RNS Number : 8073X
Petroceltic International PLC
30 June 2008
Dublin 30th June 2008
Petroceltic International plc
US $55 MILLION CASH INVESTMENT AND
STRATEGIC ALLIANCE WITH IBERDROLA
Petroceltic International plc ("Petroceltic" or the "Company") announces that it has
entered into a strategic alliance and financing
arrangements with Iberdrola, to develop the Company's oil and gas assets in North Africa and
Italy, the highlights of which are:
* Strategic alliance agreed with the major Spanish Energy Group Iberdrola, the world's
fourth largest electricity company
* Programme of cooperation on upstream projects in North Africa and Italy
* Iberdrola to invest US$55 million cash in Petroceltic through a placing of 215.8
million shares at Stg £0.13 per share, giving
Iberdrola a 22.64 per cent stake in Petroceltic
* Funds will be used to intensify and accelerate work programme across all of
Petroceltic's existing portfolio, particularly in
Algeria
* Financing option granted to acquire a 49% financing interest in any asset from
existing portfolio for a further US$55m cash
* Advance option consideration of $7.33 million payable in cash in three months to
Petroceltic
Commenting on the announcement, Brian O'Cathain, Executive Chairman of Petroceltic said:
"We are very pleased to have attracted and
reached a strategic alliance agreement with Iberdrola, all the more so at a time when there is
limited access to financial markets for
companies at our stage of development. Both Petroceltic and Iberdrola are focused on growth
in similar regions on the doorstep to Europe
and I welcome the fact that Iberdrola has chosen Petroceltic as its first ever investment in
an upstream oil and gas venture. The alliance
will be key to crystallizing the value in Petroceltic's quality exploration and appraisal
assets."
John Craven, Chief Executive Officer of Petroceltic, commented: "We are now entering the
most exciting phase of development in the
Company's history with a minimum of seven exploration and appraisal wells scheduled for the
year ahead, across a broad range of risk and
reward profiles. The funding which this investment provides secures this programme. This
investment is a clear vote of confidence in the
assets and the people of Petroceltic".
ANNOUNCEMENT
Petroceltic International plc ("Petroceltic" or the "Company") announces that it has
entered into a strategic alliance with Iberdrola, a
major international energy company, to facilitate the development of the Company's oil and gas
assets in North Africa and Italy.
To cement this alliance, agreement has been reached for Iberdrola to invest US$55 million
in Petroceltic through a placing of 215.8
million ordinary shares at Stg£0.13 per share. The investment is being made in two tranches.
Iberdrola subscribed for the first tranche of
US$37.6 million on June 29th 2008, representing 16.67 per cent of Petroceltic's issued
ordinary share capital following this subscription.The second tranche of US$17.4 million for an additional stake will be completed in August 2008
after Petroceltic's Annual General Meeting,
subject to shareholder approval. This will bring Iberdrola's total investment in Petroceltic
to US$55 million, resulting in an equity stake
of 22.6 per cent in the enlarged capital of Petroceltic.
Iberdrola has agreed not to sell any shares in Petroceltic without consent from
Petroceltic for three years.
In addition, under a two year option agreement, Iberdrola can invest a further US $55
million to acquire a 49 per cent financing
interest in any single asset in Petroceltic's existing portfolio, subject to the usual
regulatory and partner requirements. An advance
option consideration of $7.33 million in respect of this financing option is payable in cash
in three months from the date of this
transaction to Petroceltic.
A joint business committee has been formed between the two companies to manage the
strategic alliance and an Iberdrola nominated
non-executive director, Pablo Fuentes-Cantillana has joined the Petroceltic board with
immediate effect. Iberdrola will also second
personnel to Petroceltic to aid development in upstream expertise and will provide marketing
assistance on future gas sales.
Using the new funding and its existing cash resources, Petroceltic is now able to
intensify and accelerate the work programme on its
portfolio of high quality exploration and appraisal assets mainly in Algeria. Subject to
normal partner consents, this includes a programme
of 7 wells on the Isarene PSC block in Algeria where a wide azimuth 3D seismic survey to
optimise these drilling locations is already well
advanced. The first well in this programme is scheduled to start drilling in early 2009.
