Island to cut spending, sell Celtic Sea assets

Island Oil & Gas, the Dublin-based exploration group, said it plans to sell its gas storage sites in the Celtic Sea pay for the development of its licenses in Morocco and to sharply reduce spending to conserve cash.

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

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

Chief Executive Paul Griffiths said he was confident potential buyers would see the value in the Celtic Sea assets from a commercial and financial viewpoint.

“The directors believe that this sales strategy provides Island with the best opportunity to realise considerable value for shareholders."

Island has interests in nine Irish offshore licences, including one producing field, a 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 license position with its exploration permits at the Sidi Moussa, Foum Draa and Zag areas.

The board 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 have 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.

The said Island was one of the few companies to have established an early-mover position in Morocco which will see increasing industry activity in the future.

At 1.30pm shares in the company were up 26 per cent at 8.5 pence giving the company a market capitalisation of £10 million.