Petroleum Africa
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Tuesday, October 8, 2013
Petroceltic International has received formal notification that Sonatrach, Algeria’s state-run firm, that is exercising its right under the Isarene PSC to pre-empt the company’s proposed sale of an 18.375% interest in the PSC.
The commercial terms and proceeds of pre-emption are similar to those agreed between the company and a potential third-party purchaser and comprise a $20 million payment on completion, a $140 million development carry, and two contingent payments of $10 million each based on the achievement of certain early production and technical completion milestones.
Following the completion of the transaction, Sonatrach will hold a 43.375% participating interest, Petroceltic will hold 38.25% and Enel will hold the remaining 18.375%. The transaction is not expected to have any impact on the overall timing for the award of major contracts or initiation of detailed development activities.
Sonatrach and Petroceltic are working to finalize all the necessary regulatory approvals to facilitate the signing of the required amendment to the PSC to permit the transfer of interests to occur. Further announcements will be made as appropriate.
Brian O’Cathain, chief executive of Petroceltic, commented: “The decision by Sonatrach to exercise its pre-emptive right is a clear indication of the current value and long term upside potential of the Isarene asset. Since 2005, Petroceltic has enjoyed an excellent relationship with Sonatrach and we believe that this decision represents a positive endorsement of the technical, commercial and development work undertaken over the last 9 years. Sonatrach’s decision to pre-empt confirms that the timely development of the Ain Tsila field is strategically important to Algeria and we look forward to working together to achieve this shared objective. ”
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