OilVoice - Petroceltic Announces Italian Farm-in Agreement

Petroceltic Announces Italian Farm-in Agreement

Thursday, December 17, 2009

Petroceltic International plc, the upstream oil and gas exploration and production company focused on North Africa and the Mediterranean is pleased to announce it has signed a Farm-in Agreement ("the Agreement") with Vega Oil S.p.A. ("Vega"), a wholly owned subsidiary of Cygam Energy Inc. (CYG: TSX Venture Exchange) to increase its participating interest in permit B.R268.RG ("the Permit"), which includes the Elsa discovery, offshore Italy, from 40% to 70%. Petroceltic will also assume operatorship of the Permit. Vega will retain a 30% interest.

Under the Agreement, Vega will transfer a thirty per cent (30%) participating interest in the Permit to Petroceltic and in exchange Petroceltic has agreed to pay one hundred percent (100%) of the drilling and completion costs for the proposed Elsa-2 well ("the Well"). Petroceltic and Vega have agreed that, from the effective date of the Agreement, de facto operatorship of the Permit shall be transferred from Vega to Petroceltic and Petroceltic shall become the operator with respect to all operations conducted in relation to the Permit under the Elsa Joint Operating Agreement.

In September 2009, DeGolyer and MacNaughton Canada Limited ("D&M"), a worldwide petroleum and engineering consulting firm, prepared a report for Cygam Energy and determined that a best estimate of the unrisked contingent recoverable oil and gas resource attributable to the 13.65 km2 Elsa structure identified in the Permit is 104.23 million barrels of oil and 31.49 Bcf of gas.

Brian O'Cathain, Chief Executive of Petroceltic, commented:
"The transfer of operatorship and the opportunity to increase Petroceltic's interest in B.R268.RG to 70% demonstrates our commitment to Italy and to the Central Adriatic as a core area for the Company. We look forward to continuing our partnership with Vega with whom we have been working constructively since 2006. We now believe Petroceltic is well placed to attract a new partner in early 2010 to exploit the Elsa discovery and the additional potential in this exciting new play fairway, in which Petroceltic holds 10 exploration licences at 100% working interest".