Drilling reports hit Irish explorer

Shares in Irish exploration firm Petroceltic fell by over 7% yesterday on the back of further negative drilling news from its operations in Kurdistan.

The company said that testing of the remaining two Jurassic zones at its Shakrok-1 well failed to flow hydrocarbons to the surface, just as the initial two zones had.

Yesterday’s operations’ update also said that while drilling is set to commence on the Dinarta licence in Kurdistan (in which Petroceltic holds a 16% stake) this month, two other prospects — one offshore Romania and the other onshore Egypt — failed to deliver commercially.

Management said the latest outcomes were “disappointing“, but provide information that will aid future decision making.

Industry analyst, Gerry Hennigan — of Goodbody Stockbrokers — suggested the underwhelming announcement is unlikely to boost management’s efforts to garner shareholder approval for its $100m fundraising/ share placing plan at its upcoming EGM on June 9.

Petroceltic also, yesterday, strongly reiterated its recommendation for an approval vote for said placing, responding to near 20% stakeholder, Swiss investment firm, Worldview Capital Management’s opposition to the move. Worldview recently urged other shareholders to block Petroceltic’s plans to remove investor pre-emption rights — which allow for newly issued shares in a company to be offered to existing shareholders ahead of new investors — saying that the allocation of 8.8 million of the 37.9m new shares to a new shareholder, the Middle-Eastern led Dovenby Capital, amounted to “an abuse of shareholder rights”.

Responding yesterday, Petroceltic said that an offer to all shareholders on a fully pre-emptive basis would require the publication of a prospectus, “with consequent cost and timetable implications”.

It noted, also, that its planned placing structure is commonly used by public companies and is widely accepted as a secure and swift means of raising funds. The Irish firm also said that acceptance of Worldview’s other proposal — for it to underwrite the entire $100m placing — would have seen it own 25% of Petroceltic and gain blocking control over the Dublin firm’s activities.