Petroceltic raises $26m to fund Italian oil campaign

Petroceltic have raised $26m to fund a drilling campaign at the ELSA offshore discovery in Italy.

Petroceltic have raised $26m to fund a drilling campaign at the ELSA offshore discovery in Italy.

Under the terms of the agreement, Petroceltic has agreed to transfer a 15% participating interest in the Permit to Orca.

In exchange, Orca has agreed to pay 30% of the drilling and completion costs for the proposed Elsa-2 well up to a maximum amount of US$11.52m.

Orca has also agreed to pay Petroceltic 15% of the back costs in relation to the well up to a maximum of US$0.52m.

On completion of the well, Petroceltic and Orca will fund all future costs relating to the permit in proportion to their participating interests.

The Elsa Discovery has been independently estimated to contain over 100 million barrels of oil.

In addition to the farm-out agreement with Orca, Petroceltic has signed an investment agreement with Gemini Oil and Gas Fund focussed on acquiring entitlements to oil and gas revenues through provision of capital to companies.

Under the terms of the Gemini Investment Agreement, Gemini has agreed to provide $14m towards the funding for the well to be made available to Petroceltic in three tranches, with the final tranche ($4m) becoming available on testing of the well.

In exchange, Petroceltic has agreed to provide Gemini with an entitlement to receive revenues derived from the oil and gas production from the Elsa field once it is brought into development.

Brian O’Cathain, Chief Executive of Petroceltic, said: "We expect to commence drilling at the Elsa-2 location in the fourth quarter of 2010, and are well advanced in discussions on contracting a rig for the well."

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