Proactive Investors - Run By Investors For Investors
Why invest in PVR?
Providence Resources PLC: DEEP DIVE
OVERVIEW

Providence Resources' deal for Barrymore should lead to share price recovery suggests broker

“We expect to see share price appreciation as news of the planning stages indicates the approach of the drilling stages of the appraisal programme.”
Celtic Sea
OVERVIEW: PVR The Big Picture
APEC will stake a 50% stake in Barrymore, which is in the Celtic Sea

The starting gun has fired on Providence Resources PLC (LON:PVR) Barryroe oil field development after the sign-off of a farm-out deal with its new Chinese partners.

Final agreement to allow the farm-in of APEC Energy into the licence (SEL 1/11) will provide not only a much-needed cash resources but also a fillip for shareholders, said SP Angel.

“We expect to see share price appreciation as news of the planning stages indicates the approach of the drilling stages of the appraisal programme.”

Ireland’s first commercial project

Barryroe will be 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.

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. 

“Importantly, the structure of the farm-out transaction means that Providence has no upfront risk or capital exposure for the drilling programme.”

Loss reduced

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.

Dunquin, Druid and Drumbeg

Elsewhere Providence has completed another 3D seismic shot of its Dunquin South prospect, in the Porcupine Basin, offshore Ireland.

Providence owns a 26.8% stake in FEL 3/04, which hosts Dunquin South, with its partners in the venture Eni (operator), Repsol, and Sosina Exploration.

Providence is also exploring Druid and Drumbeg, two big exploration targets located within Frontier Exploration Licence (FEL) 2/14, in the Atlantic Margin off Ireland’s west coast.

FEL 2/14 lies in 2,250 metres of water in the southern Porcupine Basin some 220 kilometres off

Druid and Drombeg are, on paper, estimated to be very large with the former modelled at 3.1bn barrels of mean oil resources and the latter estimated to have 1.9bn barrels.

Providence also recently received results from a seabed survey of the Newgrange Prospect (FEL6/14).

Newgrange is contained within Frontier Exploration Licence 6/14, 260km off south-west Ireland and sits beneath 1,000 metres of water.

View full PVR profile View Profile

Providence Resources PLC Timeline

Related Articles

Isle of Wight
February 01 2019
“With company estimates of close to US$80m NPV of assets already in place, we look forward to growing awareness of the considerable strength of the United business.”
oil and gas operations
December 17 2018
The AIM-quoted Tanzania focused oiler is set for a significant 2019 as the Ntorya project advances
nodding donkey
April 30 2019
Production now at 90,000 barrels per day equivalent

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use