30th Apr 2009 07:00
Dublin: 30th April 2008
PETROCELTIC INTERNATIONAL PLC
RESULTS FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2008
OPERATIONS UPDATE APRIL 30TH, 2009
Petroceltic International plc ("Petroceltic" or "the Company") the independent oil & gas exploration company focussed on North Africa and the wider Mediterranean region today announces its results for the 12 month period ended 31 December 2008 and provides an operational update for the 4 month period to April 30th, 2009.
Separately, the Company also announced today that it has successfully raised £27.5m (US$40m) through a conditional placing with existing and new shareholders.
The operational achievements and highlights in 2008 reported on today include:
Award of rig and other major contracts for the forthcoming Algerian drilling programme of up to seven wells in Algeria
Successful completion of a large 3D seismic programme in Algeria
Enhancement of the Algerian permit through adjacent discoveries
Strengthening of management at Board and operational levels
Forming a long term strategic partnership with Iberdrola, a leading world energy corporation
Strengthening the balance sheet through a US$55m investment by Iberdrola in Petroceltic
The Group is now well positioned to benefit from the groundwork laid in 2008. Since year end achievements and highlights include:
Completing preparations for the multi-well Algerian exploration and appraisal drilling programme, now due to begin in mid-May 2009
Advancing the assessment of Italian prospects with the first well now expected to be ready for drilling in 2010 (subject to permitting and rig availability)
Receipt of the Iberdrola advance payment of US$7.3m
Results for the year ended December 31st 2008 show:
Operating loss increased to US$3.7m, due to higher administrative expenses ahead of planned drilling and changes in US$:€ exchange rates .
Andrew Bostock, Chairman of Petroceltic commented:
"2008 was a year of positioning Petroceltic for the future. We focused on maturing our exciting prospects in Algeria, Italy and Tunisia towards the drilling phase and putting in place the team and financial resources necessary to optimally exploit the attractive opportunities available to the Company. We are now poised for the most exciting phase in the history of the Company, with the imminent start of exploration and appraisal drilling operations in Algeria due to be followed by wells targeting the most attractive prospects in the much expanded Italian portfolio.
Petroceltic's shareholders have been patient in waiting for the necessary foundations to be put in place to ensure the Company can maximise its chance of success. We thank them for this patience and are optimistic that it will be rewarded as we start to unlock the value which we believe exists in our portfolio."
Press Enquiries to:
Brian O'Cathain/ Alan McGettigan Petroceltic International Tel: +353 (1) 421 8300
James Henderson / Philip Dennis, Pelham PR Tel: +44 20 7337 1516
Joe Murray / Joe Heron Murray Consultants Tel: +353 (1) 4980300
Hugh McCutcheon / John Frain, Davy Tel: +353 (1) 679 6363
Notes to Editors:
The relevant information has been reviewed and verified by Mr. Brian O'Cathain, Director and Chief Executive of Petroceltic, for the purposes of the Guidance Note for Mining, Oil and Gas Companies issued by the London Stock Exchange in March 2006. Mr. O'Cathain holds a B.Sc in Geology from the University of Bristol, and is a member of the American Association of Petroleum Geologists, The Society of Petroleum Engineers, and the Petroleum Exploration Society of Great Britain.
Glossary of Terms
|
Bcf bcm boe bopd mmbo mmscf MW tcf tcfe PSC |
Billion cubic feet (1 cubic foot = 0.028 m3) Billion cubic meters Barrels of oil equivalent. (5.6 Million cubic feet of gas = 1 boe). Barrels of oil per day (1 barrel = 159 litres). Million barrels of oil Million standard cubic feet per day Megawatts Trillion cubic feet Trillion cubic feet equivalents Production sharing contract |
Chairman and Chief Executive's Statement
2008 was a year of consolidation and building for the future and the Group is now well positioned to benefit from the groundwork laid in 2008.
