Petroceltic attracts interest for Egyptian gas assets

Petroceltic has received unsolicited expressions of interest in certain assets it holds in Egypt. The Irish exploration firm’s management noted the approaches in its interim results presentation yesterday, but didn’t identify which of the production and/or exploration assets were the subject of the takeover interest. Furthermore, regarding a potential disposal, the company said while it would consider offers, it does not generally see itself as a seller in terms of its Egypt-related portfolio.

Egypt has suddenly become a hotbed of interest among exploration firms in the aftermath of Italian energy group, Eni finding one of the world’s largest natural gas fields, off the country’s coast, last month.

Petroceltic holds two licences located around 5km west of that mega-find and is expected to begin drilling in the region next year.

Petroceltic also yesterday reiterated its plans to raise extra debt financing in the coming months.

The company cited volatile market conditions for its decision to postpone a planned bond issue, aimed at raising nearly €160m in debt, in early August, but stressed that similar plans were still alive for sometime this year.

Yesterday, management said it expects to recommence marketing for the bond issue, or equivalent financing, “in the near future, subject to market conditions”.

The company yesterday reported a halving of first-half losses to $23.3m (€21m) for the six months to June.

However, cash balances have plummeted from $105.7m to $14.4m; as expenditure outlook for its flagship Algerian asset has risen to $1.6bn for the next three years.

“The reduced cash position of $14m highlights the need for an urgent resolution to the near-term funding pressures,” said David Round at London-based brokerage BMO.

Goodbody Stockbrokers has maintained its ‘hold’ stance on the Petroceltic stock, with analyst Gerry Hennigan saying: “We see value in the Algerian asset base.

Realising that value however, will require flexibility from its current bankers, sufficient appetite from the bond market and/or some resolution to an increasingly fractious relationship with its largest shareholder.”