Exploration company Petroceltic has agreed to sell an 18% stake in Algeria's Isarene exploration project to Italy's Enel for a maximum of $183m.

The deal is still subject to approval by Algerian state-owned energy company Sonatrach and the Algerian authorities. Petroceltic said it would value its Isarene production sharing agreement at $800m-$1billion.

The company said the deal would give Enel 18.375%, Sonatrach 25% and Petroceltic a controlling 56.625% of the Isarene reserve in south-east Algeria, which Petroceltic has been developing since 2005.

'This transaction is a strong endorsement of the quality of the Isarene asset and an important financial support to our ongoing appraisal campaign and future development planning,' Petroceltic chief executive Brian O'Cathain said.

Under the terms of the deal, Enel has agreed to pay up to $36.75m towards costs already incurred in the project, and up to $75m depending on the volume of recoverable reserves. It will also pay 49% of a maximum of $149m towards the cost of six appraisal wells and a seventh contingent well, Petroceltic said.

Enel is Italy's largest power producer, and the second largest electrical utility company in Europe by installed capacity.