Explorer to sell half of Irish assets

ISLAND Oil & Gas, the Dublin-headquartered exploration company, is to sell half of its Irish-based assets in a bid to fund development work at its newer licences off the coast of Morocco, due to be carried out over the next two years.

The company said yesterday that it had decided the sale of its interests in the Celtic Sea was the best way for the firm to raise funds.

“The potential to raise organic capital through asset sales to reduce the dependency on external finance in the future is high. In this respect, the board believes that monetisation of the Celtic Sea gas assets offers the best and earliest opportunity to achieve this objective,” Island said in a stock exchange statement.

Although a spokesperson for the company gave no indication of approximately how much money could be expected to be raised by the move, nor the potential timeframe for a sale to be concluded, the company did confirm there had been initial expressions of interest from a number of parties.

In addition, Island’s chairman, Bryan Benitz, has said that he was prepared to lend the company £500,000 (€583,000) – Island is listed on London’s Alternative Investment Market and reports in sterling – to shore up its short-term working capital requirements.

Island has 10 assets situated around the Irish coast – five off the west coast in the Atlantic Ocean and five in the Celtic Sea. These include the Seven Heads gas field, the Old Head of Kinsale gas field, the Barryroe Licensing option and the undeveloped Schull gas field.

Island was tight-lipped yesterday on the identity of the parties interested in its offshore Irish assets – no responses were forthcoming from the likes of Bord Gáis or Providence Resources, both of which have made no secret of their desire to gain access to the gas storage market.

In its statement yesterday, Island said its Celtic Sea gas assets were “highly attractive, economically viable and have the potential to provide a foothold in the European gas storage market”.

“They also have the potential to significantly help safeguard Ireland’s gas supply,” it added.

The company said that the sale of these assets would give it sufficient funds to continue building its international portfolio and may allow it to return some cash to shareholders.