www.providenceresources.com
The combination of board and management talent, together with Providence's major shareholder worldwide network, presents a unique ability to succeed on the international stage. Providence has appropriate experience in the financing of large developments and is well equipped to plan and access finance for a wide range of activities and projects. Providence has established banking relations with a number of leading international financial institutions.
Since its formation, Providence has built a diversified portfolio of oil and gas exploration licences and concessions with the key focus being the pursuit of exploration and appraisal interests offshore Ireland. The Company’s board and management have a well-established background in the oil and gas business having worked closely with many major companies throughout the world. Providence works with leading companies including ExxonMobil, Repsol, ENI, Petronas, Chrysaor and Nautical Petroleum.
Providence Resources encouraged by progress on Barryroe well, says chief executive
Providence Resources (LON:PVR) shares gained around 5 per cent this morning after a bullish update on its Barryroe appraisal well in Ireland’s Celtic Sea.
The well has now successfully assessed both the upper gas field and a secondary reservoir target, the Irish company said.
Chief executive Tony O’Reilly told Proactive Investors: “Basically, today’s result shows that we are following a well plan that is consistent with the previous well that was drilled.
“It is steady as she goes. Today’s news is positive but still the main event is still to happen.”
Drilling is now going ahead through to the primary reservoir target and O’Reilly says the result is likely to be ready within around three weeks' time.
The primary target is the basal sands, which will be cored and tested to demonstrate commercial flow rates in the order of 1,800 barrels a day.
Providence is the operator of the block with 80 per cent, and is partnered with Lansdowne Oil & Gas (LON:LOGP), which owns the remainder.
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.
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.
Today’s results from the secondary target revealed that “hydrocarbon shows” were uncovered that potentially contain a number of secondary reservoir units.
Data from the current well mirrors the findings from four other wells drilled on Barryroe.
“We have met, and probably exceeded, expectations in the Barryroe well so far,” said O’Reilly.
“We already knew quite a lot about the secondary reservoir before drilling, in the sense that four other wells in the past have been drilled through it across the field.
“These sands span up to 20 kilometres east to west, thickening as they get to the west, so there is potentially some more upside (in relation to this secondary reservoir). We, obviously, need to finish the well, do mapping, data integration with the 3D we have already shot.”
O’Reilly says he doesn’t want the success in the secondary reservoir target to get overblown, however, because it is not the primary focus of the well.
In that respect, the most important point to take from the results so far is that the findings from the well have so far been consistent with pre-drill expectations.
“We are pretty much on prognosis, [the well so far] is turning out to be like we expected it be. That’s the most encouraging element.
“We’ve now put out two announcements. One on the gas field in the upper section and that was geologically on prognosis. And today we’ve shown that the secondary reservoir is also on prognosis, although the sands may be a little thicker.”
The Barryroe drilling kicks off a frenetic exploration and development programme worth US$500 million, with the London and Dublin-listed Providence footing between US$80 million and US$120 million of that bill.
The group will then move on to two exploration plays – Dalkey Island off the coast of Dublin and Rathlin Island, off the north-eastern corner of Northern Ireland.
After that the emphasis changes from east coast to the west, and Providence is heading very much further offshore in the pursuit of oil and gas.
Spanish Point is a gas condensate discovery located 125 miles offshore. It was found in 1981 when Ireland simply did not need gas in the quantities thought to be contained at Spanish Point and there was no infrastructure by which to exploit it – that has all now changed.
Providence estimates there are 200 million barrels of oil equivalent. It owns a 56 per cent stake, which will fall to 32 per cent when partner Chrysaor formally agrees to drill two wells there.
Those who follow Providence closely will know that Dunquin is the big daddy of all its exploration projects, and it has an all-star roster.
ExxonMobil and ENI each own 27.5 per cent, while Repsol has a 25 per cent stake. SOSINA holds 4 per cent, leaving Providence with 16 per cent.
Work is expected to get underway on Dunquin in mid-2012, with drilling in 2013. Also next year Providence will drill an appraisal well on the Dragon Field, which is equidistant between Wales and Ireland.
It also has a producing asset in Singleton in West Sussex. Oil revenues from this source will be used to help fund the company’s exploration activities.
