New Projects and good prospects. will be the winner in 2004. IMO
25p in early 2004

Strike it lucky

16 October 2005 By Eamon Quinn
Tullow made it out of the ranks of the minnows in recent years, and its transformation has left investors waiting for the next success story. A breakthrough for an Irish oil explorer is already overdue, analysts say.

The Irish candidates to make the next move from minnow by hitting oil or gas include Petroceltic, the Algerian and Italian oil explorer run by oil veteran John Craven; John Teeling's Pan Andean and Petrel Resources; Harry Wilson's Sterling Energy; Tony O'Reilly's Providence; and the AIM market newcomers, including David Hough's Circle Oil and Gas and the Irish-focused Island Oil run by Paul Griffiths, another veteran of the Irish oil scene.



The best market conditions in over a decade - crude prices last week were trading at $62 a barrel compared with $45 at the start of the year - has pushed the shares of speculative oil explorers to new highs.

But a major oil find could transform a speculative minnow explorer overnight into a respectable junior oil producer. Getting there is no sure thing.

The share prices of the Irish-based exploration companies have spiked this year and many have subsequently fallen as prospects came and went.

The economics of the industry should be sobering for investors. Industry leaders estimate that the daily cost of operating a rig in Irish waters can be as much as $210,000 (e 175,000) each day. Even acquiring a rig in the current tight market is a major task, while delivering a rig to Irish waters from the North Sea can cost the operator as much as 3 million.

The rewards of a winning bet are, of course, huge and it is no wonder that the exploration stocks trade on newsflow.

Making sense of the sector can be daunting for the oil investor.

For Stuart Draper, head of research at Dolmen Securities, Petroceltic is the pick of the Irish oil exploration sector. Its quality prospects in Algeria, credible' management and $20 million of net cash on its balance sheet mean that it does not need to come back to shareholders any time soon.

Royalties of $250,000 a year from the Kinsale gas field also mean useful funding as Petroceltic plans to start drilling in Algeria by early next year.

Neighbouring blocks to those owned by Petroceltic in Algeria have been acquired by BP, and Petroceltic is expected to announce a major tie-up with a drilling partner.

Petroceltic shares, which fell sharply late last year when its Tunisian prospects disappointed, have traded around 12.5 pence this year.

Dolmen's second most favoured among the Irish-based oil companies is Sterling Energy, an oil and gas producer with a small exploration arm.

Its purchase last year of assets in the Gulf of Mexico has helped it to tap surging energy prices and boost revenues.

Meanwhile, by farming out its production licences, Sterling shares hit a high of stg20.5 pence last July.

The shares have since slipped to stg18pence as investors wait for the execution of plans to ramp up production from Mauritania early next year.

Circle Oil, which came to the market last year, attracted investor attention after its deal with China Shine to develop its huge prospects in Namibia.

According to brokers, the deal means that it will not have to raise huge amounts of money from shareholders.

The shares have slipped back to around 35 pence since the summer as investors wait for more news on its Namibian development.

According to Dolmen, the highest-risk share remains Providence Resources.

We have greater confidence in Petroceltic in Algeria than Providence in offshore Nigeria and offshore Ireland, said Draper. Their strategy is not quite clear to investors, and we are just not comfortable with them.

Providence last week announced plans to carry out a major seismic study with Island Oil and Gas of its offshore Ireland prospects.

Meanwhile, shares in Iraq-focused Petrel have traded in line with hopes that chief executive David Horgan's visits to Iraq will deliver contracts for the company.

Petrel shares spiked to stg100 pence last month when it announced it had won a contract to develop an oil field in Iraq.

The shares have traded around stg60 pence since winning a second and significant contract to examine data in the Mesopotamia area of the country.

According to market sources, Petrel could be about to announce a deal with a Japanese trading company which is seeking to acquire oil.

Petroceltic

The main focus over the past few weeks for John Craven, the chief executive of Petroceltic, has been to prepare the company to start drilling in the Algerian Sahara by early next year. Getting a road laid across the desert to enable the start of drilling is just part of the work.

The company is appraising existing oil and gas discoveries across a 10,800 square kilometre area in the country after nine discoveries were made on the block since the 1960s.

Petroceltic will probably drill two wells initially in Algeria, as part of plans to drill up to seven wells in the next 24 months across Algeria, Italy, Ireland and Tunisia.

