Providence is waiting for funds to start the Barryroe oil field development after a farm-out deal with Chinese firm APEC
US$10mln is expected imminently, though delays have meant the backstop being pushed back
It also has number of other interest in Ireland’s Atlantic margin
How is it doing
Barryroe (once developed) will be Ireland’s first commercial offshore oil project.
APEC has committed to carry Providence Resources PLC (LON:PVR) 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.
The deal came 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 to be paid 14-days prior to the start of drilling.
“Importantly, the structure of the farm-out transaction means that Providence has no upfront risk or capital exposure for the drilling programme.”
Dunquin, Druid and Drumbeg
In the Porcupine Basin, 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.
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).
In terms of financial results, the group reported a €4.77mln loss for the twelve months ended 31 December 2018.
It ended the year with €7.61mln of cash and equivalents and had no debt.
What the boss says: Tony O’Reilly Jr, CEO:
“The company has had to deal with a delay in the receipt of the initial site-survey and well-consenting loan from APEC, as well as ongoing regulatory consenting delays, though we remain confident that both the loan advance and consents will be received shortly which will allow us to progress operations.”
- Ireland recently decided not to go ahead with the Climate Emergency Bill, which would have banned offshore developments
- Receipt of funds from APEC
- Start of new exploration and appraisal work at Barryroe
- Results from ongoing programmes at other assets
Barryroe is estimated to hold as much as 300mln recoverable barrels of oil, while the estimates for oil in place at Druid and Drombeg are in the billions.