Over half of Providence Resources' (LON:PVR) convertible bond holders have taken up the early repayment offer made by the Irish oil and gas explorer.

The AIM and Dublin listed group said holders of roughly €18.5 million of the convertibles, 62 per cent, had accepted, leaving about €11.2 million to be redeemed in July when the bonds mature.

Providence said the high level of acceptances would mean a substantial saving on interest payments.

Tony O'Reilly, Providence’s chief executive added: "This is a great result for Providence in that over half our bondholders have accepted our offer of early repayment. This means the company will save nearly $1,000,000 in interest payments between now and the end of July."

The early repayment follows a US$100 million institutional placing last month. 

At that time the company said the bond repayments would simplify the groups balance sheet and capital structure.

The newly raised money was also earmarked to help fund Providence's increased participation in the Barryroe discovery as well as supporting its ongoing exploration and appraisal well.

Simon Brett has been hired as chief financial officer of oil and gas company Providence Resources (LON:PVR).

Brett was previously group financial controller at the company and has worked at the London and Dublin quoted firm since 2008.

Chief executive Tony O'Reilly said since joining four years ago, he had "proven to be a very effective manager of the Providence finance function".

"I am very pleased that he has taken up this new opportunity at what is a very exciting time of Providence's corporate development." 

Prior to 2008, Brett held senior finance positions with Damovo Ireland Limited and Coca Cola Bottlers Ireland Limited.

The firm's Barryroe well test in March proved Ireland’s first commercial oil flow rates and it eclipsed Providence’s pre-drill expectations - with combined flows of 6,883 barrels oil equivalent per day tripling the initial 1,800 barrel commerciality threshold.

This result was shortly followed by a US$100 million share placing, which bolstered the group’s finances.

And Barryroe in the Celtic sea is just one of six potentially high impact wells being drilling by Providence in its current campaign in the waters around Ireland.

Providence Resources (LON:PVR) said this morning it had made an offer to purchase the €29.7 million-worth of convertible bonds still outstanding.

Holders of the bonds have until May 2 to accept the offer. The offer is being funded from the recent share placing, which raised €76 million (US$100 million). 

The company said when raising the cash it would use the proceeds to retire the debt, which matures in July.

Those bondholders that accept the deal will receive the principal amount owed and interest to date. Those that decline will be paid the interest and the principal as planned when the bond matures.

It said that Jacka Resources has now made the final payment to buy the OML 113 offshore licence. This follows an initial US$10 million payment, made in December last year.

"This divestment completes the restructuring of our asset portfolio and allows us to focus on our core areas of offshore Ireland and onshore United Kingdom,” said chief executive Tony O’Reilly.

“With the proceeds from the recently announced $100 million placing, and production cash flow from our Singleton onshore oilfield, Providence will have a very clear capital structure with resources that allow it to finance its share of its ongoing multi-well, multi-basin drilling programme."    

Last week Providence arranged a US$100 million share placing, priced at a premium, to institutional investors.

Over 30 financial institutions participated in the placing and this high level of interest is in part down to the recent Barryroe appraisal results, which has made Providence one of the big success stories of the year so far in the oil and gas sector.

Last month the Barryroe well was flowed with a combined oil and gas rate of over 4,000 barrels a day, which blew away the pre-drill threshold of 1,800 barrels a day required to make the field commercial.

Current estimates suggest the vertical Barryroe well could flow at over 6,000 barrels a day, however Providence that by using horizontal drilling tecniques each development well woul yield much high rates.

It marks out Barryroe as Ireland’s first commercial oilfield development project. Providence is now seeking development partners to take the project forward, alongside existing partner Lansdowne Oil & Gas (LON:LOGP).

Barryroe was the first of six significant drilling projects that Providence is pursuing off the coast of Ireland.

Providence will next look to the Dalkney Island exploration project and the Dragon appraisal project. These projects are pencilled in the second half of this year.

The AIM-quoted oil firm has successfully completed the first six wells of the programme, which aims to open up commercial development projects in the waters around Ireland.

Indeed Daniel Stewart analyst Kate Fisher says the Barryroe success last month shows the stock’s growth potential.

“Each (well) has the potential to drive a step-change in the market's valuation of the company,” Fisher said in a note to clients.

“This has been demonstrated early-on by the market’s reaction to the Barryroe appraisal well results. 

“The highly positive outcome drove an increase in share price from a plateau of around 270 pence experienced during the first two months of the year, to a high of 486 pence in March.”

Fisher also points out that Providence share price continues to rise even after a US$100 million funding last week.

