Petroceltic's shares surge on news from final Algerian well
Published 08/12/2011 | 05:00
PETROCELTIC International said the final well in its Algerian drilling campaign produced large amounts of gas. Shares in Dublin jumped as much as 16pc as investors and brokers welcomed the news.
Dublin and London-listed Petroceltic said the last well in the Ain Tsila field produced a daily combined flow of more than 10,000 barrels of oil or equivalent a day.
This "is nothing short of exceptional", Bank of America Merrill Lynch said in a note to investors.
Petroceltic has operations in several countries but a remote region of Algeria is the Irish company's most important drilling area. The success means that there is probably enough gas to justify building the pipe-lines and other infrastructure needed to transport the gas.
"We draw increasing comfort from recent wells' results and believe they support the case for a more economic and deliverable development project," Bank of America Merrill Lynch added.
The well was the last of a six-well appraisal programme, which have all proven gas in the field.
Petroceltic chief executive Brian O Cathain said this result strongly supported commercialisation of the field and the development plan, which will be submitted to the Algerian authorities in January.
Petroceltic is trying to get ratification for sale of a stake in the field to Italian energy giant Enel, which already owns 18pc, but needs permission from the Council of Ministers in Algeria, which has not met since mid-September.
Bank of America Merrill Lynch said yesterday the company had received a letter from the oil ministry, dated late November, confirming that the deal would be ratified and Petroceltic said it remained hopeful of a successful outcome this year.
The results should remove any lingering uncertainty regarding the commerciality of the Ain Tsila project, Davy Stockbrokers analyst Job Langbroek said.
The discovery also makes the company a less risky investment.