially offered by Naphtha, a premium of approximately 8.9% over the closing price of the Common Stock of $111.50 on May 20, 2019, the last trading day prior to the public announcement of the merger, and a premium of approximately 4.6% over the 30 trading-day average price of the Common Stock as of May 20, 2019, the last trading day prior to the public announcement of the Merger Agreement;

● the Company’s Common Stock traded as low as $98.11 per share during the 52-week period prior to the announcement of the execution of the Merger Agreement;

● the Merger Consideration is all cash, which allows the unaffiliated stockholders to immediately realize certainty of value and liquidity without incurring brokerage and other costs typically associated with market sales (including the limited trading liquidity for the Common Stock on the NASDAQ Capital Market) and allows the unaffiliated stockholders not to be exposed to risks and uncertainties relating to the prospects of the Company;

● the Merger Consideration, other terms and conditions of the Merger Agreement and the transactions contemplated thereby, including the merger, were the result of extensive negotiations over an extended period of time between the Special Committee and its advisors on the one side and the Purchaser Group and its advisors on the other side;

● notwithstanding that the Purchaser Group may not rely upon the opinion provided by Duff & Phelps to the Special Committee, the Special Committee received from Duff & Phelps an opinion, dated May 20, 2019, as to the fairness, from a financial point of view, of the Merger Consideration to be received by the unaffiliated and non-dissenting stockholders in the merger, based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Duff & Phelps in preparing its opinion;

● the recognition of the potential disadvantages that the Company would continue to face as an SEC-reporting public company, including continuing to be subject to the (i) regulatory compliance costs and (ii) requirement to disclose a considerable amount of business information to the public, some of which would otherwise be considered competitively sensitive and would not be disclosed by a non-reporting company;

● the Merger Agreement requires that it be adopted not only by the affirmative vote of the holders of not less than 75% of the outstanding shares of stock of the Company entitled to vote in the election of directors and also the

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affirmative vote of the holders of at least a majority of the voting power of the outstanding Company Stock not beneficially owned by the Purchaser Group or any Section 16 Officer of the Company;

● subject to compliance with the Merger Agreement and prior to receipt of the Requisite Stockholder Approval, the ability of the Board or the Independent Committee to participate in discussions or negotiations with, or provide non-public information to, any person in response to an unsolicited Acquisition Proposal for the Company, if the Board or the Independent Committee determines, after consultation with outside legal counsel, that such Acquisition Proposal is reasonably likely to lead to a Superior Proposal;

● the ability of the Board or the Independent Committee, subject to certain conditions, to make a Change in Recommendation;

● the Isramco Expense Reimbursement payable by the Company to Parent if the Merger Agreement is terminated under certain circumstances is $1.5 million;

● the Parent Expense Reimbursement payable by Parent to the Company if the Merger Agreement is terminated under certain circumstances is $1.5 million, which is equal to the amount of the Isramco Expense Reimbursement payable by the Company to Parent;

● the Company, under certain circumstances as set out in the Merger Agreement, is able to specifically enforce the terms of the Merger Agreement;

● the merger is not conditioned on any financing being obtained by Parent, thus increasing the likelihood that the merger will be consummated and the Merger Consideration will be paid to the unaffiliated stockholders; and

● the ability of the Company’s stockholders to exercise appraisal rights under Section 262 of the DGCL, which provides such stockholders with the opportunity to have the Delaware Court of Chancery determine the “fair value” (as defined pursuant to Section 262 of the DGCL) of their shares of Company Stock (which may be more than, less than or the same as the amount such stockholders would have received under the Merger Agreement) and to receive payment based on that valuation in lieu of receiving the Merger Consideration.

The Purchaser Group did not consider the Company’s net book value, which is defined as total assets minus total liabilities, as a factor. The Purchaser Group believes that net book value, which is an accounting concept based on historical costs, is not a material indicator of the value of the Company as a going concern because it does not take into account the future prospects of the Company, market conditions, trends in the industry in which the Company conducts its business or the business risks inherent in competing with other companies in the same industry.

In its consideration of the fairness of the merger, the Purchaser Group did not consider the Company’s liquidation value to be a relevant valuation method because it considers the Company to be a viable, going concern business where value is derived from cash flows generated from its continuing operations and because the Company will continue to operate its business following the merger.

The Purchaser Group did not seek to establish a pre-merger going concern value for the Common Stock to determine the fairness of the Merger Consideration to the unaffiliated stockholders. However, to the extent the pre-merger going concern value was reflected in the pre-announcement price of the Common Stock, the Merger Consideration represented a premium to the going concern value of the Company.

Each of the Purchaser Group Members is not aware of, and thus did not consider in its fairness determination, any offers or proposals made by any unaffiliated third parties with respect to (a) a merger or consolidation of the Company with or into another company, (b) a sale of all or a substantial part of the Company’s assets or (c) the purchase of the Company voting securities that would enable the holder to exercise control over the Company.

