Providence may sell 40% of oil field this year

Providence Resources could sell 40% of its shareholding in the Barryroe oil and gas field, off the Cork coast, later this year.

The Tony O’Reilly Jnr-headed exploration firm announced better-than-anticipated drilling results at Barryroe — which lies 50km off the Cork coast, in the Celtic Sea — in March, making it Ireland’s first commercially-viable oil find.

It has always been Providence’s intention to enter into a farm-out agreement with an international oil company, regarding the asset, in order to save on production and development costs.

Currently, Providence owns 80% of the Barryroe field, with fellow Irish explorer, Lansdowne Oil & Gas, controlling 20%.

While Providence’s management has officially said that any farm-out agreement shouldn’t be expected until early next year, things could move on apace by the end of July.

Results of an “oil in place” study at Barryroe should be known at the end of next month, giving a firm indication of just how much oil exists at the field.

Three months ago, Providence announced initial oil flow rates of 3,500 barrels of oil per day (bopd) — far in excess of initial 1,800 bopd estimates. Recent studies have shown oil there to be of better quality than first thought.

Providence is, ultimately, likely to lower its holding in the Barryroe asset to around 40%. Speaking after Providence’s AGM in Dublin yesterday, Mr O’Reilly said that while the farm-out process is still only likely to be in the early stages by the end of the year, good results next month, could move the matter along more quickly.

He added that very early expressions of interest have been shown already. Ultimately, interest is expected to come from North Sea and Asian-based players.

Mr O’Reilly also confirmed yesterday that drilling at the much-anticipated Dunquin field, off the west coast, by ExxonMobil (Providence owns 16% of the asset) is set to start in the second quarter of next year.

Foreshore planning permission for drilling at its Dalkey Island asset is expected within the month, which would facilitate a start to drilling there during the fourth quarter of this year, he added.

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