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Petroceltic International PLC

Petroceltic shares advance as ENI takes control of Carisio permit ahead of 2012 drilling

This morning the junior oil explorer revealed that ENI would be taking control of the Carisio permit in Italy’s Po Valley, where an exploration well is being planned for 2012. The deal could lead to a partial farm-down of Petroceltic’s stake in the permit and it may create new funding options. Davy’s Caren Crowley reckons the upcoming drill target could be worth as much as 17.1 pence a share for Petroceltic.

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Petroceltic (LON:PCI) reminded investors of a largely ignored but potentially material onshore Italian acreage, according to Davy’s Caren Crowley. 

This morning it revealed that ENI is taking control of the Carisio permit in Italy’s Po Valley, where an exploration well is being planned for the first half of 2012.

The AIM-listed explorer has allowed ENI to assume the operatorship of their equitable joint venture - each firm has a 47.5 percent stake in the permit, while an Italian firm owns the remaining 5 percent – before the exploration work gets underway.

The shares gained around 7 percent in early deals. At 11:00 am they were up 0.5 pence, about 4.5 percent, changing hands at t 11.5 pence a share. 

At Carisio ENI intends to drill a well on the Rovasenda prospect, which house an estimated 270 million barrels of oil. This morning Petroceltic revealed that the deal may lead to a farm-down of some of its interest in the permit.

Crowley reckons Rovasenda could be worth between 1.4 and 17.1 pence a share (risked and un-risked) for Petroceltic.

“In our valuation we assume the prospect has 200 million barrels and that Petroceltic farms out 50 percent of its interest in the licence. Our risked valuation for the group is 30.7p per share,” Crowley said in a note to clients.

As part of the agreement with ENI, Petroceltic will receive seismic data from the major Italian energy group. ENI will give Petroceltic 550 kilometres of existing 2D seismic data on the nearby Ronsecco permit – which is about 30 kilometres away from ENI’s 250 million barrel Villafortuna-Trecate oil field.

It will also give Petroceltic access to reprocessed 2D seismic data and other technical studies on Carisio. 

"These developments in the Carisio and Ronsecco permits represent a significant step forward in Petroceltic's efforts to develop a portfolio of material oil prospects in Italy,” chief executive Brian O'Cathain said. He also highlighted that the move could create additional options for funding the forward work programme.

Importantly Crowley reckons the deal shows Petroceltic’s ability and desire to do deals so it can progress its licences. The analyst also highlighted that a farm-out on the group's Algerian licence is expected in the near term, and the recent troubles in the Middle East may indirectly help offshore drillers in Italy.

“We believe Italy's reliance on Libya as a source of hydrocarbons could influence the debate on drilling in near-shore Italian seas in favour of Petroceltic and other offshore operators,” Crowley said.

Last year the Italian government passed the Italian Legislative Decree L.D. 128, a law that banned drilling for hydrocarbons within 5 miles off the coastline and within 12 miles from protected ‘Marine and Coastal Parks’.

This Petroceltic also told investors that it has asked the Italian Ministry of Economic Development (MSE) to suspend the Central Adriatic B.R268.RG permit, which hosts the Elsa discovery, due to the legal uncertainty surrounding offshore drilling.

Petroceltic said that while the decree clearly states that it does not apply to ‘existing titles’, it is still unclear how the law will impact existing exploration licences. It wants to suspend the licence because of this uncertainty.

 

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Market: AIM
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