The Purchaser Group did not perform or receive any independent reports, opinions or appraisals from any third party related to the merger, and thus did not consider any such reports, opinions or appraisals in determining the substantive and procedural fairness of the merger to the unaffiliated stockholders.

The foregoing is a summary of the information and factors considered and given weight by each of the Purchaser Group Members in connection with its evaluation of the substantive and procedural fairness of the merger to the unaffiliated

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stockholders, which is not intended to be exhaustive, but includes all material factors considered by the Purchaser Group. The Purchaser Group did not find it practicable to assign, and did not assign, relative weights to the individual factors considered in reaching their conclusion as to the substantive and procedural fairness of the merger to the unaffiliated stockholders. Rather, its fairness determination was made after consideration of all of the foregoing factors as a whole.

Each of the Purchaser Group Members believes these factors provide a reasonable basis for its belief that the merger is substantively and procedurally fair to the unaffiliated stockholders. This belief should not, however, be construed as a recommendation to any stockholder of the Company to vote in favor of the proposal to adopt the Merger Agreement. None of the Purchaser Group Members makes any recommendation as to how stockholders of the Company should vote their shares of Common Stock on the proposal to adopt the Merger Agreement.

Plans for Isramco After the Merger

It is expected that Isramco’s operations will be conducted after the merger substantially as they currently are being conducted, except that it will cease to be a publicly traded company and will instead be a privately-held subsidiary of Parent and NHL. Following the completion of the merger, the Company will no longer be subject to the Exchange Act and NASDAQ Capital Market compliance and reporting requirements and the related direct and indirect costs and expenses, and may experience positive effects on profitability as a result of the elimination of such costs and expenses.

The directors of Merger Sub will be the directors of Isramco immediately following the merger. The Purchaser Group Members intend that, upon consummation of the merger, the officers of Isramco will remain in their positions.

The Purchaser Group Members have advised Isramco that they do not have any current intentions, plans or proposals to cause Isramco to engage in any of the following:

● an extraordinary corporate transaction following consummation of the merger such as a merger, reorganization or liquidation;

● the relocation of any material operations or sale or transfer of a material amount of assets; or

● any other material changes in its business or the composition of its management.

Nevertheless, following consummation of the merger, the surviving corporation’s management and board of directors may initiate a review of Isramco and its assets, corporate and capital structure, capitalization, operations, business, properties and personnel to determine what changes, if any, would be desirable following the merger to enhance the business and operations of Isramco and may cause Isramco to engage in the types of transactions set forth above if the management or the board of directors decides that such transactions are in the best interest of Isramco upon such review. The Purchaser Group Members expressly reserve the right to make any changes to Isramco operations after consummation of the merger that they deem appropriate in light of such evaluation and review or in light of future developments.

Certain Effects of the Merger 

If the Merger Agreement is adopted by the Requisite Stockholder Approval and the other conditions to the closing of the merger are either satisfied or waived, Merger Sub will be merged with and into Isramco, the separate corporate existence of Merger Sub will cease and Isramco will continue its corporate existence under Delaware law as the surviving corporation in the merger, with all of its rights, privileges, immunities, powers and franchises continuing unaffected by the merger.

Upon consummation of the merger, each share of Common Stock issued and outstanding immediately prior to the effective time of the merger (other than shares owned by Isramco as treasury stock, shares owned by Parent or NHL, and shares owned by holders of dissenting shares) will immediately be converted into the right to receive the Merger Consideration, without interest and less applicable withholding taxes. This includes the 61,679 shares of Common Stock directly held by Mr. Haim Tsuff that will be converted into the right to receive $7,487,830.60 as merger consideration, without interest and less applicable withholding taxes.

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Following the merger, the entire equity in the surviving corporation will ultimately be owned by Parent and NHL. If the merger is completed, the Purchaser Group Members will be the sole beneficiaries of Isramco’s future earnings and growth, if any, and will be entitled to vote on corporate matters affecting Isramco following the merger. Similarly, the Purchaser Group Members will also bear the risks of ongoing operations, including the risks of any decrease in Isramco’s value after the merger.

If the merger is completed, Isramco’s unaffiliated stockholders will have no interest in Isramco’s net book value or net earnings. Based on the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, the table below sets forth the direct and indirect interests in Isramco’s net book value and net earnings of each Purchaser Group Member as of and for the year ended December 31, 2018, and what those interests would have been had the merger been completed as of that date.

