Petroceltic has opted to exit stakes in Greece and Egypt, following an announcement by the company's board that it has initiated a formal strategtic review of its business and assets due to breaching debt repayment obligations.
In the 23 December announcement, the company's board is also looking into several initiatives including farm-outs and a possible merger with a third party. The company currently has US$218 million in debt, and noted that pending new financing options, "the group does not have certainty on liquidity beyond early January 2016."
Petroceltic blamed the drop in oil prices and a reduction in capital investment programs in relation to its assets in Egypt and Bulgaria impacted the company's financing in 2015, requiring the company to make material repayments, which the company says it has not, to date, been in a position to satisfy. "In respect of these breaches of covenants and repayment obligations, the group has received various waivers from the lending group," Petroceltic said. "The most recent waiver under the Senior Bank Facility extends to 15 January 2016."
In Egypt, Petroceltic agreed to sell its interests in the North Thekah, North Port Fouad and the onshore South Idku exploration licenses to its joint venture partner Edison International for a net cash consideration of $9.5 million, after working capital adjustments of approximately $5.8 million. Edison is the operator of North Thekah and North Port Fouad and a joint venture partner in South Idku.
The transaction remains subject to government approvals and the waiver of pre-emption rights held by the Egyptian Natural Gas Holding Co. (EGAS). Petrocelctic expects the sale to complete by Q1 2016.
"The sale of these interests will reduce Petroceltic’s exploration expenditure obligations in 2016 by approximately $20 million," the company said. Petroceltic expects to take a loss of approximately $1.5 million on the sale; the proceeds will be applied to repayment of debt.
The North Thekah concession was awarded in April 2013 and lies in the deepwater Nile Delta within an underexplored part of the Levantine Basin. Petroceltic had stated that the objectives, Nile Delta Oligocene and Levantine Basin Miocene plays, on trend with the giant Leviathan and Tamar discoveries offshore Israel.
The North Port Fouad concession was awarded in September 2014 and is adjacent to North Thekah in the deepwater Nile Delta, directly adjacent to the Shorouk block where Eni recently discovered the massive Zohr gas field.
In Greece, Petroceltic concluded negotiations to exit its interest in the Patraikos licence by transferring its interest to its joint venture partners.
The Patraikos licence is in the Gulf of Patra and covers an area of 1892sq km with water depths ranging 100-300m. Petroceltic had said that the license had unrisked mean prospective resources in the range of 80 MMbbl to 360 MMbbl for mapped prospects.
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