Interim Results

29th Sep 2009 07:00



PETROCELTIC INTERNATIONAL PLC

Interim Results and Operational Update

Six months ended June 30th, 2009

Petroceltic International plc ("Petroceltic" or "the Company"), the upstream oil and gas exploration and production company focused on North Africa and the Mediterranean is pleased to announce its Interim Results for the six months to 30th June 2009. 

HIGHLIGHTS

Testing of the AT-1 discovery well confirms Algerian Isarene permit's significant commercial potential 

Evaluation continues on step out AT-2 appraisal well

Testing of the INE-2 well scheduled for after the completion of the AT-2 well.

Successful Tunisia farm out funds US$14.5 million seismic and drilling of at least two wells

Elsa oil discovery appraisal well, offshore Italy, scheduled for second half 2010

Independent reserves audit of the Elsa discovery increases 'best estimate' contingent recoverable resources to 104 MMbbls

Significantly over subscribed US$41 million placing provides flexibility and allows acceleration of activities

Cash of US$81 million at period end

Loss of US$2.1 million

Commenting, Brian O'Cathain, Chief Executive, said:

"This has been a transformational period for Petroceltic, with an increased recognition of the underlying value of the Company's assets. Algerian drilling operations are now well underway and initial results confirm the significant commercial potential of the permit. Our objective will be to maintain and exploit the momentum we have created. The Company will continue to delineate the Ain Tsila gas discovery in Algeria and will also prepare drilling programmes in Tunisia and Italy, which we expect to commence in 2010. We will also continue to pursue other business development opportunities that arise in our area of focus. "

Petroceltic International plc:

Petroceltic is a leading Upstream Oil and Gas Exploration and Production Company, focused on the Mediterranean and North African area, and listed on the London Stock Exchange's AIM Market and the Irish Stock Exchange's IEX Market. The Company has exploration and appraisal assets in Algeria, Tunisia and Italy.

For further information, please contact:

Petroceltic

Brian O'Cathain Chief Executive  Tel: +353 (1) 421 8300

Pelham PR

Philip Dennis  Tel: +44 20 7337 1516

Klara Kaczmarek  Tel: +44 20 7337 1524

Murray Consultants

Joe Murray Tel: +353 (1) 4980300

Davy 

Hugh McCutcheon Tel: +353 1 6796363

John Frain

  Chairman and Chief Executive's Statement

We are pleased to report on the excellent progress made by Petroceltic in the first half of 2009 and the subsequent months leading up to this report. This has been a transformational period for the Company during which we successfully built on the solid financial and operating platform put in place in 2008 and demonstrated our ability to deliver value to shareholders. Petroceltic's share price has responded accordingly in the year to date, rising significantly and making the Company one of the top performing listed exploration and production companies in London and Dublin. We believe that this growth in share price reflects both an increased recognition of the underlying value in the Company's assets and an increasing confidence within the investor community in the new management team's ability to extract this value.

Operations Update

Algeria

Activities during the period have focused on the planning and execution of an extensive drilling campaign on the Isarene Permit. The program was designed to facilitate the simultaneous deployment of the KCA Deutag Rig 212 for drilling and a rigless unit for testing and fracture stimulation of wells, where required. The first well, INE-2, commenced drilling on 16th May and was drilled to the planned depth of 1020 mBSRD. Gas was encountered in Devonian age sandstones as expected. Following logging the well was temporarily suspended, as planned, for later testing with the rigless testing unit, following completion of testing operations on well AT-2. 

The second well in the campaign, AT-1 began drilling on the 21st June targeting the Ordovician Ain Tsila Prospect - the largest prospect on the permit. This well is located in the northern part of the 892 square kilometer 'Wide Azimuth' 3D seismic survey, which was acquired and processed during 2008. A significant formation evaluation program was undertaken in the well, including coring, extensive logging and seismic calibration surveys. This work revealed that the well had encountered 85 metres of gas bearing sandstone, with porosity and permeability characteristics significantly better than pre-drilling expectations. The AT-1 is the most prolific single zone well test on the Isarene permit to date and the potential for hydrocarbon resources associated with this zone are greater than for our earlier discoveries on the permit.

The AT-1 well was perforated and tested under natural flow (without stimulation) using the rigless testing unit. The well flowed 11.4 mmscf/d of gas (13,451 cubic meters/hour) with a flowing wellhead pressure of 205 psi on a 2" choke setting, and at a rate of 7.75 mmscf/d (9,144 cubic metres/hour) with a flowing well head pressure of 1,458 psi on a 32/64" choke setting. The well has now been completed for possible future use as a production well. 

The AT-2 appraisal well, which began drilling on the 31st August, is located approximately 12.5 kilometres to the south of AT-1 and therefore represents a significant step-out to the first well. Drilling and well evaluation continues at the AT-2 location.