	Ownership Prior to the Merger(1)								Ownership Assuming Completion of the Merger(1)
	(in thousands, except % ownership)
Purchaser Group Member	Net Book Value			Earnings		% Ownership (2)			Net Book Value			Earnings		% Ownership
Mr. Haim Tsuff	$	(5,373	)	$	12,028		73.01	%	$	(7,359	)	$	16,476		100	%
United Kingsway Ltd.		(5,206	)		11,655		70.74	%		(7,359	)		16,476		100	%
YHK General Manager Ltd.		(5,206	)		11,655		70.74	%		(7,359	)		16,476		100	%
YHK Investment LP		(5,206	)		11,655		70.74	%		(7,359	)		16,476		100	%
Equital, Ltd.		(5,206	)		11,655		70.74	%		(7,359	)		16,476		100	%
J.O.E.L. Jerusalem Oil Exploration Ltd.		(5,206	)		11,655		70.74	%		(7,359	)		16,476		100	%
Naphtha		(5,206	)		11,655		70.74	%		(7,359	)		16,476		100	%
NHL		(4,313	)		9,657		58.61	%		(6,097	)		13,651		82.85	%
Parent		(893	)		1,999		12.13	%		(1,262	)		2,825		17.15	%
Merger Sub(3)		—			—		0	%		N/A			N/A		N/A

(1)	Ownership percentages are based on shares of Common Stock outstanding as of May 20, 2019, the date of the Merger Agreement.
(2)	% ownership includes direct and indirect ownership. For more information, see “Important Information Regarding the Purchaser Group Members” and “Important Additional Information Regarding Isramco—Security Ownership of Management and Certain Beneficial Owners.”
(3)	At the effective time of the merger, Merger Sub will merge with and into Isramco and the separate existence of Merger Sub will cease.

A primary benefit of the merger to Isramco’s stockholders (other than Purchaser Group Members) will be the right of such stockholders to receive the Merger Consideration as described above, representing a premium of approximately 18.9% over the closing price of the Common Stock of $102.10 on March 21, 2018, the last trading day prior to the public disclosure that Naphtha was in preliminary stages of evaluating the possibility of pursuing a transaction involving the acquisition of the outstanding shares of the Common Stock not already owned by Naphtha and its affiliates, and a premium of approximately 10.0% over the $110.36 purchase price per share initially offered by Naphtha, a premium of approximately 8.9% over the closing price of the Common Stock of $111.50 on May 20, 2019, the last trading day prior to the public announcement of the merger, and a premium of approximately 4.6% over the 30 trading-day average price of the Common Stock as of May 20, 2019, the last trading day prior to the public announcement of the Merger Agreement. Additionally, such stockholders will avoid the risk of any possible decrease in Isramco’s future earnings, growth or value.

The primary detriments of the merger to such stockholders include the lack of interest of such stockholders in Isramco’s potential future earnings, growth or value. Additionally, the receipt of cash in exchange for shares of Common Stock pursuant to the merger will generally be a taxable sale transaction for U.S. federal income tax purposes to our stockholders who surrender shares of the Common Stock in the merger, as described further under the section entitled “Special Factors—Material U.S. Federal Income Tax Consequences of the Merger.”

In connection with the merger, the Purchaser Group Members will receive benefits and be subject to obligations that are different from, or in addition to, the benefits received by Isramco’s stockholders generally. The primary benefits of the merger to the Purchaser Group Members, based on their ownership of all the equity interests in Parent and NHL, include their indirect interest in Isramco’s potential future earnings and growth which, if they successfully execute their

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business strategies, could be substantial. Additionally, following the merger, Isramco will be a private company, and as such will be relieved of the burdens imposed on companies with publicly traded equity, including the requirements and restrictions on trading that Isramco’s directors, officers and beneficial owners of more than 10% of the outstanding shares of Common Stock face as a result of the provisions of Section 16 of the Exchange Act. Further, following the merger, Mr. Tsuff will be a director of the surviving corporation.

The primary detriments of the merger to the Purchaser Group Members include the fact that all of the risk of any possible decrease in Isramco’s earnings, growth or value following the merger will be borne by Parent and NHL. Additionally, the investment by the Purchaser Group Members in Parent, NHL and Isramco will not be liquid, with no public trading market for such securities.

In connection with the merger, certain members of Isramco’s management will receive benefits and be subject to obligations that may be different from, or in addition to, the benefits and obligations of Isramco’s stockholders generally, as described in more detail under “Special Factors—Interests of Isramco’s Directors and Executive Officers in the Merger” beginning on page  54 . Those incremental benefits are expected to include, among others, certain executive officers continuing as executive officers of the surviving corporation.

The shares of Common Stock are currently registered under the Exchange Act and are quoted on the NASDAQ Capital Market under the symbol “ISRL.” As a result of the merger, Isramco will be a privately held corporation and there will be no public market for its shares. After the merger, the shares of Common Stock will cease to be listed on the NASDAQ Capital Market and price quotations with respect to sales of shares of Common Stock in the public market will no longer be available. In addition, registration of the Common Stock under the Exchange Act will be terminated. After the termination of registration of the Common Stock and the suspension of its reporting obligations, the Company will no longer be required to file periodic reports with the SEC or otherwise be subject to the United States federal securities laws, including the Sarbanes-Oxley Act of 2002, applicable to public companies. The Company currently estimates that following the completion of the merger the annually recurring cost savings as a result of no longer being a publicly traded company subject to the reporting requirements of the federal securities laws will be approximately $0.4 million per year. Any cost savings realized by the surviving corporation as a result of no longer being subject to SEC reporting requirements of the United States federal securities laws will be realized solely by the surviving corporation and, indirectly as stockholders or beneficial owners of the surviving corporation, the Purchaser Group Members.

