RNS Number : 8070X
Petroceltic International PLC
30 June 2008
PRESS RELEASE
Dublin: 30th June 2008
PETROCELTIC INTERNATIONAL PLC
RESULTS AND OPERATIONS UPDATE
FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2007
Petroceltic International plc ("Petroceltic" or "the Company") the independent oil & gas
exploration company operating in Algeria,
Italy, Ireland and Tunisia today announced its results for the 12 month period ended 31
December 2007. The key highlights are:
· Algerian 3D seismic programme to optimise drilling locations
· Seven wells planned for Algeria
· Major expansion of Italian exploration portfolio
· Corporate focus on developing industry relationships
· Board appointments add commercial and technical expertise
· Cash and cash equivalents conserved at US$23.5m at year end
· Operating loss reduced to US$2.5m
· Petroceltic has also made a significant announcement today on a strategic
alliance and investment in the Company by Iberdrola,
the Spanish energy company
Brian O'Cathain, Executive Chairman of Petroceltic commented:
"Petroceltic has made clear progress in laying the groundwork for what is set to be an
exciting year ahead. We have put in place a
portfolio lying on the doorstep of Europe, with growing demand for energy supply, which has
the potential to generate significant value for
shareholders.
The inherent upside in our portfolio has been underlined by the strategic alliance and
investment agreement with Iberdrola, announced
separately today, which ensures that we are fully funded for the upcoming multi-well drilling
programme in Algeria and elsewhere."
Press Enquiries to:
John Craven / Brian O'Cathain, Petroceltic International Tel: +353 (1) 421 8300
James Henderson / Alisdair Haythornthwaite, Pelham PR Tel: +44 20 7743 6676
Joe Murray / Joe Heron Murray Consultants Tel: +353 (1)
4980300
HIGHLIGHTS
In 2007, Petroceltic's focus was on building its exploration and production portfolio in
North Africa and Italy, two prolific petroleum
provinces. Extensive seismic and analysis work has identified optimal drilling locations on a
number of discovery and exploration prospects
in both areas. In the same period the Italian licence areas, both onshore and offshore, were
expanded considerably.
The company is now poised for a period of significant investment and activity to prove up
reserves, and move discoveries towards the
development stage. The acquisition and interpretation of seismic data continues apace, ahead
of the anticipated drilling of seven wells over
the next year on the selected locations.
In Algeria, Petroceltic has now completed the acquisition of over 75% of its largest ever
3D seismic survey which will cover over 850 sq
kms of the 70 kms long Ain Tsila Ridge the largest prospect in the Isarene permit. This
programme will be finished in August and data will
be processed by year end. This and other seismic data will enable the company to identify
optimal drilling locations in terms of structural
position and reservoir quality. It is planned to drill the gas-prone Ain Tsila Ridge in
addition to other oil and gas prospects in the
Isarene permit in 2009.
In Italy, the company has substantially increased its acreage portfolio and is firming up
drilling locations and rig slots. In addition
to acquiring an attractive inventory of gas prospects in the Po Valley from BG Italia,
Petroceltic has been awarded seven new exclusive
offshore permits in the Adriatic. These adjoin four existing oil and gas fields. A number of
wells are planned for late 2009/2010, including
two onshore wells in the Po Valley area and one offshore well in the Elsa discovery block BR
268 RG in the Adriatic.
Petroceltic's management has also invested significant time and energy in developing
industry relationships over the past year. High
commodity prices and the recent worldwide decline in liquidity have meant that funds for
investment in exploration and production are at
present more readily available from the industry than from capital markets. These efforts, and
the above planned activity, have laid the
foundations for a period of significant growth in shareholder value.
The focus on preparing for a more intensive investment and exploration phase is reflected
in the results for the year to December 31st,
2007. Cash and cash equivalent resources were conserved at US$23.5m while the Operating Loss
was reduced to US$2.5m. Accounts for the year
and a comprehensive review of activity are attached.