Drilling Programme Imminent
An exploration and appraisal drilling programme featuring up to seven wells is on schedule to commence in May 2009 on four highly prospective areas within the Isarene permit in Algeria. Extensive new 3D seismic acquired in 2008 has highlighted several potentially exciting reservoirs and helped optimise our drilling and well testing locations.
A key objective of the Algerian drilling programme will be to appraise the commercialisation of existing discoveries. A potential gas resource in the range of one to six trillion cubic feet of gas equivalent is being targeted, in addition to a number of new plays, some of which may contain both oil and gas. Substantial oil and gas discoveries in adjoining blocks have considerably enhanced the potential for both commodities on the permit.
Petroceltic's Mediterranean basin activities will be further expanded in 2010/2011 with a drilling programme expected on its Italian prospects. A portfolio of exploration assets with strong hydrocarbon leads in proven fairways is currently being high-graded for drilling. The portfolio includes permits in the Po Valley, Central Adriatic and the Sicily channel.
A detailed assessment of the Italian prospects is well advanced and drilling locations will be selected in the second half of this year. The first of these wells should be ready for drilling in 2010, subject to permitting and rig availability. Italy is one of Europe's leading oil producers and offers the opportunity for Petroceltic to develop hydrocarbon assets within the European Union.
Robust Financial Position
Strategic Alliance
Petroceltic's business model is focused on the acquisition of good quality acreage in areas of proven oil and gas, the development of drillable prospects through the application of our exploration skills and the addition of step-change value through the drill bit in exploration and appraisal. We seek to mitigate risk by taking partners from the industry or through strategic alliances where appropriate.
We are pleased to have found a partner of the strength and quality of Iberdrola to help us to develop our portfolio. As a significant player in the Algerian downstream gas and power industries, Iberdrola has a sophisticated understanding of the economic potential of delivering North African energy supplies into European markets. Iberdrola's good standing and the depth of its prior relationships in Algeria also compliment those of Petroceltic.
Strengthened Board and Management Team
Petroceltic's board was strengthened in 2008 with the appointment of Alan McGettigan as Finance Director and Pablo Fuentes-Cantillana, a representative of Iberdrola, as a Non-executive Director. In addition, following the departure of John Craven, who stepped down as Chief Executive in early 2009, Brian O'Cathain, formerly Executive Chairman, was appointed as Chief Executive and Andrew Bostock, formerly the Senior Non-executive Director, was appointed as Non-executive Chairman.
Regional leadership and operating capability was also enhanced in 2008 with the appointment of David Slaven, as General Manager in Algeria, and Pasquale Quattrone, as General Manager of Petroceltic Italy. Both appointees have extensive experience in their respective areas.
Exciting Outlook
In 2008 we focused on maturing our existing prospects in Algeria, Italy and Tunisia towards the drilling phase and extending the existing portfolio with additional quality assets in Italy.
We are now poised for the most exciting phase in the Company's history, with the imminent start of exploration and appraisal drilling operations in Algeria due to be followed by seismic acquisition and subsequent drilling activity on the most attractive prospects in the much expanded Italian portfolio.
It has always been the Company's intention to complement our organic growth programme by pursuing both corporate and asset acquisition opportunities. The recent fall in commodity prices, combined with the increased cost and lack of availability of capital, has lead to a reversal of last year's situation, where asset prices were too high to allow accretive acquisitions. We are now in a market where assets can potentially be acquired on attractive terms. Petroceltic will remain vigilant for and ready to exploit any such market opportunities which our experienced team and strong balance sheet may allow us to take advantage of.
We would like to thank Petroceltic's shareholders for the patience they have shown while we put the necessary technical, operational and financial foundations in place to ensure the Company can maximise its chance of future success. We are optimistic that this patience will be rewarded as we start to unlock the value which we believe exists in our asset portfolio.
We would also like to thank Petroceltic's staff and contractors, our partners and other stakeholders, for all their hard work and loyal support in bringing the Company to this very exciting point in its development.
On behalf of the Board of Directors,
Andrew Bostock Brian O'Cathain
Chairman Chief Executive
30th April 2009
OPERATIONAL REVIEW
ALGERIA
Illizi Basin, Isarene PSC (Blocks 228/229A) Petroceltic 75% Interest, Sonatrach 25% Interest.