At the effective time of the merger, the certificate of incorporation and bylaws of Isramco shall continue to be the certificate of incorporation and bylaws of Isramco following the merger until thereafter amended in accordance with their respective terms and the DGCL.

Projected Financial Information 

Our management prepares projections with respect to the Company’s future financial performance as part of its ongoing management of the business. The Company does not, as a matter of course, make available to the public future financial projections due to the inherent uncertainty of the underlying assumptions and estimates. However, the Company is including in this proxy statement a summary of certain unaudited prospective financial and operating information that was prepared by our management in connection with discussion regarding the proposed merger and made available to the Board from time to time, to the Special Committee, and to Duff & Phelps in connection with the Special Committee’s consideration of the Company’s stand-alone prospects and potential strategic transactions available to the Company, as well as, to Naphtha, NHL, Parent and Merger Sub. The inclusion of the below information should not be regarded as an indication that any of the Special Committee, Isramco, the Purchaser Group, Duff & Phelps or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future results.

These unaudited prospective financial and operating information prepared by management consist of (A) financial and operating projections for each of the Company’s operating subsidiaries which comprise its Exploration, Development and Production Segment: (1) Tamar Royalties, LLC (“Tamar Royalties”), for each of the fiscal years of 2019 through 2028 and the period from fiscal year 2029 through fiscal year 2058 (referred to as the “Tamar Royalties Projections”), (2) Isramco Resources, LLC (“Isramco Resources”), for each of the fiscal years of 2019 through 2028 and certain subsequent periods specified below (referred to as the “Isramco Resources Projections”), (3) Isramco Energy, LLC (“Isramco Energy”), for each of the fiscal years of 2019 through 2028 and certain subsequent periods specified below (referred to as the “Isramco Energy Projections”), and (4) Jay Petroleum, L.L.C. (“Jay Petroleum”), for each of the fiscal years of 2019 through 2028 and certain subsequent periods specified below (referred to as the “Jay Petroleum Projections”); and

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(B) 2019 and 2020 financial projections for the Company’s Production Services segment (referred to as the “Production Services Projections”). These projections, collectively referred to as the Isramco Projections, were prepared treating each such Isramco subsidiary and segment on a stand-alone basis, without giving effect to the merger including the impact of negotiating or executing the merger, the expenses that may be incurred in connection with consummating the merger, the potential synergies that may be achieved as a result of the merger, the effect of any business or strategic decision or action that has been or will be taken as a result of the Merger Agreement having been executed, or the effect of any business or strategic decisions or actions which would likely have been taken if the Merger Agreement had not been executed but which were instead altered, accelerated, postponed or not taken in anticipation of the merger.

The accompanying Isramco Projections were not prepared with a view toward public disclosure or with a view toward compliance with the published guidelines established by the SEC or the American Institute of Certified Public Accountants for preparation or presentation of prospective financial information, generally accepted accounting principles (“GAAP”) or international financial reporting standards (“IFRS”), but, in the view of Isramco’s management, were prepared on a reasonable basis, reflected the best available estimates and judgments at the time of preparation, and presented as of the time of preparation, to the best of management’s knowledge and belief, the expected course of action and the expected future financial performance of Isramco’s subsidiaries and Production Services segment on a stand-alone basis as described above and subject to the assumptions and limitations described in this section. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this proxy statement are cautioned not to place undue reliance on the Isramco Projections. Although Isramco’s management believes there is a reasonable basis for the Isramco Projections, Isramco cautions stockholders that future results could be materially different from the Isramco Projections.

The Isramco Resources Projections, the Isramco Energy Projections and the Jay Petroleum Projections were made available to the Special Committee and its financial advisor, Duff & Phelps, on February 6, 2019, the Tamar Royalties Projections were made available to such persons on February 11, 2019, and the Production Services Projections were made available to such persons on May 17, 2019. These projections are the projections used by Duff & Phelps in connection with its fairness analysis as described in “Special Factors—Opinion of Duff & Phelps, Financial Advisor to the Special Committee,” beginning on page 27 . This summary of the Isramco Projections is not being included in this proxy statement to influence your decision whether to vote for the merger proposal, but because these Isramco Projections were made available to the Special Committee, Duff & Phelps, Naphtha, NHL, Parent or Merger Sub, and their respective financial advisors and boards of directors for purposes of considering and evaluating the merger and the Merger Agreement as discussed above in “Special Factors—Background of the Merger,” beginning on page 12 . Neither the Company’s independent registered public accounting firm, MaloneBailey, LLP, nor any other independent accountants have examined, compiled or performed any procedures with respect to the financial projections or any amounts derived therefrom or built thereupon and, accordingly, they have not expressed any opinion or given any form of assurance on the financial projections or their achievability and assume no responsibility for, and disclaim any association with, the prospective financial information.

