Petroceltic has sold an 18.375% interest in the Isarene Production Sharing Contract (“PSC”), which includes the Ain Tsila gas condensate discovery, onshore Algeria, to Sonatrach, the Algerian National Company for Hydrocarbons.
The assignment has been effected by way of a sale and purchase agreement, under which Sonatrach will acquire an 18.375% interest in the Isarene PSC covering Blocks 228 and 229a.
The terms of the agreement with Sonatrach, which are identical to those announced on 7 October 2013, provide for a consideration of up to a maximum amount of $180 million. The consideration comprises $20 million payment on completion of the transaction, a further $140 million payment of Petroceltic’s share of Isarene project development cost from the effective date of 4 July 2013 and contingent payments of up to $20 million based on the achievement of certain project related milestones.
Sonatrach has acquired the interest by exercising its right of pre-emption in relation to a transaction with similar terms previously agreed between Petroceltic and another oil and gas company. Formal completion of this assignment remains subject only to final ratification by the Algerian Government Authorities.
Upon completion of the transaction, Sonatrach will hold a 43.375% participating interest in the Isarene PSC, Petroceltic will hold 38.25% and Enel will hold 18.375%. Operations in the development phase will be undertaken by the Groupement Isarene, a joint venture between Sonatrach, Petroceltic and Enel.
Brian O’Cathain, Chief Executive of Petroceltic, commented: “The second Isarene farm-out is a major commercial milestone. Petroceltic has had a positive and mutually beneficial relationship with Sonatrach throughout the exploration, appraisal and now development phases of the Isarene PSC. We believe that Sonatrach’s decision to increase its interest as we commence development works is an indication of their confidence in the technical and financial strength of the project and the experience and capability of the team responsible for delivering it. We look forward to continuing to work with Sonatrach and Enel to deliver the Ain Tsila Project and maximise the value of this important national resource for Algeria.”