Highlights:
Major Wide Azimuth 3D seismic survey of 892 square kilometres successfully acquired over the Ain Tsila Ridge area, on budget - only the second Wide Azimuth 3D survey ever acquired in Algeria
Over 800,000 operational man hours in the Sahara desert without any serious health, safety or environmental incidents
Additional 2D Seismic survey of 180 kilometers acquired in the El Biod area in the South West part of the Licence
Over 5000 kilometers of 2D Seismic reprocessed
Contracts awarded for drilling rig and related services for up to 7 wells.
Petroceltic successfully pre-qualified as an Operator by Alnaft, the Algerian National Agency for Promotion of Hydrocarbon Resources, to submit tenders, during the next 3 years, as operator/investor for the exploration and exploitation of hydrocarbons in future onshore bidding rounds in Algeria.
Petroceltic is focused on four prospective areas on the Isarene permit, namely the Ain Tsila Ridge, the ISAS-GTT-INW area, the Hassi Tab Tab area and the El Biod area in the south west part of the Isarene permit. These four areas will be the focus of drilling and other work necessary to progress towards commercialisation of the identified potential hydrocarbon resources. Three of these project areas already have existing oil or gas discoveries made by Petroceltic and previous operators and hence are considered appraisal areas. The other prospect, El Biod, is an exploration target.
The Ain Tsila Ridge
This is the largest prospect in the Isarene permit area. The recently acquired and processed Wide Azimuth 3D seismic survey over this area has revealed the structure as a wide anticlinal four-way dip closed trap at the key Ordovician objective level.
In the Illizi Basin, Ordovician sandstones are the most important reservoirs in terms of hydrocarbon volumes. The key to commercial appraisal success is to identify areas of high quality reservoir in conjunction with open fractures. The Isarene 3D has revealed some interesting geological detail at the Ordovician level, highlighting ancient glacial channels and areas of potential open fracture patterns. We expect to focus the majority of our appraisal wells on this high potential feature.
Previous operators have drilled five wells on or just outside the structural closure on this prospect. In these wells, drilled 20 to 40 years ago, the target Ordovician sandstone reservoir was gas saturated but only flowed gas at moderate rates, due in part to the location of the wells being mainly outside the optimal structural closure but also the quality of the Ordovician reservoir.
We are optimistic that the much clearer image of the subsurface provided by our new 3D seismic survey will help to target the new wells in areas of better flow potential. A similar approach has been successfully employed by BP in the appraisal and development of the adjacent Tiguentourine Field in the Illizi Basin (to the east of the Isarene Permit). More recently, BP and Sonatrach have had further success with a major new Ordovician discovery in the Bourhabet Sud permit, immediately to the east of Isarene. Here, the Tin Zaouatene-1 discovery well, which flowed at 9.5 mmscf/d was highlighted as one of five major exploration successes for BP in 2008 at their recent Annual Results presentation.
Petroceltic estimates prospective hydrocarbon resources for the Ain Tsila ridge to be in the range of 1 to 6 trillion cubic feet of gas (unrisked).
ISAS-GTT-INW area
Petroceltic plans to drill its first 2009 appraisal well on this gas field. Sonatrach have approved two further wells on the ISAS and INW structures in 2009.
Five wells have tested gas and oil from this Devonian accumulation in this area to date. Three wells flowed gas from the Devonian and one downdip well, GTT-1, drilled by Sonatrach in the early 1980s, flowed 500 bopd from an oil rim on this gas accumulation. In the Medex operated Block 226 to the immediate north of this area, two wells have successfully tested gas from what is probably the same accumulation.
HTT area
The Hassi Tab Tab 2 (HTT-2) well drilled by Petroceltic in 2006 tested at a combined rate of 15.8 mmscf/d from a number of zones in the Devonian and Carboniferous. This rate is one of the highest ever tested in the Illizi basin from a Devonian reservoir. Following the successful drilling of the HTT 2 discovery well, the HTT structure has been remapped using newly reprocessed seismic data. We do not expect any further appraisal drilling in this area before entering the next phase of the licence.
