Petroceltic — Update 19 January 2016

Petroceltic — Update 19 January 2016

Petroceltic

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Petroceltic

Bank waiver extended

Strategic review ongoing

Oil & gas

19 January 2016

Price

11p

Market cap

£24m

Net debt ($m) at end June 2015

176

Shares in issue

214.1m

Free float

39%

Code

PCI

Primary exchange

AIM

Secondary exchange

Irish Stock Exchange

Share price performance

Business description

Petroceltic is an AIM- and Dublin-listed E&P with assets in Egypt, Bulgaria and Algeria. Its flagship project is the Ain Tsila gas/condensate project in Algeria. It also has production assets in Egypt and Bulgaria.

Analyst

Will Forbes

+44 (0)203 077 5749

Petroceltic is a research client of Edison Investment Research Limited

During 2015, the combination of adjustments to reserves (after a 2014 CPR), drop in oil prices and reduction in the capex programme reduced the availability of the senior bank facility and led to a requirement to make material repayments on the company’s loans. Petroceltic was not able to make these repayments and continues to seek ways to secure additional financing, create liquidity and/or reduce financial commitments. On 23 December, the company initiated a strategic review with a view to considering all options to maximise value for stakeholders. It has received a number of conditional proposals and expressions of interest for its assets – negotiations are ongoing. Given the limited liquidity available to Petroceltic, the lender group agreed to waivers until 15 January. On 18 January, these waivers were extended until 29 January. In view of the strategic process we are withdrawing our forecasts and valuation.

Year end

Revenue ($m)

PBT*
($m)

Operating cash flow
($m)

Capex
($m)

Net (debt) cash
($m)

12/12

59.4

4.3

20.9

34.1

(209.0)

12/13

196.7

37.2

145.1

180.0

(246.1)

12/14

157.2

1.6

106.5

113.5

(153.2)

Note: In view of the strategic process we are withdrawing our forecasts and valuation.

Summary of financial position

In December, Petroceltic held $28.1m in cash, with $24.6m held in local currencies that are not readily convertible. The company has agreed to sell its interests in the North Thekah, North Port Fouad and South Idku exploration licences to its joint venture partner Edison, for net cash consideration of $9.5m. This will reduce its 2016 outgoings by $20m and the proceeds will go to repay debt. Additionally, Petroceltic has transferred its interest in the Patraikos licence offshore Greece to its joint venture partners.

Summary of operations update

The company’s flagship project, the Ain Tsila gas development, is progressing. Plans to start development drilling were at an advanced stage in December and the first well was expected to start in February 2016. The FEED process has concluded and the tendering for the EPC contract is expected to result in a contract award in Q316. The carry under the Sonatrach farm-out stood at $89.6m in late November 2015 and this is expected to cover all of Petroceltic’s net expenditure on the project until Q316. The management expects full-year 2015 production volumes to average approximately 14.4mboeod, in line with earlier guidance.

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New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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