Great news for PCI investors as Ain Tsila field is declared commercial by the Algerian government.
This provides PCI with the perfect platform to agree their second farm out deal which the company has already cited as being likely for Q3 or Q4.
ENEL took the first farm out at a time when the field was still in the exploration phase and thus gained a better price due to early investment. However, the second farm out should secure significantly higher returns as the field is now deemed commercial and Sonatrach confirmed sales channel/marketing position.
The funds will come in handy for PCI who are expected to kick off an aggressive exploration and appraisal program on the newly revitalised Italian assets due to a BAN on drilling offshore being lifted. Also, Hess Corp are due to conclude the Seimics program on the Kurdistan blocks soon and agree a drilling program for 2013. With Kurdistan in huge demand at present, PCI’s interests may have grown already – without a well drilled.
The remainder of 2012 will be focussed on Algerian Second Farm out and Italian interests.
Petroceltic International PLC, 9 August, 2012
Declaration of Commerciality for the Ain Tsila field, Algeria
Petroceltic International plc (“Petroceltic” or “the Company”), the upstream oil and gas exploration and production company focused on North Africa, the Middle East and the Mediterranean, is pleased to announce that the parties to the Isarene Production Sharing Contract (the “PSC”) have agreed a Formal Declaration of Commerciality in respect of the Ain Tsila natural gas field situated in the Illizi Basin of Algeria.
The Final Discovery Report (field development plan), submitted in January 2012, along with the Declaration of Commerciality and supporting documentation will now be passed to the Algerian Competent Authorities. Following their approval, the PSC parties will be granted a 30 year exploitation permit for the Ain Tsila field. Petroceltic holds a 56.625% working interest in this development, with Enel holding 18.375% and Sonatrach 25%.
The field was formally declared commercial on completion of an agreement for Sonatrach to market all of the produced gas from the Ain Tsila field, using a formula linked to Brent oil pricing. The PSC partners estimate the field to contain gross resources of 2.1 tcf of sales gas, 67 mmbbl of condensate and 108 mmbbl of LPG. Development work is expected to commence in 2014 and first gas is planned for the third quarter 2017, initially from an estimated 18 vertical wells produced through a new gas processing plant at an annual average wet gas plateau rate of 355 million standard cubic feet/day (10.05 million standard cubic metres/day). The plateau length is 14 years and an additional 106 development wells are estimated to be required during the period to maintain this production plateau.
Brian O’Cathain, Chief Executive of Petroceltic commented:
“The declaration of commerciality on the AinTsila field is a major milestone for Petroceltic and our partners Sonatrach and Enel. This is a critical step towards formally recognising the reserves on this substantial field and our asset team is now focusing on planning for the development phase of the project.”