Spanish link-up for First Calgary

FIRST Calgary Petroleums, the biggest group on the Alternative Investment Market (Aim), is finalising a multi-million pound joint venture this weekend with Spanish oil giant Repsol.

The Spanish will pay hundreds of millions of pounds to help First Calgary develop its Algerian gas field to the point of production.

The deal means Repsol will be able to set performance targets and decide whether to invest more if these are met. It could add huge new acreage for the Spanish in an area they had already identified as a key production site.

The news will end a sales process that began last October when First Calgary boss Richard Andersen appointed investment bank Lehman Brothers to find a buyer. At the time, the company had a market value of £1.3bn.

But while some talked up the price on the strength of the potential gas find, industry players baulked at the high price. The market value of the company is now £930m.

The announcement could be positive for the sector, which was rocked last week by news that Regal Petroleum had been drilling dry holes in Greece.