A presentation on the Petroceltic Iberdrola Strategic Alliance will be available on the
Company's website from 10.00am, and a
conference call will take place at 10.00am today.
Conference call-in details are as follows:
Ireland: +353-1436-7641 / 1800-943-557
UK: +44-20-8515-2301 / 0800 279 2280
The annual report and notice of AGM, which will include resolutions in relation to the
investment by Iberdrola, will be posted to
shareholders today, Monday June 30th, 2008 and will also be available on the Company's website
from 10.00am.
The Annual General Meeting will be held on Thursday August 14th, 2008, at 11am at the
Herbert Park Hotel, Ballsbridge, Dublin 4.
Notes to Editors:
The relevant information has been reviewed and verified by Mr. John Craven, Director and
Chief Executive Officer 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. Craven holds a B.Sc
in Geology and a Masters Degree in Petroleum Geology from Imperial College of Science and
Technology in London, and is a member of the
Petroleum Exploration Society of Great Britain.
Glossary of Terms
bblsd Barrel (1 barrel = 159 litres) per day
bcf Billion cubic feet (1 cubic foot =
boe 0.028 m3)
bopd Barrels of oil equivalents
mmbo Barrels of oil per day
mmscf Million barrels of oil
tcf Million standard cubic feet per day
tcfe Trillion cubic feet
PSC Trillion cubic feet equivalents
Production sharing contract
Chairman's Statement
Since my last statement to shareholders, the Company has made significant progress in its
objective of building a significant
exploration and production business in both major areas of focus, North Africa and Italy.
These two prolific petroleum provinces both have the potential to add significant
discoveries and reserves. These areas are both on the
doorstep of Europe where increasing focus on security of supply and heightened demand for
ownership of equity gas amongst utilities has
increased the competition for and attractiveness of good hydrocarbon portfolios. This provides
real opportunity for Petroceltic.
Our 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.
The current climate for small market capitalisation exploration and production companies
is challenging. Hydrocarbon prices are at
record highs, but drilling and seismic costs have increased to record levels also, and there
is a very competitive and scarce market for
equipment and people.
The exploration and production industry is prone to cyclical activity. The advent of the
current period of high commodity prices,
combined with the worldwide decline in liquidity following the "sub-prime" crisis of 2007 has
led to a period when the capital required for
investment in oil and gas exploration and production is more readily available from the
industry than from the traditional sources of
investment. The Company has invested serious time and energy in developing its industry
profile and relationships over the past year.
It is the primary strategic objective of the Board to seek to create the most value for
all of our shareholders over the long term. The
benefits of fostering industry relationships which this strategy requires may not always be
obvious in the short term; this has been
reflected in our recent share price performance. However, we are confident that our current
efforts are laying solid foundations for a
period of significant growth in shareholder value in the near future.
We are now poised for a period of investment in drilling and proving up reserves, where we
believe that the value in our portfolio will
be demonstrated.
It is also the Company's intention to complement our organic growth programme by pursuing
both corporate and asset acquisition
opportunities. High oil prices have led to a seller's market in the international oil
industry, but for experienced technical and financial
teams such as Petroceltic's with detailed technical knowledge, good regional contracts and
advisors and strong commercial partners, the
opportunity to create value through acquisition still exists. The Board will look carefully at
all opportunities which arise in our area of
focus, seeking always to maximise shareholder value and the potential upside.
The results of Petroceltic International plc have been prepared this year for the first
time in accordance with International Financial
Reporting Standards ("IFRS"). As a result last year's comparative figures have been restated.The accounting policies adopted and the impact
of the move to IFRS for the comparative financial statements, including quantification of the
main accounting differences, are set out in
the attached financial statements. These changes provide considerably more detail than
required before, and result in a longer annual
report, which I hope that you will find more useful.
