Petroceltic Suspends Drilling at Elsa Permit

Petroceltic has lodged an application with the Ministry of Economic Development to suspend the current timing of the company's commitments on the B.R268.RG permit. Petroceltic made this decision due to uncertainty regarding the proposed decree to restrict drilling in the Italian seas close to mainland. The proposed legislative changes would prohibit drilling in Italian seas within 5 miles of the coastline and within 12 miles around the perimeter of protected Marine Parks. Under the permit and Petroceltic's farm-in agreement with Vega Oil S.p.A., Petroceltic is required to spud the Elsa-2 well before Oct. 31, 2010. Given the continued legislative uncertainty, the company says they cannot commit to a timetable to procure long lead items, nor to finish rig negotiations prior to the spud date. The company was scheduled to drill the Elsa 2 well in the fourth quarter of 2010 in a location of the permit that is likely to be affected by the proposed restrictions. Petroceltic has applied to have the permit back dated to April 16; the date of the last official correspondence on the environmental application. The permit should remain suspended until the Ministry of Environmental issues the decree of environmental compatibility for Petroceltic's drilling program. Once it is approved, the company will have enough time remaining on the permit to drill the Elsa-2 well. Until then, Petroceltic will continue with the existing environmental permitting process. The Elsa field is situated in the B.R268.RG permit in the central Adriatic Sea offshore Italy in water depths of 100 to 165 feet (30 to 50 meters). Petroceltic, operator, holds a 70% working interest in the permit; Cygam holds the remaining 30% interest.

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