“The share price has continued its climb since as the market reacted well to the additional fund raise.

“The numbers speak for themselves, clearly showing that a step-change has occurred in the market’s assessment of company value.

“We believe that each well in Providence's drilling programme offers similar potential for step-change; five further revaluation opportunities are presented by the company’s drilling objectives in 2012 and 2013.”

Daniel Stewart today initiated coverage on Providence with a ‘buy’ recommendation and a 1,344p price target, which implies the stock could rise some 137 per cent from the current price of 560.5p.

Providence Resources (LON:PVR) today announced that finance director Philip O'Quigley will step down from his position.

He has accepted an offer to become the chief executive of Canadian firm Falcon Oil and Gas (CVE:FO).

O’Quigley will remain at Providence as a non-executive director.

"Philip has been an integral part of the Providence team since 2008 and has been a key player as the company has developed over the past 4 years,” said chief executive Tony O'Reilly.

“Whilst we are obviously very sad that Philip is stepping down from his executive post, we are pleased that he has agreed to stay on as a non-executive director. 

“On behalf of all the members of the board, the staff and indeed the shareholders, I want to thank Philip for all that he has done for Providence and we wish him every success in his new executive position."

Providence Resources (LON:PVR) today revealed that it has raised £63.1 million, or US$100 million, through a share placing to institutional investors.

The oversubscribed placing, priced at a 5 per cent premium, is raising sufficient funds to repay a US$40 million convertible bond and it will help fund to group’s increased participation in the Barryroe project.

Following a deal, with San Leon Energy, in December Providence now has an 80 per cent stake in the project and therefore its share of costs will be higher going forward.

"We are very pleased to announce this placing, which has been heavily oversubscribed and represents a 5% premium to the pre placing closing price,” chief executive Tony O’Reilly said.

“This placing not only further broadens our already strong institutional shareholder base, but also by way of enabling the redemption in full of the outstanding convertible bond, simplifies our balance sheet and capital structure and will, following redemption, release cash flow from servicing the bond interest obligations. 

“The placing also importantly contributes to the funding for completion of the balance of our multi-basin drilling programme."

Over 30 financial institutions participated in the placing and this high level of interest is in part down to the recent Barryroe appraisal results, which are one of the big success stories of the year so far in the oil and gas sector.

Last month the Barryroe well was flowed with a combined oil and gas rate of over 4,000 barrels a day, which blew away the pre-drill threshold of 1,800 barrels a day required to make the field commercial. 

Current estimates suggest the vertical Barryroe well could flow at over 6,000 barrels a day, however Providence that by using horizontal drilling tecniques each development well woul yield much high rates.

It marks out Barryroe as Ireland’s first commercial oilfield development project. Providence is now seeking development partners to take the project forward, alongside existing partner Lansdowne Oil & Gas (LON:LOGP).

Barryroe was the first of six significant drilling projects that Providence is pursuing off the coast of Ireland. 

“We are very pleased that the recent Barryroe well, which was the first well in this programme, came in well beyond our pre-drill expectations,” O’Reilly added.

“As such, significant progress has already been made in this extensive programme and we very much look forward to adding to the already exciting results in the months and years ahead."

Providence will next look to the Dalkney Island exploration project and the Dragon appraisal project. These projects are pencilled in the second half of this year.

Around 13.1 million new shares are being issued through the institutional placing at a price of 480p each. The placing was arranged by Cenkos Securities.

The Dunquin joint venture partners have now approved the budget for the current year and that includes well design and the procurement of long lead items for the drilling programme, it said.

"We are extremely pleased to confirm that the pre-drill activities for the Dunquin exploration well have commenced and that a spud date has now been scheduled,” said chief executive Tony O’Reilly.

“This well forms an important part of Providence's Irish multi-basin, multi-well drilling programme which kicked off in November 2011."

ExxonMobile is the operator of the Dunquin project and it has a 27.5 per cent stake in the venture. 

Fellow majors Eni and Repsol are also partners in the project owning 27.5 and 25 per cent respectively. Providence has a 16 per cent stake and Sosina owns the remaining 4 per cent stake.

Last week, Providence gave an update on the Barryroe well, which is the first in the multi-well programme.

The well has now successfully assessed both the upper gas field and a secondary reservoir target. 

Drilling is now going ahead through to the primary reservoir target and the result is likely to be ready within around three weeks' time.

Discovered in the 1970s, Barryroe previously flowed oil at the rate of 1,400-1,600 barrels a day. 

A flow rate above 1,800 barrels a day makes Barryroe economic, according to an independent report compiled by RPS, which also estimates there is 60 million barrels of crude recoverable from 373 million barrels in place.