On behalf of the Board of Directors, I would like to thank the Company's shareholders for
their continued support over the past year. I
have personally spoken to many of you over the year, and I understand that you have been
patient while we put our industry partnerships in
place. I look forward to rewarding your patience with a year of more operational progress over
the coming twelve months.
In summary, we have an exciting year of technical work and operational activity ahead of
us. The stage is set for an active and exciting
drilling campaign, and I confidently expect to see our Company making even greater strides
during the coming year.
On behalf of the Board of Directors,
Brian O'Cathain
Chairman
27 June 2008
Chief Executive's Review
2007 was a very active year for Petroceltic in which we have prepared the groundwork in
terms of new seismic acquisition and new
licenses necessary to form the basis of an active drilling programme which in Algeria is
planned to commence in late 2008 or early 2009.
ALGERIA
Illizi Basin Isarene PSC (Blocks 228/229A) Petroceltic 75% Interest
Highlights
* 4 appraisal areas and 1 exploration area identified for further drilling
* Commenced 3 D seismic acquisition and processing over the Ain Tsila Ridge
* Nearby discoveries on adjacent permits - extending in to Isarene
* Successful entry in to second exploration period
* Tenders issued for drilling rigs and related services for 7 wells.
In Algeria, we initiated the acquisition of the Company's largest ever 3D seismic survey,
which covers 850 sq. km. over the Ain Tsila
Ridge Ordovician prospect, and re-processed 1,500 km of 2D seismic on our acreage. The 3D
acquisition programme is now over 75% complete at
the time of writing, and I am very pleased to report that to date the field operations have
been carried out safely and professionally, with
no significant injuries or lost time incidents. The initial results from the early field
seismic processing look very encouraging, and we
look forward to firming up our inventory of drilling targets on this very prospective Isarene
licence.
Petroceltic has identified five highly prospective areas namely the Ain Tsila Ridge,
Issaouane South (ISAS), Issaouane NW (INW), Hassi
Tab Tab (HTT) and SW Isarene following an extensive review of all reprocessed seismic, well
and geological information, including well test
and core data. These project areas will be the focus of drilling and other necessary work to
progress towards commercialisation of potential
hydrocarbon resources. Four of these project areas already have existing discoveries made by
Petroceltic and previous operators and hence
are considered appraisal areas. The other remaining prospect is SW Isarene which is an oil
exploration target.
The Ain Tsila Ridge
This is the largest prospect in the Isarene permit area. It is a north plunging structural
high extending some 70 kms from south to
north. Petroceltic is the first foreign company to have a permit over the whole of the ridge
area, and consequently the opportunity to
explore this feature as a single entity.
Previous operators have drilled 5 wells on or just outside structural closure on this
prospect. In these wells, drilled some 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 mainly outside optimal structural closure but also the quality of the Ordovician
reservoir.
In the Illizi Basin Ordovician sandstones are the most important reservoirs in terms of
hydrocarbon volumes. The key to success is to
identify areas of high quality reservoir and increasingly operators are using state of the art
wide azimuth 3D seismic to mitigate reservoir
risk.
Petroceltic's strategy going forward is to employ the latest seismic technologies and a
key objective of the wide azimuth 3D seismic
survey is to identify high permeability sweet spots in the target Ordovician reservoirs in
order to optimise drilling and well testing
procedures. This technique has been successfully deployed by BP in the appraisal and
development of the adjacent Tiguentourine Field in the
Illizi Basin (to the east of the Isarene Permit) - where average development well flow rates
of 80 mmscf/d from the Ordovician reservoir,
have been reported.
Petroceltic has contracted Global Geophysics to acquire a 3D WAZ seismic survey over the
northern part of the ridge and as of May 2008
some 650 square kilometers of data has been acquired. Acquisition of the data is expected to
be completed in August 2008 and processing by
year end 2008. The data will be used to optimise new drilling locations in terms of structural
position and reservoir quality.
