Petroceltic confirmed on 7 October that it has received formal notification that
Sonatrach is exercising its rights under the Isarene Production-Sharing
Contract ("PSC") to pre-empt the Company's proposed sale of an
18.375% interest in the PSC.
The commercial terms and proceeds of pre-emption are similar to
those agreed between the Company and a potential third party purchaser
and comprise a US$20 million payment on completion, a US$140 million
development and two contingent payments of US$10 million each based on
the achievement of certain early production and technical
completion milestones. Following the completion of the transaction, Sonatrach will hold a 43.375% participating interest, Petroceltic will
hold 38.25% and Enel will hold the remaining 18.375%.
Petroceltic CEO Brian O'Cathain said: "The
decision by Sonatrach to exercise its pre-emptive right is a clear
indication of the current value and long-term upside potential of the
Isarene asset. Since 2005, Petroceltic has enjoyed an
excellent relationship with Sonatrach and we believe that this decision
represents a positive endorsement of the technical, commercial
and development work undertaken over the last nine years. Sonatrach's
decision to pre-empt confirms that the timely development of the Ain Tsila field is strategically important to Algeria and we look forward
to working together to achieve this shared objective."
Sonatrach and Petroceltic are currently working to finalise all
the necessary regulatory approvals to facilitate the signing of the
amendment to the PSC. Petroceltic said further announcements will be
made as appropriate.
For more news and expert analysis about Algeria, please see Algeria Focus and Algeria Politics &
Security.
© 2013 Menas Associates
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