El Biod, (SW Isarene) area
In 2008 Petroceltic acquired 180 km of new 2D seismic over this exploration prospect. The area contains two potential exploration prospects, El Biod and SW Isarene. Both prospects are considered oil targets with main reservoir objectives in the Devonian and Ordovician. Petroceltic and Sonatrach are still evaluating possible drilling plans in this area.
Operational Preparations
The company has signed a fully termed contract with KCA Deutag for the use of their Nomad class drilling rig, T-212. The T-212 rig is a new drilling unit which will be utilised for the Company's drilling and testing programme on the Isarene permit in Algeria and is currently en route having been mobilised from Germany. In total, this drilling programme is expected to take approximately 9-10 months to complete.
The Company has also signed a contract with Sahara Well Construction Services ("Sahara") for the provision of all wellsite services, including wireline evaluation, testing and cementing services and civil works. . Sahara is a joint venture between Schlumberger, the leading oilfield services provider, and L' Enterprise Nationale de Forage ("Enafor"), the Algerian National Enterprise for Drilling. Enafor is a subsidiary of Sonatrach, the Algerian state Oil and Gas Company.
Other Algerian Plans
is pleased to announce that it has been pre-qualified by Alnaft, the Algerian National Agency for Promotion of Hydrocarbon Resources, to submit tenders as operator/investor for the exploration and exploitation of hydrocarbons in future onshore bidding rounds in Algeria. The pre-qualification remains in force for a 3 year period until July 2011 and allows Petroceltic to tender offers in all bidding rounds during this time.
ITALY
Petroceltic has built up a substantial portfolio of exploration assets in Italy, through a combination of opportunistic acquisition and permit applications. These assets are held through its wholly owned Italian subsidiary, Petroceltic Elsa Srl. The current portfolio consists of 7 permits (4 operated) in the Po Valley, 11 offshore exclusive applications (10 operated) in the Central Adriatic and Sicily Channel, and 1 onshore exclusive application (operated) in the Po Valley. Petroceltic maintains a substantial equity interest (between 37.5-100%) in all these assets, giving additional flexibility with respect to forward funding of the planned work programs.
A substantial inventory of both oil and gas prospects are present on these permits. We are now in the process of rationalising the portfolio, with a view to high grading those assets which can offer a step change in value to shareholders. A pipeline of drillable prospects is being technically matured and the first of these, subject to permitting and rig availability, should be ready for drilling from early 2010.
Central Adriatic Area Permit Applications Petroceltic 100%
The 10 operated exploration permits in the Central Adriatic, offshore Italy, were awarded on an exclusive basis to the Company. Included in these assets are permits d492 and d493, which were subject to a competitive external bid. These interests together with the other eight permits d494 to d500 plus d505, and Petroceltic's existing interest in the BR 268RG offshore permit, gives the Company access to a near contiguous proven hydrocarbon play fairway of over 2,660 square kilometres along the Apulian Carbonate Platform margin. The permits lie in water depths of between 30 and 150 meters and are located adjacent to existing oil and gas fields, which have demonstrated three working hydrocarbon plays in this region; the Cretaceous Miglianico/Elsa basin floor fan; the Cretaceous to Miocene Rospo Mare/Ombrina Mare platform carbonate oil plays, the latter recently successfully tested by the OM-2 well; and the Santo Stefano Mare Pliocene biogenic gas play.
BR 268 RG (Elsa) Petroceltic 40% Interest
This block contains the Elsa-1 oil discovery. All available seismic data over the discovery has been obtained from ENI, the previous operator, during 2008. This data has been reprocessed and is currently being mapped.
The company plans to drill a well in this block in the first half of 2010. Potential recoverable reserves for Elsa have been independently estimated to be 182 million barrels. A number of other prospects in the 50-180 million barrel range have already been identified in the play fairway, on the adjacent Petroceltic (100%) blocks, and these potential resources have been attracting farm-in interest from a number of major oil and gas companies.