The economics of the field show that this one development prospect could be transformational for Providence. 

Based on the field’s P50 reserves – those with a 50 per cent chance or better of being recovered - the net present value for Barryroe is just over US$800 million using a 10 per cent discount rate.

Providence Resources (LON:PVR) shares gained 10 per cent today after it announced that it has been offered a new exploration license in the United Kingdom.

The licence is the UK seaward block 103/1, which covers an area in the St George's Channel Basin, offshore between South Wales and Ireland. And it adds to the firm’s position in the UK and Ireland.

The block contains the Dragon gas discovery. 

"We are very pleased to have been offered this UK block, which is adjacent to Irish licence SEL 1/07 which Providence operates 100 per cent,” said chief executive Tony O'Reilly.

“The Dragon gas discovery is mapped to lie within both the UK and Irish sectors and the award of this new block will allow Providence to move forward with the drilling of its planned appraisal well."

Providence will have a 50 per cent stake in the licence and its partner Star Energy Oil & Gas.

The new licence award comes as Providence is in the early stages of a long multi-well drill campaign in the waters around Ireland.

The first well in this programme is targeting the Barryroe discovery. The well was spudded in late November and drilling is scheduled to be completed before the end of January.

 “The licence award opens the way for Providence to proceed with an appraisal well in the coming year and today's news helps to progress the drilling of the prospect,” Davy analyst Job Langbroek said in a note to clients.

“In fact, Dragon is part of a multi-well offshore Ireland drilling programme. This starts with the results of the Barryroe well in the Celtic Sea, expected in the coming weeks.”

The potential value from the group’s wide range of targets in offshore Ireland leads Davy to value the stock at 919p a share, almost 300 per cent higher than the current price. Just 8p of that valuation is attributed to the Dragon prospect.

 At 13:50 the stock was up 21.5p, or 10 per cent, trading at 234p a share.

Providence Resources (LON:PVR) this morning announced that it has been offered a new exploration license in the United Kingdom.

The licence is the UK seaward block 103/1, which covers an area in the St George's Channel Basin, offshore between South Wales and Ireland. And it adds to the firm’s position in the UK and Ireland.

The block contains the Dragon gas discovery. 

"We are very pleased to have been offered this UK block, which is adjacent to Irish licence SEL 1/07 which Providence operates 100 per cent,” said chief executive Tony O'Reilly.

“The Dragon gas discovery is mapped to lie within both the UK and Irish sectors and the award of this new block will allow Providence to move forward with the drilling of its planned appraisal well."

Providence will have a 50 per cent stake in the licence and its partner Star Energy Oil & Gas.

The new licence award comes as Providence is in the early stages of a long multi-well drill campaign in the waters around Ireland.

The first well in this programme is targeting the Barryroe discovery. The well was spudded in late November and drilling is scheduled to be completed before the end of January.

Providence Resources (LON:PVR) has completed the sale of its Nigerian subsidiary for $16 million.

The subsidiary owns Providence’s 5 per cent stake in the OML 113 offshore licence.

The buyer, Jacka Resources (ASX:JKA), has now paid the first $10 million and a further $6 million payment is due by the end of April.

Providence plans to use the sale proceeds to reduce its convertible bond debt.

The sale was agreed back in September.

The OML 113 licence, which contains the Aje field, lies on the extreme western part of offshore Nigeria adjacent to the border of offshore Benin.  

The Benin Embayment lies along the prolific West African Transform Margin, a petroleum fairway which contains fields including the Tullow operated Jubilee Field offshore Ghana. 

Four wells have been drilled to date on the Aje Field, each of which were hydrocarbon-bearing, with three of the wells having logged significant net hydrocarbon-bearing sections.

Providence owns 50% of the Barryroe prospect in the Celtic Sea where it recently started a $500 million drilling programme to prove the region’s commercial viability. 

O’Reilly said today: "The significance of the appraisal drilling at Barryroe should not be underestimated and the successful demonstration of a commercial flow rate should not only unlock the substantial value of this particular asset, but should also trigger a complete industry re-appraisal of the Irish offshore.”

He added that as well as the Barryroe programme, firm drill commitments had also been made on the licences at Dalkey Island (50% owned by Providence), Spanish Point (32%), Dragon (100%) and Dunquin (16%).  

“Given recent industry advances in technology and pricing, as well as Ireland's now established infrastructure and fiscal regime, it is our firm view that the time has now come for Ireland's hydrocarbon potential to be realised,” he said.

