Petroceltic’s ( ) farm-out of a second chunk of the Ain Tsila gas project, in Algeria, marks definitive progress and reduces the financing risk, according to broker Liberum.

The deal for Ain Tsila makes Petroceltic shares look attractive on a three year horizon, while expected news flow from Kurdistan and Romania adds to the near-term investment case, added the broker.

The one disappointment for Liberum is the implied value for Petroceltic’s remaining 38.25% in Ain Tsila, which, at US$375mln, is a 44% discount to its estimate of the field’s value.

“As the discount unwinds and the path to first oil delivers key milestones, we believe that the shares should offer significant upside,” said the broker, which has a ‘buy’ stance.

“We believe there is significant upside above and beyond our price target: the remaining 25% of the Egyptian receivable, the Elsa discovery and the EMV of Carpignano Sesia give an additional 223p of near-term upside.

Sonatrach, the Algerian National Oil Company, is exercising its right to buy the 18.25% stake put for sale by Petroceltic consisting of a US$140m development carry, US$20m cash up-front and two US$10m contingent payments.

Shares were 143p today.