As expected, Petroceltic International (PCI) has been notified that Sonatrach, Algeria's state-controlled oil company, has exercised its right under the Isarene Production Sharing Contract (PSC) to pre-empt Petroceltic's proposed farm-out of an 18.375 per cent stake to a third party.
IC TIP:
Buy
at
147p
The terms of the pre-emption deal are broadly similar to those envisaged on the open market. Sonatrach will pay an upfront fee of $20m (£12.3m), and take on development costs amounting to $140m. Additional contingent payment amounting to $20m will also be made if certain early production and technical milestones are achieved. Following the deal, Petroceltic will hold a 38.25 per cent residual stake in the PSC.
