Petroceltic Awards Algerian Drilling Contract to Schlumberger
Petroceltic has awarded a major drilling contract to Schlumberger for the company's 2006 drilling program in Algeria. The company has also executed a US$25 million underwriting agreement with funds managed by RAB Capital plc ("RAB"), in conjunction with a placing of new ordinary shares of €0.0125 each to new and existing shareholders of the Company.
The RAB Underwriting Agreement
The Company has entered into a conditional underwriting agreement whereby RAB has agreed to underwrite 102,000,000 new Ordinary Shares at a placing price of 14p with a total value of approximately US$25 million, subject to a minimum participation by RAB of approximately US$12 million in the Placing. The Parties to the Underwriting Agreement anticipate the Placing to be completed by no later than March 31, 2006.
Algerian 2006 Drilling Program
The 2006 program provides for the drilling and testing of two appraisal wells on the Company's Isarene blocks 228 and 229 in the Illizi Basin of Algeria. Both wells will have multi targets in the Carboniferous, Devonian and Ordovician zones and will each be drilled to a depth of approximately 2,300 meters. It is currently expected that drilling operations will commence by the end of June 2006. The Company points out that this initial drilling program is the start of a planned multi-well drilling and seismic program to be carried out on its Algerian acreage over the next three to four years.
Award of Drilling Contract to Schlumberger
Schlumberger won a competitive tendering process initiated by the Company and its Algerian partner Sonatrach last December. Schlumberger was awarded the contract because of its technical competence, its recent Algerian experience and because it offered the most comprehensive project managed proposition. The Schlumberger award is subject to the completion of legal and normal regulatory processes.
Schlumberger's most recent Algerian experience is on Block 245 operated by Rosneft of Russia which is immediately adjacent to the North East of Petroceltic's block and where Schlumberger on behalf of Rosneft has just completed the drilling of a third consecutive oil and gas discovery. These discoveries are in a similar geological setting to Petroceltic's Isarene acreage and the application of Schlumberger's technologically advanced drilling, logging and well testing services played a key role in this success and these factors were therefore recognized in the tender award.
Another key factor in awarding the contract to Schlumberger was the near immediate availability of a drilling rig in a fiercely competitive rig market. The rig will be available to Petroceltic immediately after the completion of the Rosneft drilling program, which, depending on the results, is estimated to be by the end of June. Schlumberger will start preparatory work immediately on the Company's two drilling sites to facilitate a prompt mobilization.
John Craven CEO of Petroceltic commented:
"We are delighted that Schlumberger will be drilling Petroceltic's first wells in our large Algerian block. They offered the best technical package and their recent success with Rosneft will bring huge benefits to Petroceltic.
We are also delighted to have an institution with the calibre of RAB as a significant shareholder particularly given their commitment, financial expertise and success in the oil and gas sector.
The execution of a $25 million underwriting agreement coupled with the award of the drilling contract gives the Company "sprint capacity" to complete its aggressive 2006 drilling program which includes the two wells in Algeria and one well offshore Ireland as previously announced. Plans are already underway to increase the level of the Company's drilling activity during 2006 and 2007 which may include drilling additional wells in Algeria, offshore Italy and re-entering and testing the Sidi Toui 3 in Tunisia."
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