The Isramco Projections are subject to estimates and assumptions in many respects and, as a result, subject to interpretation. While presented with numerical specificity, the Isramco Projections are based upon a variety of estimates and assumptions that are inherently uncertain, though considered reasonable by Isramco’s management as of the date of their preparation. These estimates and assumptions may prove to be inaccurate for any number of reasons, including general economic conditions, competition, and the risks discussed in this proxy statement under the sections entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 64 . See also “Where You Can Find Additional  Information” beginning on page 95 . The Isramco Projections also reflect assumptions as to certain business decisions that are subject to change. Because the Isramco Projections were developed for Isramco and its subsidiaries on a stand-alone basis without giving effect to the merger, they do not reflect any synergies that may be realized as a result of the merger or any changes to Isramco’s operations or strategy that may be implemented after completion of the merger. There can be no assurance that the prospective results will be realized or that actual results will not be significantly higher or lower than estimated. Since the unaudited prospective financial and operating information covers multiple years, that information by its nature becomes less predictive each successive year.

The Isramco Projections contain certain non-GAAP financial measures that Isramco believes are helpful in understanding its past financial performance and future results. Isramco management regularly uses a variety of financial measures that are not prepared in accordance with GAAP, including EBITDA (defined as earnings before the deduction of interest expenses, taxes, depreciation, and amortization) for forecasting, budgeting and measuring operating performance. The non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP

46

measures. While Isramco believes that these non-GAAP financial measures provide meaningful information to help investors understand Isramco’s operating results and to analyze Isramco’s financial and business trends on a period-to-period basis, there are limitations associated with the use of these non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with GAAP, may not reported by all of Isramco’s competitors and may not be directly comparable to similarly titled measures of Isramco’s competitors due to potential differences in the exact method of calculation. The non-GAAP financial measures used in the Isramco Projections were relied upon by Duff & Phelps for purposes of its respective financial analyses and opinion and by the Special Committee in connection with its consideration of the merger. Financial measures provided to a financial advisor are excluded from the definition of non-GAAP financial measures and, therefore, are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure.

None of Isramco or any of its affiliates, advisors, officers, directors or other representatives can provide any assurance that actual results will not differ from the Isramco Projections, and none of them undertakes any obligation to update, or otherwise revise or reconcile, the Isramco Projections to reflect circumstances existing after the date the Isramco Projections were generated or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the Isramco Projections, as applicable, are shown to be in error. Except as required by applicable securities laws, Isramco does not intend to make publicly available any update or other revision to the Isramco Projections, even in the event that any or all assumptions are shown to be in error. Isramco has made publicly available its actual results of operations for the year ended December 31, 2018 on Isramco’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC on March 18, 2019, as amended by Amendment No. 1 thereto, filed with the SEC on April 30, 2019, and for the quarterly periods ended March 31, 2019 and June 30, 2019, on Isramco’s Quarterly Reports on Form 10-Q filed with the SEC on May 10, 2019 and August 9, 2019, respectively. None of Isramco or its affiliates, advisors, officers, directors or other representatives has made or makes any representation to any Isramco stockholder or other person regarding the ultimate performance of Isramco, its subsidiaries or operating segments compared to the information contained in the Isramco Projections or that forecasted results will be achieved. Isramco has made no representation to the Purchaser Parties, in the Merger Agreement or otherwise, concerning the Isramco Projections.

Summary of the Isramco Projections

Tamar Royalties Projections

Company management prepared the Tamar Royalties Projections for each of the fiscal years of 2019 through 2028 and for the period from fiscal year 2028 through fiscal year 2058. The Tamar Royalties Projections reflect (i) the projected production in the Tamar Field in which Tamar Royalties owns an overriding royalty interest of 1.5375% before payout, which escalates to 2.7375% after payout in the Tamar Field, in each case subject to wellhead adjustment (collectively, the “Tamar ORRI”), (ii) the projected share of revenue from such production attributable to Isramco Negev 2, an affiliated party of Isramco which holds a working interest in the Tamar Field and from which Tamar Royalties receives its payments in respect of the Tamar ORRI, and (iii) the projected revenue attributable to Tamar Royalties from such production pursuant to the Tamar ORRI.