Headquartered in Spain, Iberdrola has operations in 40 countries worldwide, a market
capitalisation of EUR42 billion and in 2007 had
gross operating revenues in excess of EUR20 billion. Iberdrola is the fourth largest
electricity company in the world by market
capitalisation. In 2007 it acquired ScottishPower and floated its renewable energy subsidiary,
Iberdrola Renewables, a world leader in wind
power with a presence in 19 countries.
The Petroceltic strategic alliance is Iberdrola's inaugural investment in an upstream oil
and gas venture. This investment reflects the
growing demand from the major utility companies to secure energy supply.
Further details of the Iberdrola strategic alliance and investment are set out below in
this announcement. A presentation on the
Strategic Alliance will be available on the Company's website from 10.00am, and a conference
call will take place at 10.00am.
Conference call-in details are as follows:
Ireland: + 353-1436-7641 / 1800-943-557
UK: + 44-20-8515-2301 / 0800 279 2280
The Company's final results announcement for the year ended 31st December 2007 has been
issued separately this morning.
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
(www.petroceltic.com) 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.
Petroceltic was advised by Lazard & Co. Limited and Davy Corporate Finance in respect of
the placing and the strategic alliance
agreement.
Press enquiries to:
John Craven /Brian O'Cathain
Petroceltic International plc
Tel: +353 1 421 8300
Joe Murray / Joe Heron James Henderson / Alisdair Haythornthwaite
Murray Consultants Pelham PR
Tel: +353 1 498 0300 Tel: +44 20 7743 6676
Davy Lazard & Co., Limited
Hugh McCutcheon David Kotler
Tel: +353 1 679 6363 Tel: +44 20 7187 2000
IBERDROLA PETROCELTIC STRATEGIC ALLIANCE - FURTHER DETAILS
Under the terms of a Strategic Alliance announced today, Petroceltic and Iberdrola have
signed agreements highlighting their commitment
to work together to maximise value creation in their area of upstream focus in North Africa
and Italy. The main terms of these agreements
are summarised below.
Business Co-operation
Iberdrola and Petroceltic have agreed to appoint a joint committee of two senior business
representatives to consider further joint
business co-operation in upstream assets and potential acquisitions within the geographical
area of focus of North Africa and Italy.Iberdrola is to second personnel to Petroceltic, and is to provide marketing assistance to
Petroceltic in respect of future gas sales. The
two companies plan to pursue new upstream opportunities together in this region, and where
appropriate, to jointly evaluate and participate
in those opportunities.
Iberdrola investment in Petroceltic
On 29th June 2008 Iberdrola subscribed for 20 per cent of Petroceltic's current share
capital (16.67 per cent post-subscription) at 13p
per share, equating to 147,465,564 ordinary shares of the company (total £19.1 million
(c.US$37.6 million)). This placing was within the 20%
pre-emption disapplication authority given to Petroceltic at its Annual General Meeting
("AGM") held on 31st July 2007. Iberdrola has also
agreed to subscribe for an additional 68,303,667 ordinary shares, at the same price of 13p per
share, subject to approval of this additional
subscription by a special resolution at Petroceltic's AGM which is due to take place on 14th
August 2008.
On the basis that the requisite shareholder approval is obtained at the AGM the total
number of shares to be subscribed by Iberdrola
will be 215,769,231 new ordinary shares at a subscription price of 13p sterling per share, for
a total subscription price of £28 million, or
US$55 million, representing 22.64% of the issued ordinary share capital of Petroceltic.
