Sonatrach pre-empts Ain Tsila sale by Petroceltic

Dublin-based exploration company Petroceltic International is to sell part of its stake in the Ain Tsila gas development to Algerian state oil company, Sonatrach.

Petroceltic will receive a $20 million cash payment, a $140 million development carry and two more payments of $10 million dependent on achieving certain milestones.

The commercial terms and proceeds of pre-emption are similar to those agreed between the company and a potential third party purchaser, Petroceltic said.

Following the completion of the transaction, Sonatrach will hold a 43.375 per cent participating interest, Petroceltic will hold 38.25 per cent and Enel will hold the remaining 18.375 per cent.

Petroceltic's chief executive Brian O'Cathain said Sonatrach's decision to pre-empt confirms that the timely development of the Ain Tsila field is strategically important to Algeria.

“The decision by Sonatrach to exercise its pre-emptive right is a clear indication of the current value and long term upside potential of the Isarene asset”

He said the company believes this decision represents a positive endorsement of the technical, commercial and development work undertaken between the two companies over the last nine years.

Davy Stockbrokers said the pre-emption by Sonatrach, of the sale of an 18.375 per cent stake in the Ain Tsila gas development sends an important message about its value.

“The involvement of the state company also points to the quality, potential longevity and the role the field will play in the next generation of gas projects required to meet domestic and international demand for Algerian gas.”

Petroceltic said the deal is not expected to have any impact on the overall timing for the awarding of major contracts or the starting of detailed development activities.

The oil and gas exploration company, which is focused on North Africa, the Mediterranean and Black Sea regions, has production, exploration and development assets in a number of countries including Algeria, Bulgaria, Italy and Romania.