ExxonMobil, StatOil and a Chinese national oil company are among those that applied for licences in Irish waters in the Atlantic Margin, according to an industry source.
Companies already invested offshore Ireland are also understood to have applied for licences to extend their footprint. And it was rumoured that BP also took a close look at the acreage on offer.
Providence Resources (LON:PVR), led by Tony O’Reilly Jr, is a first mover offshore Ireland. And it would be surprising if the London and Dublin listed firm wasn’t also among the list of bidders, the sources added.
It is worth noting that AIM quoted oil juniors Europa Oil & Gas (LON:EOG), Antrim Energy (LON:AEY) and Petrel (LON:PET) are already stakeholders in these waters.
News, this morning, that Kosmos has pulled out of two projects has however put something of a dent in the otherwise positive sentiment.
The Irish government closed the books on its Atlantic Margin licensing round on September 16 and the applications will now be evaluated.
It appears the process was an expectation beating success.
Job Langbroek, analyst at Dublin based broker Davy, described the licensing round as “a very positive signal” for the Irish offshore sector and highlighted that the cost structure was ‘sensible and suitable’ in the current oil and gas market.
Precise details of who actually bid for what licences will not be published though it is expected that the licence awards will be announced in the coming months by the Department of Communications, Energy & Natural Resources.
What is clear now, however, is that the available licences were in demand despite turmoil elsewhere in the oil sector.
The licensing process has exceeded industry expectations. With a total of 43 licence applications received the Irish government receive three times as many bids compared with the prior round in 2011.
That fact alone, on the face of it, may be a surprise to some. Indeed, consider what has changed since 2011.
A cursory analysis might suggest a backwards step.
In 2013, Providence was a partner - alongside Exxon, ENI and Repsol - in the unsuccessful Dunquin well. While Dunquin found evidence of oil in the basin it was not commercially viable, as the main target was water bearing.
Meanwhile, the price of crude oil has slumped some 60% since 2011. Oil producers, sector-wide, have massively cutback spending on fanciful exploration projects.
It perhaps tells its own story that Fastnet, a once enthusiastic Irish exploration company, recently decided the best way to spend £10mln was to quit oil and reinvent itself in pharmaceuticals.
There are a couple of points to make here. Fasnet’s basket of assets are in the Celtic Sea to the south of Ireland, which has lost its allure so far as equity and industry investors are concerned
It also ignores the fact that the technical risks associated with the Atlantic Margin have diminished.
At the same time the potentially very large rewards are becoming clearer (quite literally).
It is the result, largely, of the use of modern 3D seismic exploration technology in the basin.
Contemporary surveying of potential oil and gas systems is providing clearer insights into the geology and, increasingly, has allowed multi-national companies to compare the prospects with others in different parts of the world.
Not only has this ‘de-risked’ exploration, the process also unearths potentially very large resources.
The work of Kosmos Energy - courtesy of subsequent desk-top study by partner Europa – is a clear example.
Europa, which has a 15% stake in a Kosmos project, in June revealed a competent person's report which suggests licence 3/13 (awarded in 2011) could be host to unrisked 1.49bn barrels of oil resources and subsequently the junior partner’s interest in the venture was estimated in the order of US$1.6bn.
Such numbers are very substantial but are, of course, still just early indicators. Drilling will be the binary acid test. And it is anticipated that, following a farm-out process, Kosmos may now reach a decision of drilling plans sooner rather than later.
Cairn Energy and Providence had originally planned to be drilling during the latter part of this year, though a decision was made this spring to defer that programme.
Providence has played a key role thus far, particularly in terms of seismic exploration, as it has underwritten a number of programmes. And it too has, as a result, modelled very large resource numbers.
Recent news flow has leaned heavily on this desk-top work – which resulted in ‘billion barrel’ estimates for untested targets.
Tony O’Reilly, Providence’s chief executive, says the greater understanding of the area and the successes of analogous projects - particularly Bay du Nord, on the other side of the Atlantic Margin, off eastern Canada – probably goes a long way to explain the reason there has been a high level of industry interest in the bidding round.
As one of the early movers, and one of the few to have actually drilled a well, Providence already has a number of active programmes in the play.
Quite significantly, Providence yesterday announced what was described as a strategic and incentivised collaboration with major oil services firm Schlumberger, which will now apply its ‘state of the art’ technology to assess the Southern Porcupine and Goban Spur basins.
The aim, PVR said, will be to further de-risk the Dunquin South, Drombeg, Druid and Newgrange exploration prospects, together with any new acreage acquired in the area.
Schlumberger will also facilitate farm-out data-room processes for the Drombeg, Druid and Newgrange prospects. It is expected that they will ‘open’ the process in the first quarter of 2016, at which point the new licence awards will also be known.
“This collaboration agreement has been something that we've been working on with Schlumberger for some time and it will be very useful for our whole Atlantic portfolio, where we can consolidate this new data with all that we have done already,” O’Reilly told Proactive Investors.
“This arrangement with Schlumberger is yet another example of Providence leading the way in the Irish offshore.”