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Some Company's finding it difficult to survive.
Irish oil explorer Petroceltic struggling for survival

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The oil explorer Petroceltic's share price has collapsed to an all-time low of 17p (A35¢), having shed 85 per cent of its value in the last 12 months. Daniel Acker




An Irish oil and gas explorer is scrambling for survival this weekend as it threatens to run out of cash amid plummeting oil prices.

Petroceltic is understood to have appointed restructuring specialists at PwC, led by partner Ian Green, to prepare for possible administration, as financing runs perilously short.


The move comes weeks after the debt-laden, Dublin-based company launched a last-ditch search for a rescue buyer following a disastrous year.

In a shock December announcement, Petroceltic admitted it breached agreements on its debt pile, and funds were likely to run dry this month. The company also said it was struggling to raise any further financing.

It is understood PwC will draw up contingency plans if attempts to sell the company fail, leaving it with few options to raise further cash.

The explorer's share price has collapsed to an all-time low of 17p (A35¢), having shed 85 per cent of its value in the last 12 months, suggesting the market believes the company's future is grim. It has debts of £140 million ($291 million) versus a stock market value of just £46m.



Petroceltic's troubles follow the spectacular collapse in oil prices since Saudi Arabia, the world's largest producer, unleashed a brutal price war on American shale drillers in an attempt to drive them out of the market. The Middle Eastern oil superpower, which is the world's biggest crude producer, has refused to cut production, leading to a growing glut that is forcing down prices to levels not seen since 2004.

Brent crude has fallen by more than 70 per cent from $US115 a barrel in the summer of 2014 to below $US30 a barrel and many analysts now believe the price could be driven down to between $US10 and $US20, a level not seen since the late 1990s, amid the prospect of Iranian oil flooding global markets in the coming weeks.

The situation is potentially ruinous for smaller, independent explorers such as Petroceltic, which are heavily reliant on external funding to develop projects in other parts of the world. Most its debts have been ploughed into extracting gas from the promising Ain Tsila field in Algeria.

The company has racked up hundreds of millions of borrowings and losses and has breached its loan agreements on several occasions. Lenders agreed to waive borrowing covenants but only until last Friday, leaving it with a deeply uncertain future.


The producer's assets in Algeria, Egypt, Bulgaria, Italy and Greece are secured against its loans.

In the December stock exchange statement, chief executive Brian O'Cathain said the directors believed its "world-class asset" in Algeria would be "the principal driver of the long-term future value of the business".

Just over a year ago, Dragon Oil, a Dubai state-backed company, launched a takeover bid for Petroceltic, valuing it at nearly £500 million. It offered 230p a share in October 2014 when the oil price was above US$90 a barrel. But two months later, with oil at less than $US70, Dragon walked away. Finding a suitor this time will be much more of a challenge.

The company and PwC declined to comment.


The Sunday Telegraph



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