Providence Resources PLC (LON:PVR) can now start the countdown to the start of the Barryroe oil field development, as it today confirms the signing of a binding agreement for its proposed farm-out deal with its new Chinese partners.
It promises to deliver Ireland’s first commercial offshore oil project, though the immediate focus will be on preparations for a new drilling programme slated to start next year.
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Specifically, the now binding deal commits the Chinese partners to carry Providence and Lansdowne Oil & Gas Ltd (LON:LOGP) for a programme of four vertical wells and one horizontal sidetrack plus the option to extend the programme with a further two horizontal wells.
Also, significantly, the deal comes with a US$19.5mln cash advance to Providence covering project and operational costs – US$9mln will be released initially, with a further US$10.5mln will be paid 14-days prior to the start of drilling.
A survey of the proposed well sites will now be advanced in the fourth quarter of this year, setting up a timeline for rig mobilisation during the second quarter of 2019.
“The finalisation of these binding farm-out terms with APEC is transformational for Providence,” said chief executive Tony O’Reilly.
He added: “This drilling programme is a significant step forward for Barryroe as it is designed to provide modern dynamic data that will assist in the field development to production.
“Importantly, the structure of the farm-out transaction means that Providence has no upfront risk or capital exposure for the drilling programme, whilst also providing a roadmap to take this project, subject to the results of the drilling and subsequent regulatory consents, to project sanction and then on to production."
Providence, separately, today released its financial results statement for the six months ended June 30.
O’Reilly described an “exceptionally busy period” and also noted the progress made elsewhere offshore Ireland, where it also has a portfolio of exploration interests off the west coast, in the Atlantic margin.
In terms of financials, the pre-revenue explorer reported a €2.37mln loss for the six month period, compared to a €3.44mln loss for the same period a year ago.
Providence had €12.35mln of cash and no debt at the end of the period.