Providence Resources shares surge 33% on Barryroe

Shares in Providence Resources surged 33% as the oil and gas explorer said it may be close to clinching a tie-in with an unnamed firm to help develop its Barryroe prospect in the North Celtic Sea.

Shares in Providence Resources surged 33% as the oil and gas explorer said it may be close to clinching a tie-in with an unnamed firm to help develop its Barryroe prospect in the North Celtic Sea.

The contract for “a multi-well farm-in” at Barryroe is at an advanced stage, said Providence in a year-end update, confirming that plans to hire a rig and the appointment of a project manager were under way.

It also confirmed French oil giant Total will pay Providence for a 35% stake in an exploration license in the Druid-Drombeg-Diablo area in the Southern Porcupine Basin and will assume the role as operator

of the project.

Earlier this year, an exploration well in Drombeg — 220km offshore in the “the deepest water” exploration well in North West Europe —was drilled with no success and was plugged.

In the update, Providence also said Cairn Energy has let lapse its farm-in option for a 20% stake at Avalon, a license area in the Southern Porcupine Basin.

The shares, which ended 33% higher at just over 9 cent in the session, have nonetheless dropped 50% of their value in 2017.

CEO Tony O’Reilly said: “In tandem with the Druid-Drombeg well operations, we also began various work-scopes for the planned drilling of the 48/24-K Barryroe appraisal well. These work-scopes include well planning and consenting, together with the preparation of the invitation to tender for the procurement of a drilling unit, which we plan to issue in early Q1 2018.”

He said: “In parallel, the company has continued to engage with interested co-venture partners and earlier this month, having reached provisional agreement on key commercial terms with a potential farminee, we have granted a period of exclusivity to them in order to conclude contractual negotiations which, if successful, would deliver a multi-well programme at Barryroe.”

The price of Brent crude traded close to a three-year high of $66 (€55) a barrel, after falling as low as $28.70 in early 2016. Opec nations and others have agreed to curb output next year to drain a global glut. A Libyan pipeline explosion cut supplies, but the Forties network in the North Sea is due to back on stream fully, soon.