December 31, 2015, Christopher Coats
The sustained decline of global oil prices is forcing one company to reassess their position in the Eastern Mediterranean, despite strong potential in neighboring projects.
According to media reports, Petroceltic has initiated a “strategic review” of its operations and assets to address looming debt payments in the New Year.
Specifically, this includes efforts in Egypt and Greece in hopes of dealing with the more than $200 million in debt it currently faces.
For the company’s presence in Egypt, this means the sale of its interests in the North Thekah, North Port Fouad and the onshore South Idku licenses to joint partner Edison International.
According to a company statement, the “transaction remains subject to the receipt of Government approvals and the waiver of pre-emption rights held by the Egyptian Natural Gas Holding Company (“EGAS”) and is expected to complete in the first quarter of 2016. The sale of these interests will reduce Petroceltic’s exploration expenditure obligations in 2016 by approximately US$20 million. Petroceltic expects to record a loss of approximately $1.5 million on this transaction and the proceeds of the sale will be applied to repayment of debt.”
The exit comes at a time when Egypt’s natural gas fortunes appear to be improving after several years of declining output and mounting debt. Earlier this year, Italy’s Eni announced the discovery of a “super giant” offshore well that some have argued could reshape the region’s energy landscape.
According to a Bloomberg report on the discovery, Eni outlined a potential “super giant” field that could potentially be home to 30 trillion cubic feet of gas, making it the biggest find in the Mediterranean. The discovery was initially thought to provide significant momentum to regional energy development, especially among those operating in Egypt.
However, that push may have come too late for Petroceltic as the company looks for lucrative means to exiting the country to address its debt obligations.
For the company’s efforts in Greece, this means taking leave from its interest in the Patraikos license in the Gulf of Patra.
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