Petroceltic International announced Thursday that it has agreed the sale of an 18.4-percent interest in the Isarene production sharing contract (PSC), onshore Algeria, to Algerian national oil company Sonatrach for a maximum amount of $180 million. The Isarene PSC covers Blocks 228 and 229a, and contains the Ain Tsila gas-condensate discovery. The transfer of the interest took place at a signing ceremony at Algiers, which was attended by Sonatrach, Petroceltic and Enel.

Sonatrach is paying $20 million initially and will pay a further $140 million to cover Petroceltic's share of the Isarene project development cost, while there will also be contingent payments of up to $20 million based on the attainment of certain project-related milestones, Petroceltic said. Upon completion of the transaction Sonatrach will hold a 43.4-percent participating interest in the Isarene PSC, while Petroceltic will hold 38.25 percent and Enel will hold 18.4 percent.

Petroceltic Chief Executive Brian O'Cathain commented in a company statement:

"The second Isarene farm-out is a major commercial milestone. Petroceltic has had a positive and mutually beneficial relationship with Sonatrach throughout the exploration, appraisal and now development phases of the Isarene PSC. We believe that Sonatrach's decision to increase its interest as we commence development works is an indication of their confidence in the technical and financial strength of the project and the experience and capability of the team responsible for delivering it.

"We look forward to continuing to work with Sonatrach and Enel to deliver the Ain Tsila Project and maximise the value of this important national resource for Algeria."