Petroceltic International raises 2014 guidance and reassures about gas prices

15th Jan 2015 16:38

Europe- and North Africa-focused oil and gas group Petroceltic International has raised its production guidance for 2014 and reassured that most of its output is tied to fixed-price gas contracts.On of AIM's largest exploration, development and production companies, Dublin-headquartered Petroceltic said production for 2014 would be at the top end of guidance range at 22.6 thousand barrels of oil equivalents per day (Mboepd), with 2015 guidance of 17.5 mboepd that is in line with previous statements.The company has an emergency meeting hanging over its head called by activist 26% shareholder, Worldview Capital Management, to remove chief executive Brian O'Cathain and bring several others onto the board.Ignoring this, O'Cathain said in the statement that a series of important contract awards in respect of its 2009 discovery Ain Tsila development asset in Algeria were expected to enable the engineering procurement and construction contract to be awarded by early 2016."During 2015, we will be focussing strongly on delivery from our core producing assets and de-emphasising certain exploration initiatives, while maintaining exposure to long term growth wherever possible," he said.In light of the current volatility in oil markets, O'Cathain stressed that it would have "a limited impact on our daily business", as most of its production is fixed price gas in Egypt or Bulgarian gas priced on a long time lag."Our Algerian gas and condensate production is not due on stream until the second half of 2018, when most market commentators and indeed the forward curve suggests that oil will be priced at a significant premium to current levels. We expect to benefit from the current price weakness in oil markets to attract competitive bids for our main Ain Tsila EPC contract."The company, which had year-end net debt of $153m, also guided to 2015 capex of $174m, although $80m of this will be carried by project partner Sonatrach.Drilling operations resumed in Kurdistan and Petroceltic has plans to continue exploring there and in Italy, though it only plans to spend $10m here in 2015.Broker Westhouse said while the statement was solid "from a fundamental perspective", the investment case is currently dominated by the efforts of the activist investor.Further announcements in relation to the date and timing of the EGM are to be made in due course."Until this uncertainty has passed, we struggle to see how the share price recovers sustainably," analysts said.