By Geoff Percival
Providence Resources’s boss Tony O’Reilly Jr has said the company has attracted “good industry interest” from potential development partners for its highly-rated Newgrange prospect off the southwest coast.
The exploration company was granted an extension to its ownership of Newgrange last month and, earlier this week, announced the contracting of a seismic survey of the licence, due to take place in the third quarter of this year.
Speaking on the back of Providence’s annual results statement, Mr O’Reilly said Newgrange would be of interest to any existing large player in Irish waters and didn’t disagree with Davy’s forecast for successful farm out completions for the Barryroe field and Newgrange this year, followed by drilling at those and the Dunquin South prospect in 2019 and 2020.
“We are getting this prospect drill-ready by accelerating plans for a site survey this summer, while also continuing to run a major farm-out campaign,” he said.
“We are both determined and uniquely positioned to continue to lead the industry in identifying and realising Ireland’s significant offshore potential, while also scouting opportunities elsewhere,” Mr O’Reilly said.
Providence already counts Italian oil major Eni, French company Total, and Scottish explorer Cairn Energy as development partners on a number of its prospects off the west coast.
In March, Providence announced a Chinese consortium, headed by Beijing-based investment company APEC Energy, as its long sought-after development partner for its flagship Barryroe field off the Cork coast, with a six-well, six-month drilling programme planned. That deal is subject to regulatory approval.
Providence reported a loss of €21.4m for 2017, up from a loss of €18.8m for the previous year and driven by a €14.6m write-off of exploration activities.
“For us, the most notable metric in the year-end outcome was the absence of debt and €19.6m of cash and equivalents. This is comfortably in excess of its noted €6.8m commitment to exploration and evaluation in 2018,” said Davy analyst Job Langbroek.
“Our valuation for Providence was 24p prior to the announcement of the Barryroe deal. Assuming a smooth completion according to plan of this farm-in deal, our valuation would shift to 31p per share,” he said.
Providence shares were up by over 1.6%, trading at around 12c, yesterday.
“There is growing evidence that oil markets are finally shaking off the impact of the collapse in the oil price in late 2015. While the immediate strength of oil markets reflects the decision by the US to reimpose sanctions on Iran, oil markets look generally better underpinned than for some time,” said Mr Langbroek.