PCI lets get in on,algeria,tunisia,italy,oil and gas.

The Sunday Times January 01, 2006

Irish Agenda: Ciaran Hancock: Big hitters knock Irish companies out of Tynagh Energy bid



THE future ownership of Tynagh Energy, which is constructing a power station in Galway, could be decided this month. The sale, which is being handled by Fieldstone Capital Group, a New York-based corporate adviser, stalled over Christmas, but should be back on track this week.
A shortlist of five potential buyers was recently drawn up and it included some of the biggest names in the business. Any auction that attracts Australian investment banks Babcock & Brown and Macquarie, Japan’s Tokyo-Mitsubishi Bank and Sumitomo Mitsui Banking Corporation and GE’s power division has to be worth watching. These guys have so much muscle that neither Viridian nor Bord Gais made the final cut.



Turkish construction giant Gama indicated some time ago that it wanted to reduce its 80% holding in the venture. Initial indications suggested that it wanted to halve its stake, but such is the interest in the enterprise that it now seems more likely that the Turks will exit it completely. Industry sources say Gama’s entire stake could be worth €100m or more.

The intentions of Mountside, the Brian Keogh-backed entity that owns the 20% balance in Tynagh, are less clear. There is plenty of speculation to suggest that Mountside will take the opportunity to move out with Gama, but this might not be the case.

Mountside is understood to have first call on Gama’s shareholding and it might choose to exercise this right if it doesn’t like the look of the deals on the table.



Read all about it

The O’Reilly family should have been toasting its good fortune over the holiday period on the back of a bullish trading statement from Independent News & Media (INM) that hit the wires on December 23. The media group has guided advertising revenue growth of 7.5% for 2005 and an increase of 3% in its combined newspaper circulation.

Particularly pleasing is the early indication that the Irish Independent and Evening Herald have held off the damage that the free Metro newspaper promised to inflict on the titles in Dublin. The Irish Independent has lost about 800 sales a day, while the Herald’s losses are put at about 650. This represents less than 1% of the daily sales of both titles. No disaster there. The lost revenues will be more than compensated for by a recent 7% increase in the cover price of the Irish Independent from €1.50 to €1.60. No doubt the Irish Times will follow suit.

South Africa is proving to be a growth driver for INM, helped by the emergence of a black middle class. Operating margins have improved to 18% from the 14% recorded in the first half of 2005.

The UK remains the laggard, with the London-based Independent and the Belfast Telegraph both experiencing weak trading. Higher newsprint costs and a sluggish advertising market continue to hold it back. Strong economies in Ireland and South Africa, however, should provide a positive backdrop for INM’s activities in 2006.
The Sunday Times


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African sparkle
Watch out for corporate activity at African Diamonds, the Dublin-based explorer that has accumulated potentially lucrative diamond mine licences in Botswana.



The company’s potential has attracted covetous glances from Firestone Diamonds, a UK-quoted mining company headed by the Irishman Philip Kenny. Firestone has three diamond mining licences in a neighbouring area of Botswana and, like African Diamonds, is involved in a joint venture deal with De Beers to bring the mines to production.

Firestone recently acquired 7.3% of African Diamonds and is believed to have requested a seat on the board chaired by John Teeling. African Diamonds has requested further information before responding, but it’s a sure fire bet that the request will be politely declined.

De Beers, which has a small stake in African Diamonds, will be keeping an eye on the outcome. It is preparing to spend $25m (€21m) drilling AK6, a potentially world-class diamond mine. It also has pre-emption rights on the stock held by directors.

Firestone is unlikely to go away and a hostile move on African Diamonds cannot be ruled out. Kenny might find an ally in Mark Scowcroft, a former African Diamonds director, who owns 7.8% of the company. Scowcroft and Leon Daniels originally brought the project to Teeling but have since fallen out with him. Teeling is battle hardened following years of corporate scraps. Expect him to fight tooth and nail to retain control of a business that might finally see him hit the exploration jackpot.


What a gas

Another entrepreneur hoping that the exploration sector makes him his fortune this year is John Craven, the man behind Petroceltic. The Aim-listed oil and gas minnow has an aggressive drilling programme in place for 2006 that, if successful, could transform the company. The primary focus is Algeria, where Petroceltic plans to drill at least two wells, beginning in April.

Petroceltic has a 75% interest in a block called Isarene, with the balance held by a state-owned entity called Sonatrach. The concession covers 10,800 square kilometres in the Sahara desert.

It is an area where gas and oil has been discovered, and is believed to have 4 trillion cubic feet of potential gas reserves, about three times the size of Kinsale head gasfield off the coast of Cork.

Analysts have put a potential value of £1 a share on the concession if all goes well. Petroceltic will also be drilling in Italy, Tunisia and Ireland, where it has a 16.25% share in a gas play off the coast of Donegal that could be similar in size to Corrib. It will be a busy year that could yield a lot or deliver nothing, as is often the case with exploration minnows.

At 12.5p a share the stock is down over 20% this year. You pays your money and takes your chances.