Petroceltic narrows losses

Exploration firm Petroceltic International narrowed its losses last year as it cut costs and increased its income from continuing operations.

In its preliminary results for the year, the firm increased revenue to $419,000 from $270,000 a year earlier, with the pre-tax loss shrinking to almost $8.2 million. In 2010, the company posted a loss of almost $12.6 million.

Revenue generated by the company’s Kinsale royalty was $400,000, up from $300,000 as the average gas price rose.

Finance income for the year fell marginally to $1.7 million, from 2010 $1.9 million. Administrative expenses were $4.8 million, down from $6.3 million a year earlier, while exploration costs written off were $3.2 million, almost half of the $7 million recorded in 2010. The company attributed this to the acquisition of new exploration assets and more focused new venture activity.

Net debt was $15 million at the end of 2011, with net cash at $64 million by the end of March 2012. The company has received more than $100 million from Enel after it became involved in the Isarene permit in Algerian, with a share of just over 18 per cent.

Petroceltic also issued an update on its drilling, with a six-well appraisal drilling campaign in Algeria completed on time and under budget.

“Petroceltic delivered on all of its key targets for 2011. The Isarene farm-out deal was approved by the Algerian authorities, the company completed its appraisal campaign on time and under budget, achieving significant success, the plan of development was submitted to Sonatrach on time, and the portfolio expanded through the addition of two highly prospective licences in the Kurdistan Region of Iraq,” said chairman Robert Arnott.

“The coming year will see the maturation of our Algerian asset towards development sanction, the booking of commercial reserves, and accelerated activity on some exciting exploration in Italy and Kurdistan.”

The company said it was well funded for the rest of the year, and was in a good position to develop due to an anticipated bonus payment from Enel, and a probable second farm-out in Algeria.

“We believe that the recent M&A backdrop, including Shell's offer for Cove's equity in a large gas resource offshore East Africa, is encouraging for negotiation of a second farm-out of some of Petroceltic's interest in Algeria and the resulting implied valuations,” said Davy analyst Caren Crowley.