Petroceltic International shares rise following commercial AT-7 result

Petroceltic International (LON:PCI) shares advanced around 6 per cent today as it revealed testing results which confirms that gas from the southern part of the Ain Tsila field can be produced at commercial rates.

On AIM this afternoon Petroceltic shares were changing hands at 6.8p, up 6.4 per cent. 

It has been a good month for investors as the oil explorer’s stock has gone up some 70 per cent since the start of October, rising from the lows under 4p to reach 6.8p today.

This morning Petroceltic unveiled the results from hydraulic fracturing on the AT-7 well on the Ain Tsila gas field, Algeria.

AT-7 was designed as an appraisal well to test the south western extension of the Ain Tsila field. The well was hydraulically fractured successfully. 

Petroceltic revealed that AT-7 produced gas at rate of 4.9 million cubic feet per day.

“This result confirms that commercial gas rates can be achieved in the south of the field after the mixed results of AT-6,” said chief executive Brian O'Cathain.

Testing operations are continuing on AT-7. The firm will test the flow of gas while using a variety of different choke sizes so that it can characterise the reservoir in this part of Ain Tsila.

The AT-9 horizontal appraisal well will be tested later this month once the AT-7 testing is complete. AT-9 was drilled to a total depth of 2,494 metres and a horizontal section was drilled for 415 metres. 

This morning the company said that logging results from the horizontal section indicates an uppermost interval of 57 metres. The interval has an average net porosity of 10.6 per cent and a maximum porosity value of 14.5 per cent, Petroceltic said.

Additionally it said there are good indications of natural fractures in the remainder of the horizontal section. 

“We are very encouraged by the logging results from AT-9, which was drilled on time and within budget, particularly as it extends the presence of this interval of high quality sand, successfully tested in AT-1 and AT-8, further south into the centre of the field,” O'Cathain said.

“Initial petrophysical evaluation indicates that this is the best quality reservoir encountered in any of the Ain Tsila wells to-date.”

He added: “(Today’s) results improve our understanding of this field and support the current conceptual Field Development Plan in the Final Discovery Report which we plan to submit to the Algerian competent authorities by the end of January 2012."

Petroceltic has a 56.625 per cent stake in the asset. Joint venture partners Sonatrach and Enel own 25 and 18.375 per cent respectively.

Enel bought its stake in the project from Petroceltic back in April. The transaction is expected to close in the coming weeks. Petroceltic will then be due payments of around US$100 million from Enel.

The farm-out deal with Europe’s second largest utility was a telling endorsement for the potential of the Ain Tsila gas field. 

“Ain Tsila is on track now to become a world class resource. It is a very large discovery and we are delighted to be associated with it,” O’Cathain told Proactive Investors last month.

The current testing programme will help inform the final discovery report for Ain Tsila, which is on track and is expected to be completed by January. 

After that O’Cathain expects the partners will also complete a new competent persons report by the end of the first half of 2012.

Petroceltic still has a 56 per cent stake in Isarene, but O’Cathain is not against the idea of selling more project equity when the time is right.

“A further farm-out is something we are giving active consideration to at the moment. 

“With the permission of Sonatrach, with have been having some discussions with a number of new possible partners, but there’s nothing formal yet.”