Petroceltic estimates prospective hydrocarbon resources for the ridge to be in excess of 2
trillion cubic feet of gas.
ISAS and INW
New mapping utilizing all the wells and newly reprocessed seismic data over the ISAS
structure demonstrates that at the Devonian F2
level it is a gas cap with an oil rim. Three wells ISAS 1, INE 1 and TMZ 1 all flowed gas
whereas the down dip GTT 1 well flowed oil also
from the F2 sands. In addition GTTN 1 drilled in adjacent block 226 flowed gas from this
horizon on the same structure.
In 2007 Medex, operator of the adjacent block 226 and Petroceltic undertook a joint
technical study of the ISAS-INW area using a common
data base. The main conclusions from this study were that at the F2 level the ISAS and INW
structures extend in to both blocks. In 2007
Medex drilled a successful well NIS 1 which tested gas at 7mmscf/d on the INW structure.
Petroceltic plans to drill further wells on the ISAS and INW structures in 2009.
HTT
Following the successful drilling of Petroceltic's HTT 2 discovery well the HTT structure
is being remapped using newly reprocessed
seismic data. On completion of this work further appraisal drilling is planned.
SW Isarene
In 2007 we completed seismic reprocessing over this prospect area. Subsequent mapping of
this data has identified 2 prospects, SW
Isarene and El Biod south.
It is planned to conduct further 2D seismic acquisition followed by drilling in 2009. Both
prospects are considered oil targets with
main reservoir objectives in the Devonian and Ordovician.
Successful Entry in to the Second Exploration Period
Petroceltic received approval to enter the second exploration period in the Isarene PSC.The second period officially commenced on 26
April 2008 and is in force for two years until 25 April 2010. After this time discoveries can
be retained for appraisal, development and
production.
Petroceltic has retained 70 per cent of the original Isarene Permit area (7,520 sq. km)
into the second exploration period, in line with
the provisions of the Production Sharing Contract. The retained area contains all of the
prospects and discoveries previously identified by
Petroceltic in the permit area.
Future Plans
Petroceltic has issued tender documents for a minimum of seven exploration and appraisal
wells. Drilling of these wells is planned for
the Ain Tsila Ridge and the other discovery areas mentioned above. Our programme is aimed at
commercialisation of all prospective discovery
areas before the end of the second exploration period in April 2010.
ITALY
Italy is a good place to do business. The fiscal terms are very favourable with a simple
tax and royalty regime. Entry costs are low,
there is a well developed infrastructure and producers enjoy high oil and gas prices. Against
this background I am pleased to report that in
2007 Petroceltic made significant progress in Italy by acquiring new licences, including a
package of onshore permits in the Po Valley from
the BG Group and by generating prospects in existing permits for future drilling.
In Italy, we have substantially increased our acreage portfolio, by acquisition in the Po
Valley area, and through successful licence
application in the Central Adriatic. We are excited about possible oil prospects in both of
these areas. We are now working with our
partners in firming up drilling locations and rig slots for the Italian portfolio.
BR 268 RG (Elsa) Petroceltic 40% Interest
This block contains the Elsa oil discovery. Seismic data over the discovery has been
obtained from ENI the previous operator. This data
has been reprocessed and is currently being mapped.
It is planned to drill a well in this block in late 2009 or early 2010. Potential
recoverable reserves for Elsa have been independently
estimated to be 182 million barrels.
There is farm-in interest in this block from a number of major oil and gas companies.
Civitaquana Exploration Permit Petroceltic 35% Interest
In 2007 Petroceltic received final ministerial approval for the Civitaquana exploration
permit onshore Italy.
The permit is located in the Marche-Abruzzi Basin of central Italy, west of the onshore
Miglianico oil and gas discovery and close to
Petroceltic's BR 268 RG Offshore Permit, in the Adriatic Sea.
The block contains several potential oil and gas targets, including a shallow Pliocene gas
play and possible extensions of the
intra-Cretaceous Maiolica formation that yielded light oil and gas in the nearby Miglianico
discovery well, drilled by ENI in 2001.
