Sonatrach — the Algerian State oil company and, up to now, a junior partner in the field — has agreed to purchase an additional 18.4% stake in the asset; thus boosting its overall share to just under 43.4%.
The company will pay Petroceltic — which will ultimately keep a 38.25% holding — an initial $20m, before covering $140m of development costs and making two contingent payments of $10m each, based on certain early production milestones being met.
The Irish company had controlled 56.6% of the asset — seen as being potentially one of the biggest gas finds in the world — since selling an 18.4% stake to Italian energy giant Enel in 2012; but it’s plan has always been to offload another similar sized shareholding.
While yesterday’s announcement was expected — Petroceltic’s management told shareholders at its May AGM that it hoped to conclude the second Algerian farm-out by the end of October — what is being viewed as a bonus, of sorts, is that Sonatrach has emerged as the buyer.
It was widely reported, during the summer, that Oil India — the second largest exploration firm in that country — was in talks to buy the stake from Petroceltic.
Sonatrach, however, chose to exercise its pre-emption right on the offer; a rare enough move in the sector and something of a vote of confidence in the project, according to commentators.
“The pre-emption by Sonatrach,” according to Job Langbroek of Davy Stockbrokers, “sends an important message about its [Ain Tsila’s] value”.