Petroceltic Sells Stake in Isarene Block
Petroceltic announced the sale, subject to the satisfaction of certain conditions, of an 18.375% interest in the Isarene Production Sharing Contract ("PSC"), which includes the world class Ain Tsila gas condensate discovery, onshore Algeria, to ENEL Trade S.p.A. ("ENEL"), a fully owned subsidiary of ENEL.
The assignment is to be effected by way of a sale and purchase agreement under which, ENEL has agreed to acquire an 18.375% interest in the rights, benefits and liabilities of the PSC for the Isarene perimeter (Blocks 228 and 229a). The PSC was signed between Petroceltic and the Algerian National Company for Hydrocarbons ("Sonatrach") in April 2005.
Under the terms of the agreement ENEL has:
- Agreed to pay up to US $36.75 million to Petroceltic, which equates to 24.5% of all back costs incurred from signing of the PSC in 2005 until the end of the exploration period in April 2010.
- Committed to fund 49% of the cost of the first six appraisal wells in an enlarged Isarene appraisal campaign (including AT-4 which has been completed and the second well of the campaign, AT-5, currently drilling the horizontal section) and of a contingent additional well, which costs are capped, in aggregate, at US $145 million.
- Agreed to pay Petroceltic a contingent cash consideration, up to a maximum of US $75 million, determined by the level of recoverable hydrocarbon reserves approved by the Algerian Authorities in the Final Discovery Report, which is expected to be submitted by the parties in early 2012.
On completion of the appraisal drilling program, or if the agreed budget limits are exceeded, Petroceltic and ENEL will fund any additional costs relating to the PSC in proportion to their participating interests.
ENEL is Italy's largest power producer, and the second largest electrical utility company in Europe by installed capacity. Enel is Sonatrach's main end-user customer of Algerian gas, as well as a partner in both the Medgaz and the Galsi trans Mediterranean pipelines, the former in operation since early 2011 with a nominal capacity of 8 BCM of gas per year and the latter, still under development, with a planned capacity on completion of 8 BCM of gas per year. Both of these developments have been undertaken to facilitate increased Algerian gas pipeline exports to Southern Europe.
This assignment has been submitted for approval to Sonatrach which is a 25% partner in the PSC, and is also subject to the usual approvals by the Algerian regulatory authorities. Upon completion of the sale, ENEL will hold an 18.375% participating interest in the PSC, Petroceltic will hold 56.625% and Sonatrach will hold the remaining 25%. Petroceltic will continue as Operator for the permit.
Brian O'Cathain, Chief Executive of Petroceltic, commented, "We are delighted to have ENEL joining us in the Isarene Block in Algeria. ENEL is a well-established partner of Sonatrach, 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. We look forward to a long and fruitful partnership with ENEL and Sonatrach."
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