Island Oil to sell Celtic Sea gas sites to pay for Morocco venture

ISLAND OIL Gas, the Dublin-based exploration group, said it plans to sell its gas storage sites in the Celtic Sea to pay for the development of its licences in Morocco. It will also sharply reduce spending to conserve money.

The company said it had received several expressions of interest in its Celtic Sea assets and was looking at concluding a sale swiftly in the “best interests of all shareholders’’.

To cut costs and preserve money, Island said it was significantly reducing uncommitted expenditures. Chairman Bryan Benitz has offered to provide a £500,000 (€575,000) loan to allow it to continue its operations in the short term, the company said in a statement.

Island has interests in nine Irish offshore licences, including one producing field, an offshore licence in Albania, a royalty interest in the Amstel field development in the Netherlands and onshore licences in Morocco, which the company is keen to develop.

The company said it had put up funds for bank guarantees for the Moroccan government to secure its licence position with its exploration permits at the Sidi Moussa, Foum Draa and Zag areas.

The board also said it would look at other forms of company restructuring over the coming months, including “restructuring, mergers and acquisitions”.

Davy analyst Job Langbroek said the two gas discoveries at Old Head and Schull had not been depleted of their gas, which means no cushion gas is required for them to be used for storage and consequently makes them more attractive for this purpose.

Shares in the AIM-listed company closed 11 per cent stronger at 7.5p, giving the company a market capitalisation of £8.8 million.