Cantillon: Time for Petroceltic and Worldview to talk

Worldview Capital, the dissident 29 per cent shareholder in Petroceltic International, has been uncharacteristically mute ever since the Dublin-based exploration company quietly put itself up for sale on the eve of Christmas Eve.

For much of the last 13 months, Worldview has lambasted the strategy followed by the management team at Petroceltic, led by Brian O'Catháin. The dissident, run by pugnacious former banker Angelo Moskov, consistently argued that Petroceltic would inevitably run out of money, and it seems this has come to pass.

One therefore might have expected Worldview to shout loudly “we told you so”, but, strangely, it is keeping its counsel. Why? Petroceltic is desperate for capital, after breaching covenants on more than $200 million of bank debt. Locked out out of the bond markets – a cold house these days for small exploration companies – it has also been unable to raise equity without the imprimatur of Worldview, whose backing is required to carry a shareholder vote. As Worldview made clear last year, that imprimatur will only come with the departure of existing management and a dramatic change in strategy.

Petroceltic has few palatable options left. Will its chief tormentor yet turn out to play a part in its salvation?

To raise equity, Petroceltic obviously needs Worldview on board. To raise enough cash to address its debts through asset sales, however, it would have to offload some or all of its prime gas assets in Algeria. Given that this is where most of the company’s value is stored, again, it will likely need Worldview’s agreement. Even to sell the entire business, Petroceltic will need the agreement of Worldview.

Perhaps Worldview’s silence indicates that it and Petroceltic are now, finally, going to do what they should have done a year ago: sit down and talk, with the aim of agreeing a deal for the good of the company.