Oil-drilling success sends Providence shares up 11%

A massive oil flame flare on the GSF Arctic III rig could be seen by ships 50km off the Cork coast yesterday.

The tell-tale sign of oil drilling success burned safely on the rig that hit the first commercial oil find in Irish waters this week.

The Panamanian-registered semi-submersible rig has been hired by Providence Resources.

The Irish Examiner yesterday revealed that initial tests on the drilling on the Barryroe oil field have recovered oil at a rate of 2,000 barrels a day — 200 more that the commercialisation target for the field.

The markets reacted positively to the news. Shares in Providence rose almost 11% on the Irish Stock Exchange to close at a year high of €5.15, while shares in AIM-listed Lansdowne Oil and Gas rose by more that 12%.

A spokeswoman for Providence Resources would not comment on the Irish Examiner’s disclosure on the flow rate but said: “Flow test operations continue with an update announcement due shortly.”

The GSF Arctic III, with accommodation for 94 people, has become the focal point of Irish oil exploration.

It is expected that Providence Resources which owns 80% of the field and its 20% partner, Lansdowne Oil and Gas will release details of the result from the appraisal oil well by the end of this week.

However, the drilling programme has not run totally smoothly over recent months and the announcement could be delayed until next week if further problems are encountered.

The successful appraisal well at Barryroe marks a successful start to Providence’s $500m (€383m) drilling programme at six different Irish basins.

Providence have said they expected positive results from Barryroe but admitted to being surprised at the extent and quality of the reservoir encountered.

“This primary basal sandstone reservoir can now been seen in all five wells that have been drilled on Barryroe, and this covers a strike [east to west] of approximately 20km, or a total spatial area of some 300sq km.

“The preliminary pressure gradient analysis indicates that the basal sandstone could have the potential for an oil-water contact to be significantly down-dip from the current well location, thereby even possibly expanding the resource potential even further,” it said.

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