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Price:
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8p
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Rating:
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Outperform
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30/06/09
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FACTS: Petroceltic has announced the completion of the sale of an 18.375% stake in the Isarene PSC to ENEL Trade SpA. Post deal, Petroceletic holds a 56.625% interest in the licence.
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ANALYSIS: Following the news that the transfer of a part of the Isarene licence had been officially gazetted, the completion of the sale allows the payment of past costs, funding of 49% of the recent appraisal programme and a contingent payment (up to a maximum of $75m) to take place. The recovery of past costs and the contribution to the appraisal programme are due to be paid within 30 days.
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DAVY VIEW: While the gazetting news some days ago provided a clear line of sight to payment, the completion announcement crystallizes the payment date. The receipt of funds should completely remove any residual market concern that the structure of the balance sheet would not be able to keep pace with the cash demands of its various projects. The contingent payment due later this year provides a significant source of funds for new ventures above that in the group at present. Reviewing the new equity position in the licence and the delays in progressing its Italian asset portfolio, we have tweaked our group valuation to 26p per share (formerly 28p), with the bulk made up of a 16.4p contribution from Algeria.
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