Providence Resources has found gas at its Barryroe asset off the Cork coast, just a week after hitting oil in the same area.
Test work at the sixth well to be drilled at the Barryroe site showed a gas-bearing zone producing initial flows of 1,350 barrels of oil per day. Preliminary estimates showed a full-flow rate of 3,350 barrels.
Providence chief executive Tony O’Reilly Jr said the find did not change the company’s focus on Barryroe being first and foremost an oil project, with an additional gas element a “very encouraging” bonus. He said the gas zone was “far more productive” than the company anticipated.
“It’s particularly pleasing to note that both the oil and gas zones have far exceeded our pre-drill expectations; both in terms of reservoir development and more importantly, oil and gas flow rates,” he said.
Regarding the prospects for any commercial gas flow, Mr O’Reilly added: “The well lies just 3km from installed pipeline infrastructure, which may provide a future route to monetise any surplus Barryroe gas production.”
While last week’s oil flow rate at Barryroe — at 3,500 barrels per day — far exceeded initial expectations of about 1,800 (the rate to make the oil field commercial), the gas flow rate had no expectations to live up to, with management not having factored in gas potential prior to the find.
Yesterday’s news from Providence was welcomed by analysts. Job Langbroek of Davy Stockbrokers said that Barryroe had surprised on a number of fronts.
“The first test flowed at rates nearly twice the baseline economic level; subsequent testing of the oil indicated a very light mobile oil and gas production has been far higher than expected,” he said yesterday via a research note on the company.
“The surprisingly strong gas flow throws up a number of interesting options, not least being that Barryroe looks to have a second development incentive based on gas — all the more so given the relatively close gas production infrastructure associated with the Seven Heads gas field. This all adds up to a very successful close to the Barryroe well, which is now being suspended prior to rig release.”
Davy has a €10 full-year share price target on Providence, whose shares were up by just under 1%, at €5.80 yesterday.
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