Oil and gas producers Hess Corporation and Petroceltic International have agreed to pull out of the Dinarta licence in Iraqi Kurdistan due to the fall in oil prices and disappointing well results, Petroceltic said today.
Petroceltic owns 16% of the venture in Kurdistan.
It said it had agreed with Hess Middle East New Ventures, a unit of Hess Corp, to withdraw from Kurdistan, also citing the limited time remaining in the current period of the production-sharing contract.
Operator Hess owns 64% of the Dinarta licence, which borders Akri Bijeel, while the Kurdistan Regional Government (KRG) holds 20%.
Explorers and producers in Iraqi Kurdistan have been struggling with poor drilling results and unstable payments from the KRG for oil exports.
Afren said in January that it would evaluate options for the Barda Rash oilfield, saying the asset held no proven or probable reserves, while Gulf Keystone Petroleum is looking to offload its minority stake in Akri Bijeel.
"This should not come as a huge surprise to the market although the size of the impairment may be higher than some would have estimated," Westhouse Securities said in a note.
The brokerage said it expected Petroceltic to write off about $125m related to the pullout in its 2014 financial statements.
Westhouse also expected Petroceltic to incur $7m more in costs in 2015 relating to remedial and demobilisation work.
Shares in Petroceltic closed 12.2% lower in Dublin trade today.
Brian O'Cathain, Petroceltic's chief executive said that the company's strategy "remains clearly focussed on delivering from its core producing and development assets, whilst maintaining balanced exposure to longer term exploration led growth wherever possible".
"In light of this, and the current oil price environment, the decision to withdraw from Kurdistan is the right one for the business," he added.