Po Valley Permits
In December 2007, Petroceltic acquired a portfolio of acreage comprising 4 exploration permits from BG Italia. The interests in these permits vary from 50 per cent to 95 per cent. In addition, the deal included interests in two exclusive permit applications, one in the Po Valley (now a fully decreed permit) and one offshore in the Sicily Channel in Southern Italy. In 2008, Petroceltic's acreage position in the western Po Valley was complimented with the award of the Ronsecco Exclusive Permit application (Petroceltic 100%), which contains a substantial undrilled Triassic structure, previously mapped by ENI.
The Carisio, Torrente Nure, Casalnoceto and Vercelli permits contain an inventory of Miocene prospects with estimated unrisked recoverable resources in excess of 1 TCFe (trillion cubic feet gas equivalent). Some of these prospects have been mapped on 3D seismic, are technically mature, and are ready to drill. In addition, a number of Triassic oil leads have recently been identified on trend to the nearby ENI operated Villafortuna-Trecate oil fields.
Petroceltic's activity in the Po Valley will focus on the Carisio Licence. (Petroceltic Operated, 47.5% interest). A significant Triassic oil prospect called Rovasenda has been identified on this licence. The prospect will require further 2D seismic reprocessing and interpretation before drilling. A 47.5% interest in the Carisio licence was recently farmed-out to ENI.
Sicily Channel area
The Licata Exclusive Permit Application (ENI operated; Petroceltic 37.5%) in the Sicily Channel was acquired as part of the asset package purchased from BG Italia in late 2007. The application area contains the Licata prospect (100-300 Bcf) which is a Pliocene gas prospect mapped on 3D seismic. The potential value of this prospect has increased substantially in 2008 as a result of the successful drilling by ENI of the Argo and Cassepio Pliocene gas discoveries in the Sicily Channel. These discoveries, in conjunction with the Panda Gas Field, are reported as being planned for development by ENI during 2010.
Future Plans
The Company plans to mature existing oil and gas prospects in the Po Valley for planned drilling in 2010/2011. In addition, it intends to farm-out the 100% Adriatic blocks for a carried seismic and drilling programme commencing in 2010.
TUNISIA
Petroceltic has been informed by the Tunisian government that the application to enter the first renewal period of the Ksar Hadada permit has been approved. The first renewal period of the permit began on 20th April 2008 and lasts for three years. In line with the Production Sharing Contract, Petroceltic and its' co-venturer, Independent Resources, have retained 80% of the original Ksar Hadada permit (5,600 sq. km) into the first renewal period.
New interpretation of seismic and well data on the permit has yielded positive results with the validation of a number of Ordovician and Silurian prospects in the southern part of the block. Drilling on this licence has been deferred to allow the incorporation of recent positive exploration drilling results on adjacent permits. The participants of the Remada Sud licence immediately to the south of Ksar Hadada recently announced a successful oil discovery which has been independently assessed to contain 170 MMbbls of Stock Tank Oil Initially In Place in the Ordovician TT2 discovery. This adjacent discovery de-risks the Ordovician prospects on Ksar Hadada, and confirms the presence of a mature source rock and a working migration system in this area.
Petroceltic has a 57% interest in and is operator of the Ksar Hadada permit. The other partners are Independent Resources (Ksar Hadada) Ltd (40%), GA.I.A. srl. (1.5%), and Derwent Resources (Ksar Hadada) Ltd (1.5%).
