Petroceltic to take 40% stake in Italian sites

OIL and gas company Petroceltic, which changed its name from Ennex last year, said yesterday that it had signed a deal to take a 40% stake in two exploration sites in Italy.

Petroceltic will buy an initial 15% interest in the two fields from Rigo Oil, a local oil company that will remain as a partner in the projects, and has the option to increase its stake until a decision is made to start drilling at the sites.

Petroceltic executive chairman Brian Cusack said the new deal fitted into the strategy of buying “low cost, high impact appraisal projects” in an area that had already established the presence of oil. Oil was discovered in one of the blocks, off the eastern coast of Italy, in the early 1990s. The company said its evaluation work showed the field had the potential to contain up to 300 million barrels of oil.

“Our initial work on the project has made us confident that we can conduct a successful appraisal programme in the near future,” said Mr Cusack. The company will issue six million warrants, which are financial instruments that can be converted to ordinary shares in the company over the next three years, to pay for the stake. Petroceltic shares rose from 10p to 11.4p, or 14% in thin trading on London’s Alternative Investment Market yesterday.

The company recorded pre-tax profits of $1.38 million (€1.13m) for the year to December 2003 after losses of $660,000 the previous year. It built up a cash pile of over $15 million to fund its continuing development. This was partly funded by a share placing and the sale of the company’s interest in an exploration site in the former Soviet Union last year.

Yesterday’s announcement complements Petroceltic’s existing oil and gas operations off the south coast of Ireland in two sites in the Celtic Sea and near Marathon’s Kinsale gas field, as well as a site in Tunisia that the company hopes to drill before the end of the year. The company has also signalled plans to examine projects in Algeria and Libya. It hopes to drill three new sites this year.