In Italy, Petroceltic has attracted interest from Italian oil companies for its offshore interests there. Its main Irish licence is in a gas prospect in offshore Donegal, north-east of the Corrib discovery. Craven said the company planned to drill there next year.

Following its initial disappointment in Tunisia, it has been offered a prospect there and may also drill there next year. There is a nice newsflow ahead of us, he said.

Petrel Resources

Petrel's David Horgan recalls how difficult it was to raise funding to develop licences before the war in Iraq.

We had a funding at stg3 pence and John Teeling was one of the few people to see the opportunities there, said Horgan.

Horgan's hard work has paid off with the award of two contracts from the Iraqi oil ministry in recent weeks.

Whether the contracts are the doorway to Petrel winning major business in Iraq in future years remains to be seen.

Island Oil and Gas

Paul Griffiths, who formed Island Oil and Gas in 2003, raised stg8 million privately and brought it to the AIM in December last year at stg40 pence. It now has a mixture of private investors and institutions, including Gartmore.

Management owns about 30 per cent. It was trading last week at stg60 pence.

Griffiths worked alongside Petroceltic's Craven at Gulf Oil when the company discovered Ireland's first significant oilfield in the 1980s. Though mostly focused on Ireland, Island is also seeking a licence in France.

We understand how to do business here, said Griffiths.

The company has numerous interests in offshore Irish prospects but generates its main revenue stream from its 12.5 per cent stake in the Seven Heads gas field. Unlike Ramco, Island has no debt tied up in the field

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From oilbarrel.com

01.12.2005
Petroceltic Increases Its Exposure To Close-Ology Drilling Project In Italy
2006 is shaping up to be a busy year for AIM-listed Petroceltic, which has wells planned in Italy and Ireland. Investors are also keen to hear news of drilling on its prospective acreage in Algeria but, in common with many companies, it would seem the tight rig market is thwarting an announcement on firm drill dates.

The company made a vote of confidence in its Italian acreage earlier this month when it upped its stake in the shallow water licence B.R.268.RG from 15 per cent to 40 per cent. The licence contains the 1992 discovery well ELSA-1, drilled by a consortium of companies including Agip and Enterprise Oil. According to consultants Petrel Robertson, this structure could hold 182 million barrels, an increase on the 108 million barrel estimate held by Enterprise. These numbers will need to be tested by the drillbit - Petroceltic plans an appraisal well next year.

This is a sign of Petroceltics confidence in this project. This is a deep well - down to 4,575 metres - and under the terms of its option, Petroceltic will pay 60 per cent of the costs. (Thereafter, its share of costs is 40 per cent, in line with its equity holding.) But as Petroceltic CEO John Craven points out, this is an exciting project, with independently assessed P2 reserves of more than 100 million barrels and next door to two producing wells - Agips Miglianico 1 and 2 - that are pumping from the same oil reservoir. Oil companies - and risk-averse investors - like the art of close-ology when wells are drilled close to proven producing fields but it never entirely de-risks an exploration project.

Across the Mediterranean, Petroceltic is active in Algeria and Tunisia. Algeria is, of course, one of the jewels in the portfolio. The company holds 75 per cent of the Isarene Permit, which covers more than 10,800 sq km and has yielded a number of proven discoveries in the past 50 years. It is also close to existing infrastructure, lying some 80 km of the nearest export pipeline. However, Petroceltic have not set any firm drill dates and rig availability in this part of the world is tight.

Tunisia has, by contrast, lost some of its shine and the company recently reviewed farmed down its Ksar Hadada production sharing contract to Independent Resources plc for US$400,000. The option gives Independent, which owns gas storage interests and exploration rights in the Mediterranean region, the right to earn a 38 per cent interest in the PSC. In return it must pay 40 per cent of all future seismic and drilling costs on the 7,000 sq km licence area.

The Ksar Hadada permit has been the scene of a number of highs and lows. The low-point was the drilling of the Sidi Touri structure in late 2004. Sidi Touri 3 was drilled some 4.5km to the east of the 1950s-drilled Sidi Touri 1 well and was designed to probe the crest of a 30 km-long structure, which pre-drill estimates had reckoned could hold more than 400 million barrels of oil. In the event, oil shows were recorded over a 177 metre gross interval in the target formation but a short open hole test failed to recover any hydrocarbons. The company continues to mull the potential of this prospect.