The Tamar Royalties Projections are based on the Tamar Reserve Report prepared by Netherland, Sewell & Associates, Inc. (“NSAI”) estimating the proved, probable, and possible reserves and future revenue, as of December 31, 2018, to the Isramco Negev 2 working interest in certain gas properties located in Tamar and Tamar Southwest Fields, Tamar Lease I/12, offshore Israel. Consequently, the Tamar Royalties Projections incorporate the assumptions utilized by NSAI in its preparation of the Tamar Reserve Report. In preparing the Tamar Royalties Projections and projecting future revenues related to Isramco Negev 2’s working interest in the Tamar Field and the royalty payments to be made in respect thereof, Isramco management used gas prices based on a weighted average of all current and projected sales contracts from the Tamar Field, according to their relative volume. These contract prices were mainly derived from various formulae that include indexation to the Consumer Price Index, the Israeli Power Generation Tariff, or an average of long-term forecasts for Brent Crude prices provided by various institutions.

The Tamar Reserve Report was prepared by NSAI for Isramco Negev 2 in its capacity as Isramco Negev 2’s independent petroleum engineering firm and provided to Isramco in connection with the Tamar ORRI. The scope and results of the procedures employed by NSAI and NSAI’s qualifications are summarized in the Tamar Reserve Report (which is filed as an exhibit to the Schedule 13E-3).

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NSAI was founded in 1961 and performs consulting petroleum engineering services under Texas Board of Professional Engineers Registration No. F-2699. NSAI provides a complete range of geological, geophysical, petrophysical, and engineering services, and has the technical expertise and ability to perform these services in any oil and gas producing area in the world. Its staff are familiar with the recognized industry reserves and resources definitions, specifically those promulgated by the U.S. Securities and Exchange Commission, by the Alberta Securities Commission, and by the SPE, Society of Petroleum Evaluation Engineers, World Petroleum Council, and American Association of Petroleum Geologists.

NSAI has no relationship with Isramco other than its engagement as Isramco’s independent petroleum engineering firm covering the Tamar ORRI.

Isramco management has not undertaken to update the Tamar Royalties Projections since their preparation. However, subsequent developments discussed above in “Special Factors—Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger,” beginning on page 21 , and “Special Factors—Opinion of Duff & Phelps, Financial Advisor to the Special Committee,” beginning on page 27 , may materially impact certain production quantity assumptions underlying the Tamar Reserve Report and certain pricing assumptions on which the Tamar Royalties Projections were based.

The following presents in summary form the Tamar Royalties Projections:

Projected Financial Performance – Tamar Royalties
($ in thousands)
	Tamar Royalties Projections (1)
	2019P		2020P			2021P			2022P			2023P			2024P
Tamar Field (100%):
Natural Gas (Billion Cubic Meters (“BCM”))		10.4		10.4			10.4			10.4			10.4			10.4
NGL (000s Barrels)		477		477			477			477			477			477
Total Tamar Field Revenues	$	2,083,492	$	2,045,270		$	2,042,170		$	2,012,282		$	2,033,344		$	2,050,833
Isramco Negev 2 Share of Revenues (28.75%)	$	599,004	$	588,015		$	587,124		$	578,531		$	584,586		$	589,615
Isramco Inc. ORRI Revenues (Before-Petroleum Levy)	$	54,436	$	53,439		$	53,357		$	52,576		$	53,126		$	53,584
Less: Petroleum Levy		0		(922	)		(14,198	)		(18,831	)		(22,859	)		(25,069	)
Isramco Inc. ORRI Revenues (After-Petroleum Levy)	$	54,436	$	52,517		$	39,159		$	33,745		$	30,267		$	28,515

(1) The Tamar Royalties Projections include revenue attributable to proved, probable, and possible reserves.

Projected Financial Performance – Tamar Royalties
($ in thousands)
	Tamar Royalties Projections (1)
	2025P			2026P			2027P			2028P			Remaining (2)
Tamar Field (100%):
Natural Gas (BCM)		10.4			10.4			10.4			10.4			281.3
NGL (000s Barrels)		477			477			477			477			12,916
Total Tamar Field Revenues	$	2,056,622		$	2,077,963		$	2,107,959		$	2,145,590		$	74,504,578
Isramco Negev 2 Share of Revenues (28.75%)	$	591,279		$	597,414		$	606,038		$	616,857		$	21,420,066
Isramco Inc. ORRI Revenues (Before-Petroleum Levy)	$	53,734		$	54,292		$	55,076		$	56,060		$	1,946,603
Less: Petroleum Levy		(25,148	)		(25,409	)		(25,775	)		(26,236	)		(911,012	)
Isramco Inc. ORRI Revenues (After-Petroleum Levy)	$	28,587		$	28,883		$	29,300		$	29,824		$	1,035,591

(1) The Tamar Royalties Projections include revenue attributable to proved, probable, and possible reserves.

(2) “Remaining” includes revenue attributable to proved, probable, and possible reserves and represents the period from FY2029P through FY2058P.

