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Petroceltic complete USD180m farm-out

Tuesday, July 08 10:26:28

Irish oil and gas explorer, Petroceltic today announced the completion of its sale of an 18.375pc interest in the Isarene PSC to Sonatrach, the National Oil and Gas Company of Algeria for USD180m.

The assignment was effected by way of a sale and purchase agreement, under which Sonatrach has acquired a further 18.375pc interest in the Isarene PSC covering Blocks 228 and 229a. The amendment to the Isarene PSC (or Avenant) required to give effect to the transfer was signed by Sonatrach, Petroceltic and Enel at a ceremony in Algiers on 12 February 2014. This was subsequently ratified by the Algerian Council of Ministers and completion occurred with the publishing of the Avenant in the official journal of Algeria on 18 June 2014 which was made available publically on 7 July 2014.

The terms of the agreement with Sonatrach provide for a consideration of up to a maximum amount of USD180 million. The consideration comprises USD20 million payment on this completion of the transaction, a further USD140 million payment of Petroceltic's share of Ain Tsila project development cost from the effective date of 4 July 2013, and contingent payments of up to US$20 million based on the achievement of certain project related milestones.

Post completion, Petroceltic has a 38.25pc interest, Sonatrach has a 43.375pc interest, and Enel maintains its 18.375pc interest. Petroceltic remains operator of the license.

"We are delighted to announce the completion of the Sonatrach farm-out. Petroceltic has had a positive and mutually beneficial relationship with Sonatrach throughout the exploration, appraisal and now development phases of the Isarene PSC. The formal ratification of this agreement is a critical step in the overall funding plan for this development project. As development operations ramp-up, we look forward to continuing to work with Sonatrach and Enel to deliver the Ain Tsila Project and to maximise the value of this important national resource for Algeria," said Brian O'Cathain, Chief Executive of Petroceltic.