2011 was a great year for PCI. You wouldn’t know it by looking at the sp but that’s more a story of 2011′s broader debt/economic woes than any company specific operational progress.
For a company that has already demonstrated the value of their asset through the drill bit but also via the farm out process – it’s astonishing that PCI is still valued at just a fraction of its overall asset worth. However, the markets tend to take a heavily discounted view these days when FDP’s and funding are uncertainties.
PetroCeltic have said that they are undergoing a second farm out process as well as in advanced talks to confirm the commercial project status with the Algerian Government/Sonatrach.
PCI had hoped to confirm details on the FDP by end of March but this date now appears to have been pushed out a further 3 months to July 24th deadline. Shareholders will be pleased that a firm deadline has been set but equally disappointed that it could take another 12 weeks to complete.
Plans on Italy look to be moving in the right direction and progress in Kurdistan on Seismics is encouraging.
Whilst it looks like a quiet first half to 2012 for PCI, the second half looks very busy indeed.
The stock may be suffering from the short term trading attitude that is prevalent in today’s climate but this should change once the FDP and MOU’s are agreed – and by the time farm out’s are sorted, PCI should have strong momentum and the valuation gap between sp and assets should be closing.
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26(th) April 2012, Petroceltic International plc
Preliminary Results Announcement
Results for the twelve months ended 31 December 2011.
Petroceltic International plc (“Petroceltic” or “the Company”), the independent oil & gas exploration company focussed on the Middle East-North Africa (“MENA”) and Mediterranean region today announces its results for the year ended 31 December 2011.
Highlights:
– Successful six well appraisal drilling campaign in Algeria completed on time and under budget.
– Petroceltic estimate of most likely gas resource in place in the Isarene permit area, Algeria, increased by c.70 per cent to 10.3 TCF.
– Enel introduced to the Isarene permit as 18.375 per cent partner. Over US$100 million received to date.
– Substantial progress on finalising with Sonatrach a plan of development incorporating gross recoverable contingent resources of 2.2 TCF of gas and 180 million barrels of condensate and LPG recoverable contingent resources over life of field.
– Sonatrach, Petroceltic and Enel agree to a three month period from 24(th) April 2012 to conclude the Final Discovery Report and submission of the Declaration of Commerciality for the field.
-- Entry into two highly prospective licences in the Kurdistan Region of Iraq.
– Preparation for drilling of high value Carpignano Sesia prospect (formerly Rovasenda) in Italy.
-- Strengthened investor base following successful US$60 million share placing in May 2011.
– Funded and well placed to continue to develop and grow the business. Net debt position of US$15 million at year end and cash at 31 March 2012 is US$64 million with no debt.
Robert Arnott, Chairman of Petroceltic commented:
“Petroceltic delivered on all of its key targets for 2011. The Isarene farm-out deal was approved by the Algerian authorities, the Company completed its appraisal campaign on time and under budget, achieving significant success, the plan of development was submitted to Sonatrach on time, and the portfolio expanded through the addition of two highly prospective licences in the Kurdistan Region of Iraq.
The coming year will see the maturation of our Algerian asset towards development sanction, the booking of commercial reserves, and accelerated activity on some exciting exploration in Italy and Kurdistan. In 2012, the Company is well positioned, operationally and financially, to take advantage of opportunities to expand its portfolio”.
Full results can be found here
I asked this on other BBs but didn’t get any thoughts, HUB what do you think are the prospects for Petroceltic buying Petroneft resources?
Petroceltic have the cash and the two companies share a lot in common, Petroneft have seen their market cap slashed and are now ripe for the picking
What do you think, maybe you might look further into this
Thanks
My immediate thought would be ‘no’. Whilst Petroceltic have a decent wedge of cash at present, this will be required for future funding of Kurdistan Seismics, plans on Italian assets and of course Algeria.
The market climate is not ripe for raising cash at the moment and companies that are fully funded for their ops are performing better than those that are not.
I think it would be more prudent for PCI to secure a second farm out on algeria before making acquisitions in the future.
But you are right in so much that the recent washout of small cap players has reduced sp levels and made many attractive targets for some bigger fish with greater cash balances.
The question I think might be more appropriate is… which big fish out there might fancy a nibble or bite at PCI?
HUB
I meant to say that if they do get the second farmout and even if it is at the same price as the last farmout then they will most certainly be in predator mode. Its just the fact that Thomas Hickey is a non exec on Petronefts board that got me thinking, but I guess your closer to the mark when you say Petroceltic could become a target especially at the current share price. Worth monitoring though!!
Hello
I recently invested in Petroceltic after reading your opinions on them. I am now not so sure that I did the right thing. My investment is down 23%
My question is should I sell or hold for news from Kurdistan?
Regards
Gunther
Gunther,
thesharehub initiated coverage on PCI at 4p ranges and with the sp currently just shy of 8p, that’s quite a leap already. When you bought at 9p or 10p ranges – I’m guessing you did so with a target in mind based on your own risk vs reward strategy? If not – then it’s certainly a better idea to have your risk vs reward goals set before you purchase a stock.
Nothing has changed on the ops or business front where PCI are concerned. So nothing should have changed on your view of them from a business point of view.
The share price has been less prolific since the fine run late in 2011 after drill successes.
As mentioned before, stocks tend to see ‘waves’ of investor attention which coincides with news worthy events. Unfortunately for PCI, the news flow is minimal due to no near term drill plans. That said, Italy could kick off soon and the firm deadline of July 24th for the Sonatrach decision/commercial plan is another event to pen in. Then there’s the potential for the second farm out. Kurdistan news is not likely to be a driver in 2012, but 2013 certainly looks like it could see the first well drilled for PCI/HESS.
Look into the company in more detail and you’ll see what’s around the corner. Look at the valuation of their asset in Algeria and you’ll get an idea on whether the stock has more upside ahead of it or whether it is over priced. All investors should look closely at the stocks they hold and it would be a concern if any did not know the basics on the companies they buy/hold.
Hope the above is of help.
HUB