Losses at Petroceltic have narrowed in the first half of the year following a drop in operating costs and a rise in income.

The oil and gas exploration company, which is headquartered in Dublin, lost €3.25 million in the first half of the year, compared to losses of €4.1m in the first six months of 2011.

Operating costs were down over €600,000 to €4.22m, while income rose over €200,000 to €1.05m.

Petroceltic has operations in Algeria, Italy and the Kurdistan area of Iraq, and recently made a large gas discovery in Africa.

Earlier this month Petroceltic also announced plans to take a controlling interest in British company Melrose Resources.

The proposed merger values Melrose at about £165m, while the enlarged group will be well capitalised with a new $300m loan facility provided by HSBC.