The explorer has recently talked of its intention to more closely focus on its core operations in Algeria and Egypt and exit non-core geographical areas such as Greece and the Black Sea region.
Last year, it relinquished one of its two licences in the Kurdistan Region of Iraq known as the Shakrok prospect. Yesterday, announced it was following suit at the Dinarta licence; which it shares with US explorer, Hess and the Kurdistan regional government.
The partners announced earlier this year that drilling operations on the Shireen-1 exploration well at the Dinarta prospect encountered significant operational challenges since a resumption of drilling last October.
A review of forward options led the partners (Petroceltic is a 16% shareholder in the Kurdistan asset) to conclude that an additional well would be required to further evaluate the exploration potential of the Shireen prospect and that “further operational difficulties could not be ruled out”.
“In light of the current low oil price environment, lack of conclusive well results to date and the limited time remaining in the current period of the production sharing contract for the Dinarta licence, Hess and Petroceltic have jointly elected to withdraw from the Dinarta licence without any further drilling,” the partners said.
In a statement, Petroceltic’s chief executive Brian O’Cathain said yesterday: “Petroceltic’s strategy remains clearly focused on delivering from its core producing and development assets, while maintaining balanced exposure to longer-term exploration-led growth wherever possible.
“In light of this, and the current oil price environment, the decision to withdraw from Kurdistan is the right one for the business.”
“While not wholly unexpected, the news will nevertheless rank as a disappointment,” said Gerry Hennigan of Goodbody Stockbrokers.
“The news will further consolidate value within the Petroceltic portfolio around the core assets of Algeria and Egypt,” he added.
“This is a painful conclusion to the group’s investment in Kurdistan, but probably appropriate, given the early diagnosis of drilling to date, additional risk capital required and the uncertain oil price environment,” Davy Stockbrokers’ Caren Crowley added.
Petroceltic is now expected to include a writeoff of around €115m, relating to Kurdistan costs.