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Petroceltic extends Algerian PSC by 2 years for further appraisal

Petroceltic International (AIM: PCI) has extended its Production Sharing Contract (NASDAQ:PSC) in Algeria, to carry out appraisal work on the four discovery areas on the Isarene Block for two further years. In association with its partner Sonatrach, the Algerian national oil & gas company, Petroceltic announced the signature of an addendum to the PSC to begin 26th April 2010.

"We are pleased to have agreed the two year addendum to the production sharing contract with our partner Sonatrach”, Petroceltic Chief Executive Brian O'Cathain commented. “We look forward to recommencing drilling and appraisal work on the Ain Tsila field and other discoveries later this year".

Isarene is being developed through a joint venture with Sonatrach. With a 75% working interest and 100% of the paying interest, Petroceltic is the primary stakeholder and operator of the permit. Sonatrach owns the remaining 25%.

The addendum defines the arial limits to the four discovered fields on the Isarene permit – consisting of Ain Tsila, Isarene North East, Isarene North West and Hassi Tabtab.

Petroceltic and Sonatrach will retain these areas for appraisal work, and relinquish title to the other areas of the permit. The retained acreage has a total area of 4,032 square kilometres, equating to approximately 54% of the Isarene permit prior to the extension.

After the two year appraisal period, Petroceltic and Sonatrach intend to apply to the competent authorities for the approval of commerciality declarations and development plans for the discovered fields on the permit.

Last week, to support the on-going appraisal work in Algeria and its other operations, Petroceltic raised £81m through the placing of approximately 635m new shares at 12.75p each.

Petroceltic plans to begin an appraisal programme consisting of three wells on its Isarene Permit in the fourth quarter of 2010. The appraisal programme’s focus will be to determine the most likely recovery factors in respect of the previous discoveries of hydrocarbon resources on the permit. The programme is expected to enable the optimisation of development plans for Isarene.

In February 2010, the company completed a highly successful five well appraisal drilling programme with four of the five wells drilled successfully testing at commercial gas flow rates, ranging from 4mmscfd (million standard cubic feet per day) to 33mmscfd.

Data gathered from the previous appraisal drilling suggests the presence of an extensive and continuous gas accumulation, Petroceltic said.

Disclosure: The author holds no positions in the company