Consolidated Income Statement
For the year ended 31 December 2008
|
2008 US$'000 |
2007 US$'000 |
||
|
Continuing Operations |
|||
|
Revenue |
962 |
549 |
|
|
Administrative expenses |
(3,476) |
(2,817) |
|
|
Amortisation and depreciation |
(228) |
(53) |
|
|
Exploration costs written off |
(699) |
(210) |
|
|
Cost of share based payments |
(1,371) |
(1,757) |
|
|
Results from operating activities |
(4,812) |
(4,288) |
|
|
Finance income |
1,117 |
1,827 |
|
|
Loss before tax |
(3,695) |
(2,461) |
|
|
Income tax expense |
- |
- |
|
|
Loss for the year - all attributable to equity holders in the Company |
(3,695) |
(2,461) |
|
|
Basic loss per share (cent) |
(0.44) |
(0.33) |
|
|
Diluted loss per share in (cent) |
(0.44) |
(0.33) |
Consolidated Statement of Recognised Income and Expense
For the year ended 31 December 2008
|
2008 US$'000 |
2007 US$'000 |
||
|
Loss for the year |
(3,695) |
(2,461) |
|
|
Income recognised directly in equity |
|||
|
- net change in fair value of available-for-sale assets |
(458) |
50 |
|
|
- related deferred tax |
92 |
(10) |
|
|
Total recognised income and expense for the year all attributable to equity holders of the company |
(4,061) |
(2,421) |
Consolidated Balance Sheet
As at 31 December 2008
|
2008 US$'000 |
2007 US$'000 |
||
|
Assets |
|||
|
Intangible assets |
78,326 |
47,490 |
|
|
Property, plant and equipment |
42 |
- |
|
|
Other investments |
300 |
758 |
|
|
Total non-current assets |
78,668 |
48,248 |
|
|
Trade and other receivables |
1,139 |
632 |
|
|
Cash and cash equivalents |
43,429 |
23,463 |
|
|
Total current assets |
44,568 |
24,095 |
|
|
Total assets |
123,236 |
72,343 |
|
|
Equity |
|||
|
Share capital |
30,562 |
26,191 |
|
|
Capital conversion reserve fund |
51 |
51 |
|
|
Share premium |
162,631 |
113,079 |
|
|
Share based payment reserve |
10,157 |
9,220 |
|
|
Fair value reserve |
195 |
562 |
|
|
Retained deficit |
(81,551) |
(78,290) |
|
|
Total equity |
122,045 |
70,813 |
|
|
Liabilities - current |
|||
|
Trade and other payables |
1,143 |
1,390 |
|
|
Liabilities - non current |
|||
|
Deferred Tax |
48 |
140 |
|
|
Total liabilities |
1,191 |
1,530 |
|
|
Total equity and liabilities |
123,236 |
72,343 |
Consolidated Cash Flow Statement
For the year ended 31 December 2008
|
2008 US$'000 |
2007 US$'000 |
|
|
Cash flows from operating activities |
||
|
Loss before tax |
(3,695) |
(2,461) |
|
Adjustments for: |
||
|
Finance income |
(1,117) |
(1,827) |
|
Amortisation & depreciation |
228 |
53 |
|
Exploration costs written off |
699 |
210 |
|
Cost of share based payments |
1,371 |
1,757 |
|
Cash from operations before changes in working capital |
(2,514) |
(2,268) |
|
Decrease/(increase) in trade and other receivables |
(507) |
353 |
|
(Decrease)/increase in trade and other payables |
(247) |
(626) |
|
Net cash from operating activities |
(3,268) |
(2,541) |
|
Cash flows from investing activities |
||
|
Expenditure on intangible assets |
(31,749) |
(9,233) |
|
Expenditure on tangible assets |
(56) |
- |
|
Interest received |
983 |
1,515 |
|
Net cash used in investing activities |
(30,822) |
(7,718) |
|
Cash flows from financing activities |
||
|
Proceeds from the issue of new shares |
55,000 |
- |
|
Payment of transaction costs |
(1,078) |
- |
|
Net cash used in financing activities |
53,922 |
- |
|
Net (decrease)/increase in cash and cash equivalents |
19,832 |
(10,259) |
|
Effect of foreign exchange fluctuation on cash and cash equivalents |
134 |
312 |
|
Cash and cash equivalents at start of year |
23,463 |
33,410 |
|
Cash and cash equivalents at end of year |
43,429 |
23,463 |
Related Shares:
PCI.L