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Funding central to Petroceltic's prospects

Petroceltic reduced its losses at the half-year mark, but prospects hinge on a viable funding solution for the Ain Tsila project in Algeria.
October 5, 2015

Against a lingering whiff of shareholder revolt, Petroceltic (PCI) delivered an interim gross profit of $4.1m (£2.7m) - well down on the $39.8m achieved during the first six months of 2014. At the same time, a marked reduction in exploration cost write-downs enabled the frontier oil and gas driller to halve its net losses. But with just $14.4m in cash at the period-end, funding remains the key issue.

IC TIP: Hold at 64p

That's certainly the view of Petroceltic's largest investor: hedge fund Worldview Capital, whose recent attempt to convene an EGM to force a vote on the company's refinancing plans was scuppered by a High Court injunction. Worldview is opposed to a decision to issue $175m in senior secured bonds, and has also recently raised questions as to whether Petroceltic's subsidiary in Bulgaria is the subject of a legal investigation.

Though higher-risk capital projects have been cut, funding is needed to bring Petroceltic's key development asset - the Ain Tsila gas field in Algeria - into production in 2018. The project has been partially de-risked by the procurement of a rig, but much remains to be done. For now, management is committed to maintaining production levels at Petroceltic's Egyptian and Bulgarian wells, and has restated 2015 midpoint guidance of 14,500 barrels of oil equivalent per day.

PETROCELTIC INTERNATIONAL (PCI)
ORD PRICE:64pMARKET VALUE:£138m
TOUCH:64.75-65p12-MONTH HIGH:224pLOW: 43p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:142¢NET DEBT:60%

Half-year to 30 JuneTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
201496.3-48.5-32.2nil
201538.0-23.3-12.7nil
% change-61---
£1 = $1.52