Petroceltic International plc announces that it has entered into a strategic alliance and financing arrangements with Iberdrola, to develop the Company’s oil and gas assets in North Africa and Italy, the highlights of which are:
• Strategic alliance agreed with the major Spanish Energy Group Iberdrola, the world’s fourth largest electricity company
• Programme of cooperation on upstream projects in North Africa and Italy
• Iberdrola to invest US$55 million cash in Petroceltic through a placing of 215.8 million shares at Stg £0.13 per share, giving Iberdrola a 22.64 per cent stake in Petroceltic
• Funds will be used to intensify and accelerate work programme across all of Petroceltic’s existing portfolio, particularly in Algeria
• Financing option granted to acquire a 49% financing interest in any asset from existing portfolio for a further US$55m cash
• Advance option consideration of $7.33 million payable in cash in three months to Petroceltic

Commenting on the announcement, Brian O’Cathain, Executive Chairman of Petroceltic said: “We are very pleased to have attracted and reached a strategic alliance agreement with Iberdrola, all the more so at a time when there is limited access to financial markets for companies at our stage of development. Both Petroceltic and Iberdrola are focused on growth in similar regions on the doorstep to Europe and I welcome the fact that Iberdrola has chosen Petroceltic as its first ever investment in an upstream oil and gas venture. The alliance will be key to crystallizing the value in Petroceltic’s quality exploration and appraisal assets.”

John Craven, Chief Executive Officer of Petroceltic, commented: “We are now entering the most exciting phase of development in the Company’s history with a minimum of seven exploration and appraisal wells scheduled for the year ahead, across a broad range of risk and reward profiles. The funding which this investment provides secures this programme. This investment is a clear vote of confidence in the assets and the people of Petroceltic”.

ANNOUNCEMENT
Petroceltic International plc (”Petroceltic” or the “Company”) announces that it has entered into a strategic alliance with Iberdrola, a major international energy company, to facilitate the development of the Company’s oil and gas assets in North Africa and Italy.

To cement this alliance, agreement has been reached for Iberdrola to invest US$55 million in Petroceltic through a placing of 215.8 million ordinary shares at Stg£0.13 per share. The investment is being made in two tranches. Iberdrola subscribed for the first tranche of US$37.6 million on June 29th 2008, representing 16.67 per cent of Petroceltic’s issued ordinary share capital following this subscription. The second tranche of US$17.4 million for an additional stake will be completed in August 2008 after Petroceltic’s Annual General Meeting, subject to shareholder approval. This will bring Iberdrola’s total investment in Petroceltic to US$55 million, resulting in an equity stake of 22.6 per cent in the enlarged capital of Petroceltic.

Iberdrola has agreed not to sell any shares in Petroceltic without consent from Petroceltic for three years.
In addition, under a two year option agreement, Iberdrola can invest a further US $55 million to acquire a 49 per cent financing interest in any single asset in Petroceltic’s existing portfolio, subject to the usual regulatory and partner requirements. An advance option consideration of $7.33 million in respect of this financing option is payable in cash in three months from the date of this transaction to Petroceltic.

A joint business committee has been formed between the two companies to manage the strategic alliance and an Iberdrola nominated non-executive director, Pablo Fuentes-Cantillana has joined the Petroceltic board with immediate effect. Iberdrola will also second personnel to Petroceltic to aid development in upstream expertise and will provide marketing assistance on future gas sales.

Using the new funding and its existing cash resources, Petroceltic is now able to intensify and accelerate the work programme on its portfolio of high quality exploration and appraisal assets mainly in Algeria. Subject to normal partner consents, this includes a programme of 7 wells on the Isarene PSC block in Algeria where a wide azimuth 3D seismic survey to optimise these drilling locations is already well advanced. The first well in this programme is scheduled to start drilling in early 2009.

Headquartered in Spain, Iberdrola has operations in 40 countries worldwide, a market capitalisation of €42 billion and in 2007 had gross operating revenues in excess of €20 billion. Iberdrola is the fourth largest electricity company in the world by market capitalisation. In 2007 it acquired ScottishPower and floated its renewable energy subsidiary, Iberdrola Renewables, a world leader in wind power with a presence in 19 countries.

The Petroceltic strategic alliance is Iberdrola’s inaugural investment in an upstream oil and gas venture. This investment reflects the growing demand from the major utility companies to secure energy supply.

(Oil Voice)