30th May 2014 07:38
LONDON (Alliance News) - Petroceltic International PLC Friday reiterated its belief in the value of shareholders voting for a planned USD100 million placing with institutional investors but said it has received a string of disappointing results from its 2014 drilling programme in the Kurdistan Region of Iraq, Romania and Egypt.
The oil and gas exploration, development and production company said its Muridava-1 exploration well in Romania has now been drilled to a total depth of 2,747 metres but failed to find commercial levels of hydrocarbons in its primary reservoir targets. It said the well is now being plugged and abandoned.
The company said that its South Dikirnis-1 exploration well reached a depth of 2,895 metres, targeting an opportunity in the Miocene formation to the south of its producing West Dikirnis Field. However, Petroceltic said that, although high quality sandstone reservoirs were encountered on site, analysis shows that the reservoir was water wet.
Petroceltic also announced that the final drill stem tests from its programme on the Jurassic interval of its Shakrok-1 well in the Kurdistan region of Iraq in the Adaiyah and Mus formations but did not flow hydrocarbons to surface.
However, the company said drilling preparations for its Shireen-1 well on the Dinarta licence in the Kurdistan Region of Iraq are at an advanced stage, and it is now scheduled to begin in early June. It said the well should take around 150 days to reach its planned depth and is targeting both triassic and Jurassic formations, which are expected to have gross mean unrisked prospective resources of 706 million barrels.
In a separate statement, the company reiterated its support for resolutions at its upcoming extraordinary general meeting for a proposed USD100 million placing with institutional investors, which will bring in a new strategic investor.
The company was responding to calls by Worldview Capital Management LLP for shareholders to stand against the plans. Worldview argued that the investment process will remove shareholders' pre-emption rights for an unjustified reason, will dilute their shareholding and, without appropriate warning or background information, bring in a representative of Dovenby Capital Ltd as part of the company's board due to it having over 8% of the shareholding in Petroceltic.
The resolutions ask existing shareholders to set aside their pre-emption rights in order for the company to place 37.9 million shares at roughly EUR0.3125 each with institutional investors and raise USD100 million.
Petroceltic announced the placing plans on May 16, saying it would place 37.9 million shares at roughly EUR0.3125 each with institutional investors, and noted that as part of the deal, Dovenby Capital will invest GBP30 million, becoming a new strategic shareholder. Dovenby is an investment company led by Ahmad Fuad, an experienced Malaysian oil and gas industry specialist, Petroceltic said. Fuad served as deputy chairman of Bumi Armada Bhd until his retirement in June 2013. Bumi Armada is a Malaysia-based international offshore oil field services provider.
On Friday, the company said the placing remains in the best interests of shareholders and the company and noted that the process of waiving pre-emption rights is commonly used by public companies to provide a secure and swift method of raising funds.
It also explained why it had rejected an offer from Worldview which would have effectively underwritten the placing at a higher price and respected pre-emption rights, stating that the process would have meant that Worldview, which currently holds more than 17% of Petroceltic, would hold over 25% of the company and would have gained blocking control over Petroceltic's activities.
The company also said that Dovenby has agreed to not increase its stake in the company above 15% for three years, and it has carried out extensive due diligence on Ahmad Fuad, which confirmed him as a credible long-term investor and candidate for its board.
However, Worldview had said on Tuesday that it believes its concerns are shared by a number of investors, and it already had 19% of shareholders ready to vote against the plans at the extraordinary general meeting on June 9.
Petroceltic shares were down 5.0% to 152.50 pence, putting it in the top AIM ALL-Share fallers during early trading on Friday.
By Tom McIvor; [email protected]; @TomMcIvor1
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