Friday, 11 October 2013
Algeria: Sonatrach exercises pre-emption rights in Petroceltic's farm-out
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.
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