Providence Resources PLC (LON:PVR) chief executive Tony O’Reilly, in the Irish oil explorer’s financial results statement for 2018, told investors that it was an “extremely busy” year, albeit, the most significant recent event came after the reporting period.
“During the year, we agreed 3 major exploration farm-out transactions which provided significant momentum to our portfolio development activities and also delivered incremental capital to enhance our financial resources,” O’Reilly said.
This April, meanwhile, saw Providence unveil a long awaited farm-out transaction which will see the Barryroe oil field advance towards development, with a proposed three-well appraisal drill programme and testing.
In essence, the deal sets a roadmap to production from the field in Ireland’s Celtic Sea.
“Importantly, the structure of the farm-out transaction means that Providence has no upfront risk or capital exposure for the initial appraisal drilling, whilst also providing a roadmap to take this project, subject to the results of the drilling, to project sanction and on to production,” O’Reilly said.
In 2017, the operational focus for on exploration off the West Coast - though the Druid & Drombeg dual exploration well delivered disappointing results but it was not a total loss.
“Unfortunately, as we announced last summer, both targets were water wet which was very disappointing - but as a by-product, valuable regional geology, reservoir development and pressure regime data were obtained,” the Providence chief executive explained.
“As only the second wildcat exploration well ever drilled in the southern Porcupine Basin, the well data will be useful for any future planned drilling of the deeper Diablo structure contained within FEL 2/14 or other Providence assets elsewhere within the basin.
“Importantly, from a financing perspective, the farm-out deals structured with TOTAL and Cairn substantially mitigated our cost exposure to this drilling programme.”
O’Reilly added: “We continue to be by far the most active player offshore Ireland in terms of drilling activity, commercial deals and collaborations with world-class partners.
“Looking ahead, we have the portfolio, partners, people and financial resources in place to advance our portfolio through exploration & appraisal drilling for the benefit of all our shareholders."
In terms of financial results, the group reported a €20.4mln loss for the year, including a €14.6mln impairment to exploration and evaluation assets.
As at December 31, Providence had €19.6mln of cash and equivalents and its exploration assets carried a book value of €74.8mln.