O’Reilly: Three years before oil flows

It will be at least three years before any oil is produced from Ireland’s first commercial oil well — 50km off the Cork coast.

Providence Resources chief executive Tony O’Reilly Jnr told the Irish Examiner he does not expect the Barryroe oil field to be in production for at least three years.

And he disclosed that the exploration company will most likely dilute their 80% shareholding in the field in a deal which will bring an existing oil producer anything up to €500m in capital investment to produce oil from the field.

Mr O’Reilly said that it is company’s preference to utilise Irish assets where it can and his preference would be for the oil to be refined at Whitegate Oil refinery if it had the capability to do so.

“Building a pipeline is not out of the question but we envisage the oil would be removed by shuttle tanker.

“Using Whitegate would be the most cost effective to us transport wise,” he said.

In a flash equity note Davy Stockbrokers analysts Job Langbroek and Caren Crowley increase their share price target for Providence to €12 — the shares closed at €5.76 yesterday — up 11.9% on the day, after being as much as 20% up in earlier trading. Shares in Lansdowne Oil and Gas, who have a 20% stake in Barryroe, soared by as much as 18% to close up 1%.

“The well has important implications for Providence and its partners and the Irish offshore in general. There are a number of legacy discoveries offshore Ireland — unconventional and straightforward — that may now be taken much more seriously. Providence is particularly well poised to avail of this opportunity with the foremost licence position offshore Ireland.

“Based on current expectations, we think Barryroe is worth £3.69 per share, risked (£4.62 unrisked). The group is valued at £11.60 per share, risked (up from just under £10 previously). Taking into account the new factors, we see £10 (€12) per share as a tenable target price,” Davy said.

Numis Securities raised its price estimate on the stock to £6.37 from £4.60 after upgrading Barryroe’s recoverable resource estimate and increasing the chance of commercial success at the find to 80% from 50%.