Tuesday 20 July 2010

Petroceltic International spuds Oryx-1 in Tunisia and applies to protect Italian offshore interests

Petroceltic International (LON:PCI) has spudded the first of a two wells in its exploration programme on the Ksar Hadada Permit in Tunisia. The Oryx-1 exploration well will be drilled to at least 1,165m to target the Ordovician Bir Ben Tartar Formation. According to independent consultants Blackwatch Petroleum Services, the Oryx target has 25 million barrels of (MMbbls) prospective oil resources, and the well has a 34% chance of success.

The company has also applied to the Italian authorities to temporarily suspend its commitments under the offshore permit, to ensure that Petroceltic will not contravene drilling requirements under the terms of the permit, while it awaits formal publication of proposed restrictions on drilling near the Italian shoreline.

"We are pleased to be drilling again in Tunisia on this high-potential exploration licence. We look forward to some interesting evaluation results in the near future," Petroceltic chief executive Brian O'Cathain commented.

Petroceltic is the operator, and it has a 27.03% stake in the permit. The current programme is being funded by PetroAsian Energy under the terms of its farm-in agreement for the Ksar Hadada Permit. PetroAsian is required to fund the first two wells, up to US$14.5 million.

Oryx-1 has an estimated dry hole cost of approximately US$4.35 million, and it is expected to take three weeks to drill. Once Oryx-1 drilling is complete, the rig will be moved to the site for the second well in the Ksar Hadada programme, the Sidi Toui-4 exploration well.

Ksar Hadada is being explored through a joint venture between PetroAsian, with a 52.96% interest, Petroceltic with its 27.03% stake and Independent Resources (LON:IRG) which has a 18.97% interest. There are also two minor interest holders, with GA.I.A srl Holding and Derwent Resources each owning 1.5%.

In a separate statement, Petroceltic told investors that it has lodged an application with the Italian Ministry of Economic Development to suspend the timing commitments in relation to the B.R268.RG permit, following the recently announced  legislative proposals by the government- which aim to prohibit offshore hydrocarbon drilling within 5 miles of the Italian shoreline.

At the start of the month, the Italian Minister of Environment, Stafania Prestigiacomo, announced an outline proposed decree to amend the Italian Environmental Code, to ban drilling within 5 miles of the Italian coastline and 12 miles around designated, protected marine and coastal areas.

The formal legislative changes have yet to be published.

Petroceltic informed investors at the time that it was likely that the planned Elsa-2 well, which was expected to spud in Q4, would be affected by the proposed restrictions.

Consequently, the company has now decided to suspend the proposed drilling. “Given the continued legislative uncertainty, the company cannot commit at present to a timetable to procure long lead items and to conclude the rig negotiations that would enable a pre-31 October 2010 spud date.”

Petroceltic said that it has applied to have the suspension back-dated to April 16th 2010 - the date of the last official correspondence on the Environmental application - and that the permit will remain suspended until the Ministry of Environment issue the decree of environmental compatibility for Petroceltic's drilling program.

Once this environmental approval has been received, Petroceltic believes it will have sufficient time remaining on the Permit to drill the Elsa-2 well.

"Whilst this period of uncertainty regarding the application of the proposed new legislation continues we believe that the most effective way of securing the significant inherent value in the Elsa permit is through the suspension of commitments on the Permit,” Petroceltic Brian O'Cathain commented.

“This suspension ... ensures that Petroceltic will not contravene a drilling requirement that could possibly have resulted in a loss of the permit. We continue to work together with all our stakeholders and industry partners to fulfil our commitment to the drilling of the Elsa-2 well." 

While the implications of the proposed changes to legislation are assessed, Petroceltic said it intends to continue with the existing environmental permitting process, which is at an advanced stage.

http://www.proactiveinvestors.co.uk/companies/news/19033/petroceltic-international-spuds-oryx-1-in-tunisia-and-applies-to-protect-italian-offshore-interests-19033.html

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