Close to home, Petroceltic is active in Ireland, where it derives revenue from the Kinsale Head royalty interest. Petroceltic is hoping Irish waters will yield more riches. It has a 16.25 per cent stake in some frontier exploration acreage in the Donegal Basin off Irelands west coast. The Donegal licence includes the Inishbeg structure, a ready-to-drill anticline that could hold similar volumes to Corrib.

This is high risk stuff: the geology has yet to be fully tested, the drilling costs are expensive and apart from the newly-built gas-fired power station onshore near Derry, there is little commercial infrastructure in the region. But, as Shell has proven with the Corrib gas field, there are hydrocarbons in sufficient quantities to justify commerical development on the Irish Atlantic Margin.

Petroceltics partner here, Island Oil and Gas, has secured a rig for this high risk/high reward drilling project next year. This promises to add some real excitement for investors who like this kind of white-knuckle wildcatting: others, however, are likely to prefer the more prosaic art of close-ology in Italy

When we get into late feb/early march watch the rise in volume. This may push the sp up to 16/17.

thats what i bought at 18 months ago!!!!

Yes, but they were 8 at the end of may. Drilling in april, what price for a find?

well MRP just found something - 95% rise in one day? if only :-)

6716000 thats a good buy

Price has fallen back from 14.25, a good time to buy . Somebody hitting this after the bell.

Yes, it has started to pick up buyers again. up 1 today

Watch this one , its starting to get some daily volume.

A raise again, something is going on. Anybody still holding ?

PCI may be re-rated at any time due, to exciting prospects in the middle east.

Drilling plan with Schum.-is that the reason,anything else,any views ,in since 3p.

might have something do with it :-) full story on PCi website
http://www.petroceltic.ie/pub/060320%20Award%20of%20Drilling%20Contract%20and%20Underwritten%20Placing.pdf

Press Release Dublin: 20th March, 2006: Petroceltic International plc (Petroceltic or the Company) Award of Algerian Drilling Contract and Execution of US$25 million Underwriting Agreement Petroceltic is delighted to announce the award of a major drilling contract to Schlumberger for the Companys 2006 drilling programme in Algeria in addition to the execution of a US$25 million underwriting agreement with funds managed by RAB Capital plc (RAB), in conjunction with a placing of new ordinary shares of 0.0125 each (Ordinary Shares) to new and existing shareholders of the Company (the Placing). The RAB Underwriting Agreement The Company has entered into a conditional underwriting agreement whereby RAB has agreed to underwrite 102,000,000 new Ordinary Shares at a placing price of 14p with a total value of approximately US$25 million, subject to a minimum participation by RAB of approximately US$12 million in the Placing. The Parties to the Underwriting Agreement anticipate the Placing to be completed by no later than 31st March 2006. Algerian 2006 Drilling Programme The 2006 programme provides for the drilling and testing of two appraisal wells on the Companys Isarene blocks 228 and 229 in the Illizi Basin of Algeria. Both wells will have multi targets in the Carboniferous, Devonian and Ordovician zones and will each be drilled to a depth of approximately 2,300 metres. It is currently expected that drilling operations will commence by the end of June 2006. The Company points out that this initial drilling programme is the start of a planned multi-well drilling and seismic programme to be carried out on its Algerian acreage over the next three to four years. Award of Drilling Contract to Schlumberger Schlumberger won a competitive tendering process initiated by the Company and its Algerian partner Sonatrach last December. Schlumberger was awarded the contract because of its technical competence, its recent Algerian experience and because it offered the most comprehensive project managed proposition. The Schlumberger award is subject to the completion of legal and normal regulatory processes. Schlumbergers most recent Algerian experience is on Block 245 operated by Rosneft of Russia which is immediately adjacent to the North East of Petroceltics block and where Schlumberger on behalf of Rosneft has just completed the drilling of a third consecutive oil

Added some more at 18 , the next few weeks could be interesting.

A new high again, some big trades going through. Drilling and finding oil will send this sky high.

A new high again , I wish chp would move at this rate .

Its buy back time . nice 4m buy

Any body holding pci and waiting for news ?