A big, big discovery by Italian energy firm ENI (ENI:BIT) off the coast of Egypt this weekend is being taken as a major positive for embattled E&P Petroceltic (PCI:AIM) and the shares rise 19.6% to 64p.
As well as falling commodity prices, Petroceltic has been beset by an ongoing dispute with major (29%) shareholder Worldview over strategy.
However ENI's Zohr-1 well – which initial estimates suggest has found up to 30 trillion cubic feet of gas (5.2 billion barrels of oil equivalent) – could presage a change in fortunes. The find is less than five kilometres from the company's 50%-owned North Port Fouad licence and could even extend into this block.
The £200 million cap also has a stake in the nearby North Thekah licence. The plan is to shoot 3D seismic in 2016 but Petroceltic – partnered by Edison – would like to farm down some of its equity ahead of this activity. That should be made easier by ENI's find.
Westhouse reiterates its netural recommendation and 127p price target and comments: 'We don't currently carry any value in our risked NAV based target price for either of the offshore Egypt licences, however news of the ENI discovery will increase supermajor interest in the region, which is gas prone and benefits from good infrastructure and adjacency to European gas markets.
'News of a possible farm-out could be a big boost to the Petroceltic investment case, which is currently overshadowed by ongoing squabbles with 29% shareholder, Worldview Capital Management.'