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.
 

© 2013 Menas Associates

Petroceltic wins another Algeria job

Petroceltic has signed KCA Deutag for a second drilling rig on the appraisal campaign on the Isarene Permit in Algeria. Last week, the company raised £37 million to subsidise the expansion. It has also hired two contractors to assist desktop-work on the Final Discovery Report for the licence.

Speaking about the developments Petroceltic's chief executive Brian O'Cathain said: "The contract for the second rig will see a significant increase in the pace of appraisal activity on the Ain Tsila discovery following the recent successful fund raising and the farm out to ENEL.

The award of contracts for the conceptual and geotechnical studies is of importance as they mark the start of the move from the exploration and appraisal phases of the production sharing contract into the pre-development phase."

The second drill rig has been contracted for three wells which means that the enlarged drill programme will stretch to at least six wells before the end of 2011. Petroceltic expects the rig to be mobilised in June with drilling expected to start in July 2011.

Sources: Upstream, Proactive Investors, Petroceltic

For more news and expert analysis about Algeria, please see Algeria Focus and Algeria Politics & Security.

Petroceltic announces encouraging early results from Isarene well

Petroceltic has discovered "larger-than-expected" quantities of gas in AT-5 well on the Isarene permit in Algeria. The drilling, which began on 9th January, reached a total depth of 2,049 metres on 2nd March after drilling delays caused by equipment failures on the contracted drilling rig.

Logs at AT-5 showed the objective Ordovician reservoir to be fully gas bearing, and a gross gas column of 75.5 metres was logged, with no gas water contact seen in the well. The company is testing what it calls a “major pop-up” feature in the north of the field associated with enhanced un-stimulated gas productivity.

Petroceltic's Chief executive Brian O'Cathain said: "The results of well AT-5 are encouraging to date, the presence of natural fractures at this location augurs well for the test results, and the overall gas column logged was greater than expected at this location.”

Sources: Irish Independent, Oil Voice, Petroceltic Investors

For more news and expert analysis about Algeria, please see Algeria Focus and Algeria Politics & Security.