Po Valley Permits
In October 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 and one offshore in the Sicily Channel in Southern Italy.
These permits, Carisio, Torrente Nure, Casalnoceto and Vercelli contain an inventory of
prospects with estimated unrisked recoverable
resources in excess of 1 TCFe (trillion cubic feet gas equivalent). Some of these are ready to
drill and are well defined by an extensive 3
D seismic data base. Also Triassic oil leads have been recently identified on trend to the
nearby ENI operated Villafortuna oil fields.
Petroceltic's activity in the Po Valley will focus on the Carissio and Torrente Nure
Licences. In Carissio (Petroceltic Operated, 95%
interest) there are two gas prospects well-defined by 3D seismic, Rosso and Arborio. These
low-risk prospects are adjacent to existing gas
infrastructure. The Company intends to mature these to fully-permitted, ready-to-drill
prospects during the year, with drilling planned for
2009, subject to rig availability. There is also a significant Triassic oil lead which will
require further seismic before drilling. In
Torrente Nure (ENI operated, Petroceltic 55% interest) the operator intends to shoot
additional 2D seismic, and plans to drill an
exploration well in 2009.
Included in the BG Italia acquisition are two exclusive permit applications Case Sparse in
the Po Valley and Licata in the Sicily
Channel. A prospect in the Licata application area is similar to and on trend with the Pande
Gas Field which is now being developed by ENI.
Adriatic Permit Applications Petroceltic 100% Interest
The Gazette of the Ministry of Economic Development, published in April 2007, confirmed
that seven new permit applications in the
Central Adriatic offshore were awarded on an exclusive basis to Petroceltic Elsa Srl
('Petroceltic') a wholly owned subsidiary of
Petroceltic International plc.
These exploration permit areas were primarily selected to access the extension of the
proven Elsa-Miglianico oil fairway, into the
Central Adriatic, to the east and southeast of the existing Petroceltic blocks. They are
adjacent to four oil and gas fields, the
Miglianico, Rospo Mare and Ombrino Mare oil fields and the Santo Stefano Mare Gas field.
Petroceltic will operate the seven exclusive exploration permits with a 100% working
interest. These permit areas, which cover
approximately 2,040 sq kms, lie in water depths ranging from 30 to 150 meters.
The seven exclusive exploration permits are part of an application for nine permits, in
the central Adriatic area, submitted by
Petroceltic in October 2006. A decision from the Ministry regarding the other two applications
is expected from the Ministerial Commission
in the coming months.
Since year end Petroceltic has applied for 2 further permits in the Adriatic.
Future Plans
We plan to mature existing oil and gas prospects in the Po Valley for planned drilling in
2009/10. In addition, we intend to farm-out
the Adriatic blocks for a carried seismic and drilling programme commencing in 2010.
TUNISIA
Tunisia Ksar Hadada Petroceltic 57% Interest/Operator
New interpretation of seismic and well data on the Ksar Hadada permit has yielded positive
results with the validation of a number of
Ordovician and Silurian prospects in the southern part of the block. These prospects have been
enhanced recently by positive drilling
results on adjacent permits where an oil discovery in the Ordovician in the TT2 well,
approximately 20 kilometres to the south, has been
announced by the co-venturers in this well.
It was intended to farm-out Tunisia for drilling in late 2008. However this process has
been suspended pending the final results of
testing of the TT2 well in the adjacent block.
Since year end Petroceltic as operator of the Ksar Hadada permit has been informed by the
Tunisian government that the application to
enter the first renewal period has been approved. The first renewal period of the permit
begins on 20 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.
IRELAND
Kinsale Gas Royalty
The Marathon operated Kinsale Head, SW Kinsale and Ballycotton Gas fields continued
production in 2007 yielding a net royalty to
Petroceltic of $549,000.
