Middle East and north Africa-focused oil and gas explorer
At the end of last year Petroceltic raised its resource estimate of the Isarene permit area (including the Ain Tsila field) by 70 per cent to 10.3 trillion cubic feet (TCF) and also completed an 18.4 per cent farm-out to Enel SpA, Italy's largest energy company. Petroceltic pocketed over $100m (£62m) from that deal in February this year, which is also important strategically because Enel is one of the biggest customers of the third partner in the venture, Algeria's state-owned oil company Sonatrach.
By August, the Final Discovery Report should be submitted to Algerian authorities for approval, which will open the way for a declaration of commerciality later in the year. The latest development plan for Ain Tsila gives a contingent resource of 2.2 TCF of gas, together with 180m barrels of condensate and liquefied petroleum gas (LPG) over the life of the field.
Broker Daniel Stewart has a risked sum-of-the-parts valuation of 13.7p a share.
| PETROCELTIC (PCI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 7.91p | MARKET VALUE: | £187m | |
| TOUCH: | 7.87-7.91p | 12-MONTH HIGH: | 12.25p | LOW: 3.8p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 13¢* | NET DEBT: | 5% | |
IC VIEW
By the end of March, Petroceltic had $64m of cash and no debt, but it's unlikely that the company has sufficient funds to see Ain Tsila through to development and additional farm-outs are likely given that resources will also be required for the Carpignano Sesia prospect in Italy. However, these deals will highlight the obvious untapped value embedded in Petroceltic shares. Buy.
Last IC view: Buy, 10.5p, 5 April 2011
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