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Petroceltic International completes Algeria farm-out

Petroceltic receives an immediate US$20mln cash boost as a result, and crucially the deal lightens the load in terms of development spend as Ain Tsila advances towards production.
Petroceltic International completes Algeria farm-out

Petroceltic International (LON:PCI) has confirmed the US$180mln deal with Algeria’s Sonatrach to farm out 18.375% of the Ain Tsila gas project is now complete.

It receives an immediate US$20mln cash boost as a result, and crucially it lightens the load in terms of development spend as Ain Tsila advances towards production.

The farm-out deal was struck in October, and now it is complete Petroceltic will finally begin to reap the benefits.

Petroceltic retains 38.25% of the Isarene production sharing contract (PSC) that hosts the world class gas field, slated to start up in 2018, and under the terms of the farm-out Sonatrach will now cover US$140mln of the group’s development costs.

A further US$20mln cash payment is contingent upon certain project milestones.

“We are delighted to announce the completion of the Sonatrach farm-out,” said chief executive Brian O’Cathain.

“Petroceltic has had a positive and mutually beneficial relationship with Sonatrach throughout the exploration, appraisal and now development phases of the Isarene PSC.

“The formal ratification of this agreement is a critical step in the overall funding plan for this development project.

“As development operations ramp-up, we look forward to continuing to work with Sonatrach and Enel to deliver the Ain Tsila Project and to maximise the value of this important national resource for Algeria."

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