Petroceltic shares climb on possible €124m deal
Published 29/04/2011 | 05:00
SHARES in oil and gas explorer Petroceltic jumped yesterday after the company said it is to sell part of its interest in an exploration project in Algeria in a deal that could be worth nearly $200m.
The Dublin-based company is to sell 18.4pc of its Isarene contract to the Italian utility company Enel.
Under the terms of the deal, Enel -- which is the second- biggest utility company in Europe -- will pay up to $36.75m towards costs already incurred in the project, and up to $75m depending on the volume of recoverable reserves.
It will also pay 49pc of a maximum of $149m towards the cost of six appraisal wells and a seventh contingent well, Petroceltic said.
If all conditions are met the deal could be worth as much as $183m (€124m) to Petroceltic.
The Isarene contract contains the Ain Tsila gas condensate discovery, which Petroceltic described as a "world-class discovery".
The Irish company will retain around 57pc of the licence. The other 25pc is held by Sonratrach, the Algerian state-owned exploration company.
Petroceltic said the deal was subject to regulatory approval in Algeria and by Sonratrach. Petroceltic will continue to operate the permit.
Company chief executive Brian O'Cathain was "delighted" with the move.
"Enel is a well-established partner of Sonratrach, and their unparalleled knowledge of European gas markets will greatly enhance our ability to bring the Isarene gas to market.
"This transaction is a strong endorsement of the quality of the Isarene asset and an important financial support to our ongoing appraisal campaign and future development planning," he said.
Davy Stockbrokers' Caren Crowley welcomed the deal.
"Assuming the max consideration is paid, it implies Peteoceltic's interests in Algeria are worth some 22.5c per share.
"The transaction looks a good deal for all parties involved. Petroceltic stock should trade up on this news," she added.
Petroceltic closed 12.5pc at 12c.
It had been up as much as 17pc earlier.