Petroceltic in €160m funding round

Irish exploration firm Petroceltic is set to raise $175m (€157m) in debt financing next month.

The bulk of the funding will go towards further financing the development of its key gas field asset in Algeria.

The Dublin-headquartered company — which, last year, raised $100m via a contentious share placing - yesterday announced its intentions to launch a bond issue with a three-year term.

The company is expecting to lend at a yield of 10% to 13% and anticipates good appetite for the offering.

Petroceltic is likely to use up to $50m of the funds to pay off outstanding bank debt; another $20m for general corporate purposes and the remaining $100m, or so, on capital expenditure for the Ain Tsila gas field in Algeria, of which the company controls just over 38%.

The debt raise is expected to close next month.

This funding along with a cost carry (storage costs) from project partner Sonatrach will cover Petroceltic’s Algerian costs up to the end of 2016, but further funding will be required. To that end, the company is likely to launch a further bond sale sometime next year, the timing of which could help it benefit from lower yields.

Yesterday also saw the publication of Petroceltic’s latest annual results; showing a 2014 loss of $281.6m; which was up from losses of just over $18.8m the previous year.

While commodity prices played a part in the ballooning loss, the main driver was an exploration write-off, of $183m, relating to unsuccessful drilling rounds at assets in Romania, Kurdistan and Egypt and an $86m impairment charge, which related to the carrying value of oil and gas assets.

Group revenues amounted to $157m, down from $197m in the previous year. Net debt, at the end of last year, amounted to $153m and capital expenditure was $109m.

“Key contracts in respect of the Ain Tsila asset, in Algeria, were awarded and these are crucial steps towards unlocking the value of this important gas field for Algeria and Petroceltic,” said chairman, Robert Adair.

In terms of operational activity elsewhere, Petroceltic said it has begun procedures to offload its Greece-based assets (where it has a one-third share of a block off the west coast), following similar exits from Kurdistan and Romania.

The company also expects to get approval for drilling at one or two high-impact assets it holds in Italy.

“The group has de-emphasised certain exploration initiatives and is focusing its strategy on its core development and producing assets to generate greater value for shareholders,” Mr Adair said.