| 11.5°C Dublin

Petroceltic shares see-saw as oil and gas firm changes tack

Close

Petroceltic

Petroceltic

Thinkstock

Petroceltic

Shares in Irish oil and gas company Petroceltic soared over 7.5pc in Dublin yesterday after the company said it was going to restructure and focus on developing its core assets in the year ahead.

But the company's stocks pared those gains in the afternoon and eventually closed the session up just 0.5pc.

Petroceltic said yesterday that the company's 2015 exploration programme will be restricted to "core areas and territories where material reserves additions are possible.

"A number of farm-out initiatives are in progress and no significant new venture activities are planned during the year".

The company said its 2014 production levels were at the upper end of its guidance, but its projections for 2015 are below analysts' previous estimates. Against the backdrop of a very low oil price and a sector out of favour, Petroceltic's operational update understandably makes clear that the focus is to develop core assets," Davy equity analyst Job Langbroek said in a note circulated yesterday.

"In this environment, exploration is likely to take a back seat for now," he added. Petroceltic said it is insulated from the slump in oil prices because most of its production is gas, adding that its year-end debt had fallen significantly, to $153m in 2014 from $246m in 2013.

The company's flagship asset in development is the Ain Tsila gas field in Algeria, from which it expects gas to be produced from 2018.

Petroceltic and its partners in the project will this year seek to tender an engineering, procurement and construction contract for the site.

"We expect to benefit from the current price weakness in oil markets to attract competitive bids," chief executive Brian O'Cathain said yesterday.

Petroceltic's management is currently embroiled in a dispute with the company's major shareholder, Worldview Capital, which is seeking to have Mr O'Cathain removed as chief executive.

Worldview has accused the Irish company of breaking an agreement relating to corporate governance and launched legal proceedings against it.

Petroceltic called the proceedings "misconceived" and "without merit".

Dragon Oil recently dropped a takeover bid for the Irish firm, citing negative market conditions.

Irish Independent