The extensive formation evaluation and testing program to date has resulted in a substantially increased dataset, which will be used to evaluate the resource potential of the Ain Tsila discovery and guide the continuing appraisal program. Initial indications suggest that Ain Tsila has the potential to be a major gas accumulation able to be produced at commercial rates. 

All operations on the permit have been carried out by Petroceltic as Operator (75% interest) in association with our Algerian partner Sonatrach (25% interest). A discovery declaration for the AT-1 Ordovician reservoir has been submitted to Sonatrach.

Tunisia

In June 2009, Petroceltic successfully farmed out a stake in its Ksar Hadada onshore oil and gas exploration permit in Tunisia to a subsidiary of PetroAsian Energy Holdings Limited, a company listed in Hong Kong. Subject to the approval of the relevant authorities in Tunisia, PetroAsian will finance all of the Company's work commitments up to US$14.5 million, including new seismic acquisition and the drilling of at least two wells. Post farm-out, Petroceltic will retain a 27.03% interest in the permit and remain as operator.

Petroceltic is now preparing for seismic and drilling operations starting in 2010. The Company has opened an office in Tunis and appointed a new Country Manager, and is now investigating the market for seismic and drilling services in Tunisia. Both Silurian and Ordovician age prospects have been identified on the permit. The Company has been encouraged bythe reported success of the long term testing program on the recent TT-2 Ordovician discovery in the adjacent Remada Sud permit. 

Italy

Petroceltic's activity in Italy during the period has been focused on the onshore Carisio permit in the Po Valley and on the offshore BR268RG Permit in the central Adriatic area which contains the Elsa oil discovery. 

Planning for the Elsa-2 appraisal well is progressing. An environmental impact assessment for the well location has been submitted to the Ministry of the Environment and tenders for equipment and materials are underway, with a view to spudding the well in the second half of 2010. The parent company of the operator of the BR268RG permit, Vega Oil, has recently released the results of an independent reserve audit of the Elsa discovery, which provides a 'Best Estimate' contingent recoverable resource of 104 MMbbls. Petroceltic holds a 40% interest in the permit.

Test reprocessing of some 2D seismic data across the Rovasenda Prospect, located in the Carisio permit has yielded promising results. This reprocessing will now be extended across the entire prospect with a view to maturing Rovasenda for drilling. Petroceltic operates the Carisio permit with a 47.5% equity interest. 

Elsewhere in Italy, Petroceltic has continued to develop and rationalise its acreage portfolio, with opportunistic applications for four new permits in the Sicily Channel and Gulf of Taranto areas (d 358C.R-.EL, d 31G.R-.EL, d 34G.R-.EL, d 151D.R-.EL) and the relinquishment of the Casalnoceto permit in the Po valley.

Corporate

Brian O'Cathain was appointed Chief Executive following the resignation of John Craven in February 2009. Brian was formerly Executive Chairman of the Company. Andrew Bostock, who was formerly the Senior Non-Executive Director, was appointed Non-Executive Chairman.

Since that time, the new leadership team has sought to significantly improve the operating capability of the Company with a number of key management and staff appointments and the raising of further equity capital to give the Company the financial flexibility to further develop its business. At the Company's Annual General Meeting on the 3 June, Petroceltic shareholders approved a share placing in which the Company raised aggregate net proceeds of US$41 million. The placing, which was significantly over-subscribed, brought in additional leading institutions as new investors in Petroceltic. 

Financial

The loss for the six month period to 30 June 2009 was US$2.1 million; this is slightly higher than the same period in 2008 (US$1.9 million) due to an increase in administrative expenses. Revenue from the royalty interest in the Kinsale gas fields in Ireland decreased to $125k (six month period to 30 June 2008: $320k) due primarily to lower gas prices but also due to decreasing gas sales volume. Finance income for the period increased to $1.5 million (six month period to 30 June 2008: $584k) due to foreign exchange gains on funds raised in Sterling. Net cash raised from the issue of new equity during the period was US$41.4 million. Cash in the bank at period end was US$81 million and there was no bank debt.

Outlook

The first half of 2009 was focused on improving the Company's operating capability and completing the technical and operations planning required in advance of the Algerian drilling programme. With Algerian drilling operations now well underway and initial results indicating that Ain Tsila may become a significant gas field, our objective will be to maintain and exploit the momentum we have created. In the next six months we will focus on;

further delineation of the Ain Tsila gas discovery in Algeria

preparation for the seismic acquisition and drilling programmes in Tunisia and Italy

pursuing business development opportunities where we can take advantage of our experienced team, strong balance sheet and improved market position.