Providence said the immediate plans for its Irish acreage in 2012 were to complete drilling of 48/24-10 appraisal well on the Barryroe oil discovery; continue with multi-well, multi-year drilling programme over six basins offshore Ireland and complete drilling preparation work for other wells in the forward programme.

For the onshore UK acreage, the plan is to conclude the X12 drilling programme at Singleton and commission for production; continue other production enhancement opportunities at Singleton and continue the development of Baxter's Copse.

Production at Singleton is running at 900 barrels per day, but Providence wants to increase that rate to 1,500 barrels.

The onshore oilfield is located in the weald basin, near Chichester in the south of England. It currently produces around 900 barrels of oil per day but the current drill programme could potentially add a further 500 barrels a day.

"This is a very busy and exciting time for Providence with the commencement of this onshore drilling programme in the UK as well as the ongoing offshore drilling programme at the Barryroe oil discovery, offshore Ireland, which is proceeding according to plan,” said chief executive Tony O'Reilly.

"This well at Singleton is the third new production well to be drilled over the past 3 years and it forms a central part of our ongoing field development plan, which should see us boosting production levels to c. 1,500 barrels a day through a series of initiatives at the field, including new wells, de-gasification of the plant and acid stimulation. 

“We look forward to updating the market on the progress from this programme over the coming months."

It will be a multi-lateral horizontal production well to the south west. Providence expects that it will take up to 100 days to complete the well.

In total the well will involve around 16,800 feet of drilling, which will allow Providence to access more than 4,000 feet gross exposure to the hydrocarbon reservoir. Later another lateral is also planned. That would provide a further 4,000ft of gross reservoir exposure. 

The well is designed to allow acid stimulation to take place in the future. As such Providence says there is incremental production potential in the well.

Singleton is 99.125 per cent owned by Providence.

Singleton currently produces around 900 barrels of oil equivalent each day. The field comprises seven producing wells. 

The company now plans to drill a new multi-lateral horizontal production well which could potentially add a further 500 barrels of oil per day.

First Providence will drill the main well-bore to a depth of 16,800 feet. The firm expects this part of the well will expose around 4,000 ft of the hydrocarbon reservoir. From this main well-bore a lateral section will be drilled to expose another 4,000 ft of gross reservoir exposure. 

The well has been designed to allow for future massive acid stimulation which will provide incremental production potential, Providence said.

"This is the third new production well to be drilled at Singleton in the same number of years and forms the central part of our ongoing field development plan,” said chief executive Tony O’Reilly.

“This plan sees us boosting production levels to c. 1,500 barrels of oil per day through a series of initiatives at the field, including new wells, de-gasification of the plant and acid stimulation. 

“To date, our past two new production wells have exceeded production expectations and we have every confidence that this new well will continue this positive trend."

The Singleton well is expected to be completed in 100 days following the spudding, which is expected in three weeks time.

Meanwhile, the firm said that it and its partners in the Barryroe project - located in the north Celtic Sea - have been awarded Standard Exploration Licence 1/11 over the oil discovery by the Irish minister for energy and natural resources, Pat Rabitte TD, for a period of up to six years.

The planned well will offset and primarily appraise the previous Marathon Oil-operated 48/24-3 (1990) well, which tested light sweet oil of approximately 45 degrees API at around 1,600 barrels of oil per day from Base Cretaceous sands. Using the latest technology, the 48/24-J well is planned to acquire a modern set of wire-line logs, together with an orientated conventional core through the primary objective.

The objective will be to demonstrate commercial flow rates of 1,800bopd or better from the well.

“This appraisal well is the first in Providence's multi-well, multi-year drilling programme. In addition to being a very important confirmation well for the future development of the Barryroe oilfield, this well also heralds the renaissance of major drilling activities offshore Ireland.”

The new six-year licence covering Barryroe is split into two three-year phases and is a successor to licensing option 08/1. The areal extent of the licence has been increase by approximately nine per cent to cover additional acreage with identified resource potential.

Providence holds a 50-per cent interest in the licence, while San Leon Energy and Lansdowne Oil & Gas (LON:LOGP) hold interests of 30 per cent and 20 per cent respectively. Lansdowne’s chief executive officer, Steve Boldy, commented this morning: “The award of Standard Exploration Licence 1/11, brings the number of licences held by Lansdowne in the shallow water North Celtic Sea Basin to five. These licences, along with Licensing Option 09/1, cover close to 500,000 acres held by Lansdowne in this underexplored basin with proven petroleum systems. We believe the application of 3D seismic will provide the key to unlocking the potential of the basin and we look forward to the drilling of the Barryroe appraisal well in November."