Barryroe drilling unlikely until 'well into 2020'

Barryroe drilling unlikely until 'well into 2020'

Long-awaited drilling at the Barryroe oil and gas field, off the Cork coast, is unlikely to start until "well into 2020" - more than a year later than initially planned - Providence Resources chief executive Tony O'Reilly Jr has said.

Addressing shareholders at Providence's agm in Dublin, Mr O'Reilly also indicated that the company will not be extending any further the deadline for payment of a $9m (€8m) initial development loan for Barryroe from APEC Energy, the Chinese consortium partnering Providence on the project.

He also indicated that Providence has attracted interest from several North Sea players in coming on board at Barryroe should the APEC partnership fall through.

Providence has extended APEC's payment deadline ten times over the summer and currently has September 30 as the latest cut-off point.

Mr O'Reilly said he expects payment to land prior to that date, with APEC remaining as partner.

Bank processing issues and changes to the Chinese consortium have been given as the reason for the delay.

Providence has raised $3.76m (€3.4m) in emergency funding through a share placing, which finances the business up to the start of February. Mr O'Reilly said "doing the unthinkable" and going to shareholders to ask them for money "changes the equation" with APEC.

He said APEC was "ashamed" when told of Providence's share placing plan, last week, and had reassured the Irish company overpayment and its commitment to the Barryroe partnership.

Providence had no choice over the timing of the raise as it only had sufficient working capital to see it through to the end of this month.

A multi-well drilling campaign was due to commence at Barryroe within the next three months, but approval delays for further development work blocked progress.

While Barryroe's progress is also heavily reliant on receipt of the aforementioned extensive funding, Mr O'Reilly said a six month, or so, wait for drilling approval realistically means that it will be "well into 2020" before drilling finally gets underway.

He said the first half of 2019 was "a very difficult period for the company", backed up by new figures showing its first half losses jumping from €2.4m to €5.5m.

Part of those losses were due to restructuring costs and a €2.9m impairment charge relating to Providence's Newgrange prospect off the west coast.

That prospect had been one of Providence's more highly-rated assets, but the company has relinquished it - rather than reapply for an exploration licence - after seeing early interest from potential development partners dry up in recent months.

The company still has a number of exploration prospects at varying degrees of development - two in partnership with French oil major Total and one with Italian explorer Eni.

However, Total is still evaluating future plans on two of those and Eni has pushed a site survey on the other out from this year with no new date pencilled in as yet.

Asked whether Providence can realistically survive beyond February, Mr O'Reilly said shareholders will ultimately decide his fate, but have shown they are willing to support the company as they believe in its underlying assets.

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