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Isramco Resources Projections

Company management prepared the Isramco Resources Projections for each of the fiscal years of 2019 through 2028 and certain subsequent periods specified below. The Isramco Resources Projections reflect the projected oil, gas, and NGL production and revenue, and the operating expenses, EBITDA and capital expenditures, attributable to Isramco Resources for the periods indicated based on total proved reserves. The Isramco Resources Projections are based in part on the Cawley Reserve Report, prepared by Cawley, Gillespie & Associates, Inc. (“CGA”), which includes estimates of the proved developed producing reserves (“PDP”) and forecasts of economics attributable to Isramco Resources, as of December 31, 2018, and were calculated using forward strip prices for crude oil and natural gas (“Forward Strip Pricing”). Isramco management has not undertaken to update the Isramco Resources Projections since their preparation.

The Cawley Reserve Report was prepared by CGA for Isramco as part of its annual review of the Company’s United States proved reserves. The scope and results of the procedures employed by CGA are summarized in the Cawley Reserve Report (which is filed as an exhibit to the Schedule 13E-3).

CGA was founded in 1960 and performs consulting petroleum engineering services under Texas Board of Professional Engineers Registration No. F-693. As a petroleum consulting firm, CGA reviews and evaluates hundreds of thousands of oil and gas properties on an annual basis worth billions of dollars and has deep experience with SEC guidelines and reporting.

CGA has no relationship with Isramco other than its engagement as Isramco’s independent petroleum engineering firm for its United States proved reserves.

The following presents in summary form the Isramco Resources Projections and related assumptions:

Projected Financial Performance – Isramco Resources
($ in thousands)
	Isramco Resources Projections (1)
Fiscal Year Ending December 31,	2019P			2020P			2021P			2022P			2023P			2024P
Wells (Net)		235.7			173.1			170.0			167.8			133.0			56.2
Oil Price ($/Bbl)	$	46.20		$	48.13		$	49.76		$	51.15		$	52.18		$	51.59
Net Oil Production (MBbl)		116			94			88			91			98			69
Oil Revenue	$	5,356		$	4,518		$	4,361		$	4,657		$	5,098		$	3,537
Gas Price ($/mcf)	$	3.57		$	3.40		$	3.31		$	3.43		$	3.41		$	3.45
Net Gas Production (Mmcf)		452			338			312			390			361			276
Gas Revenue	$	1,614		$	1,148		$	1,032		$	1,341		$	1,232		$	952
Total Revenue	$	6,970		$	5,666		$	5,393		$	5,997		$	6,330		$	4,489
Total Operating Expenses	$	5,169		$	3,190		$	3,123		$	2,781		$	2,545		$	1,548
EBITDA	$	1,801		$	2,477		$	2,270		$	3,216		$	3,785		$	2,941
Capital Expenditures	$	148		$	0		$	99		$	166		$	0		$	0
as % Total Revenue		2.1	%		0.0	%		1.8	%		2.8	%		0.0	%		0.0	%

(1) NGLs are included in Isramco Resources’ Gas Price, Net Gas Production, and Gas Revenue lines throughout the Isramco Resources Projections.

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Projected Financial Performance – Isramco Resources
($ in thousands)
	Isramco Resources Projections (1)
Fiscal Year Ending December 31,	2025P			2026P			2027P			2028P			Remaining (2)
Wells (Net)		53.8			53.1			50.2			48.9		NA
Oil Price ($/Bbl)	$	51.44		$	51.33		$	51.25		$	51.18		$	50.89
Net Oil Production (MBbl)		59			52			46			42			488
Oil Revenue	$	3,049		$	2,675		$	2,367		$	2,124		$	24,835
Gas Price ($/mcf)	$	3.47		$	3.50		$	3.55		$	3.54		$	3.75
Net Gas Production (Mmcf)		231			201			173			151			1,785
Gas Revenue	$	802		$	705		$	614		$	534		$	6,687
Total Revenue	$	3,850		$	3,379		$	2,980		$	2,658		$	31,522
Total Operating Expenses	$	1,464		$	1,389		$	1,278		$	1,176		$	17,327
EBITDA	$	2,386		$	1,991		$	1,703		$	1,482		$	14,195
Capital Expenditures	$	0		$	0		$	0		$	0		$	0
as % Total Revenue		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%

(1) NGLs are included in Isramco Resources’ Gas Price, Net Gas Production, and Gas Revenue lines throughout the Isramco Resources Projections.

(2) “Remaining” represents the sum of (i) the discrete period from FY2029P through FY2037P and (ii) a separate subtotal for “After,” reflecting the amounts until the end of the economic life of the well per the Cawley Reserve Report. Oil Price ($/Bbl) and Gas Price ($/mcf) in the “Remaining” period were calculated using the respective revenue divided by the respective production volume.

Isramco Energy Projections

Company management prepared the Isramco Energy Projections for each of the fiscal years of 2019 through 2028 and certain subsequent periods specified below. The Isramco Energy Projections reflect the projected oil, gas, and NGL production and revenue, and the operating expenses, EBITDA and capital expenditures, attributable to Isramco Energy for the periods indicated based on total proved reserves. The Isramco Energy Projections are based in part on the Cawley Reserve Report, prepared by CGA, which includes estimates of the PDP reserves and forecasts of economics attributable to Isramco Energy, as of December 31, 2018, and calculated using Forward Strip Pricing. Isramco management has not undertaken to update the Isramco Energy Projections since their preparation.

