Petroceltic divests stake in Algerian production sharing contract

Upstream oil and gas explorer and producer Petroceltic International has completed a deal to sell an 18.375% stake in the Isarene production sharing contract (PSC) in Algeria to Enel Trade.

Under the agreement, Enel will pay up to $36.75m to Petroceltic. This equates to 24.5% of all back costs incurred from 2005 until the end of the exploration period in April 2010.

The company has also agreed to fund 49% of the costs associated with the recently completed six-well Isarene appraisal drilling campaign and the costs are capped up to $145m.

Enel will pay Petroceltic up to $75m which is contingent upon the results of an appraisal programme, as well as overall level of reserves and the production profile.

The amounts outstanding under this deal, or to be paid under cash call arrangements, now exceed $101m.

According to Petroceltic, any contingent consideration amounts payable will fall upon approval of the Declaration of Commerciality by the Algerian authorities and it is expected later in this year.

Petroceltic chief executive Brian O’Cathain said since announcement of the deal in April last year, Petroceltic has forged a valuable and co-operative working relationship with Enel and Sonatrach, culminating in the completion of the highly successful appraisal campaign.

“We look forward to a long and successful relationship in this outstanding asset,” O’Cathain said.

Petroceltic has retained a 56.625% stake in the PSC located in the south of the Illizi basin in south eastern Algeria and is its operator. The remaining interests in the permit are held by Enel (18.375%) and Sonatrach (25%).

Image: Petroceltic now operates the Algerian permit with a 56.625% stake. Photo: Petroceltic International