Outlook
In 2007 we focused on extending the existing portfolio with additional quality assets in
Italy and maturing our exciting prospects in
Algeria, Italy and Tunisia towards the drilling phase.
We are now poised for the most exciting drilling campaign in the history of the Company,
when we will begin to unlock the value which we
believe exists in our portfolio. I would like to thank the Staff of Petroceltic, and our
partners and stakeholders, for all of their hard
work and loyal support in bringing us to this very exciting period. I am confident that
significant value uplift will be realised for
shareholders in the near future.
John Craven
Chief Executive
27 June 2008
Consolidated Income Statement
for the year ended 31 December 2007
2007
2006*
US$'000
US$'000
Continuing Operations
Revenue
549
1,266
Administrative expenses
(2,817) (2,577)
Amortisation of intangible assets
(53) (51)
Exploration costs written off
(210) (5,756)
Cost of share based payments
(1,757) (1,832)
Results from operating activities
(4,288) (8,950)
Finance income
1,827
4,257
Loss before tax
(2,461) (4,693)
Income tax expense
-
(102)
Loss for the year -
all attributable to equity holders in the Company
(2,461) (4,795)
Basic loss per share (cent)
(0.33)
(0.70)
Diluted loss per share (cent)
(0.33)
(0.70)
* As restated for IFRS
Consolidated Statement of Recognised Income and Expense for the year ended 31 December
2007
2007
2006*
US$'000
US$'000
Loss for the year
(2,461)
(4,795)
Income recognised directly in equity
- net change in fair value of available-for-sale assets
50 299
- related deferred tax
(10)
(59)
Total recognised income and expense for the year,
all attributable to equity holders of the Company
(2,421) (4,555)
* As restated for IFRS
Consolidated Balance Sheet
as at 31 December 2007
2007
2006*
US$'000
US$'000
Assets
Non-current assets
Intangible assets
47,490
41,767
Investments
758
708
Total non-current assets
48,248 42,475
Trade and other receivables
632
985
Cash and cash equivalents
23,463 33,410
Total current assets
24,095 34,395
Total assets
72,343
76,870
Equity
Share capital
26,191
26,191
Capital conversion reserve fund
51
51
Share premium
113,079 113,079
Share based payment reserve
9,220 7,463
Fair value reserve
562
522
Retained earnings
(78,290)
(75,829)
Total equity
70,813
71,477
Liabilities - current
Trade and other payables
1,390 5,263
Liabilities - non current
Deferred tax
140
130
Total liabilities
1,530
5,393
Total equity and liabilities
72,343 76,870
* As restated for IFRS
Consolidated Cash Flow Statement
for the year ended 31 December 2007
2007
2006*
US$'000
US$'000
Cash flows from operating activities
Loss for the year
(2,461)
(4,795)
Adjustments for:
Finance income
(1,827)
(4,257)
Income tax expense
-
102
Amortisation of intangible assets
53 51
Exploration costs written off
210 5,756
Cost of share based payments
1,757 1,832
Cash from operations before changes in working capital
(2,268) (1,311)
Decrease/(increase) in trade and other receivables
353 (190)
(Decrease)/increase in trade and other payables
(626) 4,681
Net cash from operating activities
(2,541) 3,180
Cash flows from investing activities
Expenditure on intangible assets
(9,233) (34,427)
Interest received
1,515
1,870
Sale of investments
-
1
Net cash from investing activities
(7,718) (32,556)
Cash flows from financing activities
Proceeds from the issue of new shares
- 40,994
Net cash from financing activities
- 40,994
Net (decrease)/increase in cash and cash equivalents
(10,259) 11,618
Effect of foreign exchange fluctuations on cash and cash equivalents
312 2,387
Cash and cash equivalents at start of year
33,410 19,405
Cash and cash equivalents at end of year
23,463 33,410
* As restated for IFRS
This information is provided by RNS
The company news service from the London Stock Exchange
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