Application has been made to the London Stock Exchange and Irish Stock Exchange for
147,465,564 new ordinary shares of nominal value
EUR0.0125 each ("Ordinary Shares") in the capital of the Company to be admitted to trading on
the AIM Market of the London Stock Exchange
("AIM") and the IEX Market ("IEX"). Dealing is expected to commence in the Ordinary Shares on
4th July 2008. These Ordinary Shares rank
pari passu in all respects with the existing Ordinary Shares of the Company. Subject to
shareholder approval, it is expected that admission
of the additional 68,303,667 new ordinary shares of nominal value EUR0.0125 each to AIM and
IEX will occur on or around 20 August 2008.
These Ordinary Shares rank pari passu in all respects with the existing Ordinary Shares of the
Company.
Shareholders Agreement
Under the terms of a shareholders agreement signed by Iberdrola and Petroceltic, Iberdrola
undertakes for a period of three years not to
hold in excess of 24.9 per cent of Petroceltic's issued share capital without Petroceltic's
prior consent. Iberdrola has also agreed not to
vote any shares in excess of 20 per cent at any shareholder meeting, nor can it sell any
shares without consent from Petroceltic for three
years. Iberdrola is entitled to subscribe in cash for new equity, if Petroceltic issues shares
non-pre-emptively so as to enable Iberdrola,
if it so wishes, to maintain its percentage shareholding in Petroceltic. Iberdrola has agreed
to vote its new shares in favour of the
Board's 2008 AGM resolutions. The key rights and obligations under the shareholders agreement
will lapse if Iberdrola holds less than 10 per
cent of the issued ordinary share capital of Petroceltic for greater than 90 days.
Financing Option Agreement
Under the terms of a financing option agreement signed immediately prior to the
shareholders agreement, Petroceltic has agreed to grant
Iberdrola an option to acquire a 49 per cent financing interest in any single material asset
from Petroceltic's portfolio, for a
consideration of US$ 55 million. The particular asset must be selected by Iberdrola within 6
months of the date of the agreement, and the
option will expire if not exercised on or before 1st May 2010. An advance option consideration
of $7.33 million in respect of this financing
option is payable in cash in three months from the date of this transaction to Petroceltic.This advance option consideration will be
deducted from the final option consideration if exercised. The US$ 55 million cash received
from the option exercise will be used to
refinance incurred exploration costs on the chosen asset, and/or to finance future exploration
costs. When an overall capital expenditure
from inception of US$55 million has been accomplished on the chosen asset, the asset will be
funded 51% by Petroceltic, 49% by Iberdrola going forwards.
Use of Funds
Petroceltic plans to use the $55 million investment in the Company to re-finance the $16
million commitment to the Isarene 3D seismic
survey, and to invest in exploration and appraisal drilling mainly in Algeria. Petroceltic has
issued tender documents for a minimum of
seven wells in Algeria on the Isarene permit, and the first of these is expected to begin
drilling in early 2009, subject to partner and
Government consents. The new wells will be targeting the Ordovician Ain Tsila Ridge area and
other discovery areas in the Isarene permit, as
part of the steps necessary to commercialize hydrocarbon resources under our Production
Sharing Contract.
Board Appointment
Pablo Fuentes-Cantillana has been co-opted to the Petroceltic Board as the Iberdrola
representative with immediate effect. Mr
Fuentes-Cantillana is Director for Gas Projects Development of Iberdrola. He is responsible
for Iberdrola's gas midstream business
development including, amongst others, the Medgaz project, a subsea pipeline connecting
Algeria with Spain. He was previously Director of
Energy Management of Iberdrola Mexico which today has a portfolio of over 5,000MW of
electricity in operation. He was also General Manager
of Iberdrola Monterray, a company responsible for the development and operation of a 1,000 MW
CCGT in Monterrey (Mexico). He is a Mining
Engineer from the Madrid School of Mines and has a Masters degree in Business Administration
from IESE Business School,
Mr Fuentes-Cantillana will stand for re-appointment by the shareholders at the 2008 AGM.Iberdrola will continue to have a right of
representation on Petroceltic's board as long as it holds at least 10 per cent of the ordinary
shares of Petroceltic. Mr. Fuentes-Cantillana
has no other current Directorships or partnerships.
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
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