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The following presents in summary form the Isramco Energy Projections and related assumptions:

Projected Financial Performance – Isramco Energy
($ in thousands)
	Isramco Energy Projections
Fiscal Year Ending December 31,	2019P			2020P			2021P			2022P			2023P			2024P
Wells (Net)		219.8			143.4			104.1			102.3			97.9			92.2
Oil Price ($/Bbl)	$	41.25		$	45.37		$	47.27		$	48.33		$	48.94		$	48.80
Net Oil Production (MBbl)		57			45			40			36			33			28
Oil Revenue	$	2,358		$	2,028		$	1,876		$	1,755		$	1,603		$	1,348
Gas Price ($/mcf)	$	2.34		$	2.23		$	2.17		$	2.38		$	2.39		$	2.39
Net Gas Production (Mmcf)		585			429			386			359			330			301
Gas Revenue	$	1,370		$	954		$	835		$	856		$	787		$	719
NGL Price ($/Bbl)	$	22.18		$	22.56		$	23.17		$	23.75		$	24.11		$	23.88
Net NGL Production (MBbl)		53.6			41.6			36.6			33.8			30.5			27.0
NGL Revenue	$	1,188		$	939		$	849		$	803		$	736		$	644
Total Revenue	$	4,916		$	3,922		$	3,560		$	3,413		$	3,126		$	2,711
Total Operating Expenses	$	3,459		$	2,113		$	1,957		$	1,905		$	1,780		$	1,528
EBITDA	$	1,457		$	1,809		$	1,603		$	1,509		$	1,346		$	1,183
Capital Expenditures	$	135		$	45		$	0		$	0		$	0		$	0
as % Total Revenue		2.8	%		1.1	%		0.0	%		0.0	%		0.0	%		0.0	%

Projected Financial Performance – Isramco Energy
($ in thousands)
	Isramco Energy Projections
Fiscal Year Ending December 31,	2025P			2026P			2027P			2028P			Remaining (1)
Wells (Net)		70.1			66.5			64.0			62.1		NA
Oil Price ($/Bbl)	$	48.79		$	48.78		$	48.78		$	48.76		$	48.60
Net Oil Production (MBbl)		26			24			23			21			236
Oil Revenue	$	1,245		$	1,165		$	1,099		$	1,013		$	11,463
Gas Price ($/mcf)	$	2.40		$	2.39		$	2.39		$	2.37		$	2.51
Net Gas Production (Mmcf)		258			235			220			191			1,074
Gas Revenue	$	618		$	562		$	527		$	452		$	2,692
NGL Price ($/Bbl)	$	22.92		$	22.94		$	23.08		$	23.12		$	21.98
Net NGL Production (MBbl)		21.6			19.7			17.8			16.2			128.3
NGL Revenue	$	495		$	452		$	411		$	375		$	2,820
Total Revenue	$	2,358		$	2,179		$	2,036		$	1,839		$	16,975
Total Operating Expenses	$	1,301		$	1,236		$	1,192		$	1,084		$	10,522
EBITDA	$	1,056		$	943		$	844		$	755		$	6,453
Capital Expenditures	$	0		$	0		$	0		$	0		$	0
as % Total Revenue		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%

(1) “Remaining” represents the sum of (i) the discrete period from FY2029P through FY2037P and (ii) a separate subtotal for “After,” reflecting the amounts until the end of the economic life of the well per the Cawley Reserve Report. Oil Price ($/Bbl), Gas Price ($/mcf), and NGL Price ($/Bbl) in the “Remaining” period were calculated using the respective revenue divided by the respective production volume.

51

Jay Petroleum Projections

Company management prepared the Jay Petroleum Projections for each of the fiscal years of 2019 through 2028 and certain subsequent periods specified below. The Jay Petroleum Projections reflect the projected oil, gas, and NGL production and revenue, and the operating expenses, EBITDA and capital expenditures, attributable to Jay Petroleum for the periods indicated based on total proved reserves. The Jay Petroleum Projections are based in part on the Cawley Reserve Report, prepared by CGA, which includes estimates of the PDP reserves and forecasts of economics attributable to Jay Petroleum, as of December 31, 2018, and calculated using Forward Strip Pricing. Isramco management has not undertaken to update the Jay Petroleum Projections since their preparation.

The following presents in summary form the Jay Petroleum Projections and related assumptions:

Projected Financial Performance – Jay Petroleum

($ in thousands)

Jay Petroleum Projections

Fiscal Year Ending December 31,

2019P

2020P

2021P

2022P

2023P

2024P

Wells (Net)

10.4

3.8

3.7

3.7

3.6

3.6

Oil Price ($/Bbl)