We would like to thank Petroceltic's shareholders for the patience and loyalty they have shown over the last few years. We trust that the Company has now begun to reward this faith. 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

  

PETROCELTIC INTERNATIONAL PLC CONSOLIDATED INCOME STATEMENT
For the period ended 30 June 2009
	Unaudited  6 months ended  30 June 2009	Unaudited  6 months ended  30 June 2008	Full year ended 31 December 2008
	US$'000	US$'000	US$'000
Revenue	125	320	962
Administrative expenses	(2,833)	(1,932)	(3,476)
Amortisation & depreciation	(78)	(203)	(228)
Exploration costs written off	(494)	(63)	(699)
Cost of share based payments	(389)	(645)	(1,371)
Results from operating activities	(3,669)	(2,523)	(4,812)
Finance income	1,551	584	1,117
Loss before tax	(2,118)	(1,939)	(3,695)
Income tax expense	-	-	-
Loss for the period - all attributable to equity holders in the company	(2,118)	(1,939)	(3,695)
Basic loss per share in cents	(0.20)	(0.26)	(0.44)
Diluted loss per share in cents	(0.20)	(0.26)	(0.44)
PETROCELTIC INTERNATIONAL PLC CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the period ended 30 June 2009
	Unaudited  6 months ended  30 June 2009	Unaudited  6 months ended  30 June 2008	Full year ended 31 December 2008
	US$'000	US$'000	US$'000
Loss for the period	(2,118)	(1,939)	(3,695)
Income recognised directly in equity
-net change in fair value of available-for-sale assets	196	98	(458)
-related deferred tax	(43)	(20)	92
Total recognised income and expense for the period
all attributable to equity holders of the company	(1,965)	(1,861)	(4,061)

  

PETROCELTIC INTERNATIONAL PLC CONSOLIDATED BALANCE SHEET
As at 30 June 2009
	Unaudited  30 June 2009	Unaudited 30 June 2008	31 December 2008
	US$'000	US$'000	US$'000
Assets
Intangible assets	89,935	63,273	78,326
Property, plant and equipment	35	61	42
Other investments	494	856	300
Total non-current assets	90,464	64,190	78,668
Trade and other receivables	1,061	813	1,139
Cash and cash equivalents	80,934	47,554	43,429
Total current assets	81,995	48,367	44,568
Total assets	172,459	112,557	123,236
Equity
Share capital	37,382	29,103	30,562
Share premium	197,184	146,981	162,631
Capital conversion reserve fund	51	51	51
Share based payment reserve	10,488	9,865	10,157
Fair value reserve	348	640	195
Retained deficit	(83,603)	(80,229)	(81,551)
Total equity	161,850	106,411	122,045
Liabilities- current
Trade and other payables	10,518	5,986	1,143
Liabilities- non current
Deferred tax	91	160	48
Total Liabilities	10,609	6,146	1,191
Total equity and liabilities	172,459	112,557	123,236

  

PETROCELTIC INTERNATIONAL PLC CONSOLIDATED CASH FLOW STATEMENT
For the period ended 30 June 2009
	Unaudited  6 months ended  30 June 2009	Unaudited  6 months ended  30 June 2008	Full year ended 31 December 2008
	US$'000	US$'000	US$'000
Cash flows from operating activities
Loss before tax	(2,118)	(1,939)	(3,695)
Adjustments for:
Finance income	(1,551)	(584)	(1,117)
Amortisation & depreciation	78	203	228
Exploration costs written off	494	63	699
Cost of share based payments	389	645	1,371
Cash from operations before changes in working capital	(2,708)	(1,612)	(2,514)
(Increase)/decrease in trade and other receivables	78	(181)	(507)
Increase/(decrease) in trade and other payables	9,376	4,596	(247)
Net cash from operating activities	6,746	2,803	(3,268)
Cash flows from investing activities
Expenditure on intangible assets	(12,174)	(16,049)	(31,749)
Expenditure on tangible assets	-	(61)	(56)
Interest received	380	277	983
Net cash used in investing activities	(11,794)	(15,833)	(30,822)
Cash flows from financing activities
Proceeds from the issue of new shares	43,086	37,589	55,000
Payment of transaction costs	(1,704)	(774)	(1,078)
Net cash used in financing activities	41,382	36,815	53,922
Net increase in cash and cash equivalents	36,334	23,785	19,832
Effect of foreign exchange fluctuation on cash and cash equivalents	1,171	306	134
Cash and cash equivalents at start of period	43,429	23,463	23,463
Cash and cash equivalents at end of period	80,934	47,554	43,429

Note:

The above statements have been prepared under International Financial Reporting Standards using accounting policies consistent with those in the last Annual Report.  Dermot Corcoran, Head of Exploration, Petroceltic International plc, is the qualified person who has reviewed and approved the technical information contained in this announcement. Mr. Corcoran holds a B.Sc. in Geology and an M.Sc in Applied Geophysics from the University of Galway, and a Ph.D from Trinity College Dublin, and has over 25 years experience in oil & gas exploration and production. 

Glossary

Mmscf/d million standard cubic feet per day

mBSRD metres below seismic reference datum

psi  Pounds per Square Inch

ENDIR CKFKDFBKDNCB

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