Initiation: Creating value in Algeria through execution
Petroceltic (PCI) is an E&P with assets in Egypt, Bulgaria and Algeria, where it is developing its flagship gas project Ain Tsila. As producing fields in Egypt and Bulgaria decline and exploration is de-emphasised, the valuation proposition in PCI shifts steadily towards Algeria. The drilling contract for Ain Tsila was awarded in April and the project is on track to be sanctioned by end-2015 and start up in Q418. Ain Tsila is fully funded until Q216 thanks to Sonatrach’s carry. The June launch of a $175m secured bond is an important step towards securing financing for H216-2018 – further progress on this front would remove uncertainty. A RENAV of 154p/share (which should grow c 16% pa over time) indicates the stock is pricing in nothing for a possible second phase at Ain Tsila or exploration.
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