Providence strikes it lucky with Hook Head drilling

IRISH oil and gas explorer, Providence Resources has found “significant” hydrocarbon reserves at the Hook Head prospect in the Celtic Sea.

Drilling on the 50/11-3 appraisal well has delivered a 75-foot hydrocarbon-bearing reservoir, said the company which is controlled by Dr Tony O’Reilly and his family.

Flow testing at the well will commence shortly.

At this stage there is an expectation the well may contain as much as 70 million barrels of oil or 250 billion cubic feet of natural gas while quality of the reserves are believed to “better than expected”.

Shares in London rose 9% or 0.57 pence, to close at a record 7 pence in London.

“The results so far are very positive and reservoir quality looks to be excellent”, said Job Langbroek, analyst with Davy Stockbrokers, who are brokers to the group.

The ultimate value of this well will depend on how it flow tests, he said.

“The results so far are very positive for Providence, not only for Hook Head specifically but also for the rest of its Celtic Sea portfolio. We have always maintained that a successful development in the Celtic Sea could unlock the value of the whole portfolio,” he said.

Chief executive Tony O’Reilly Jnr said the group was “delighted with the 50/11-3 well results to date, which appear to confirm the presence of a significant hydrocarbon volume within the Hook Head structure. The partners have agreed to case the well which will be followed by a flow testing programme”.

However, he added, “the key to this is in the testing and, while the results so far have been very encouraging, it is still a case of steady as she goes until the full flow testing of the well have been carried out”, he said.

However, the signs were encouraging and the porosity of the structure being drilled was also positive.

This determines the rate at which any oil or gas can flow and Mr O’Reilly said it was a further positive boost for the group as it headed into the flow testing process in the period ahead.

The well is located in 240 feet of water and is 60km offshore Waterford and has been drilled to a total depth of 4,880 feet and significant oil and gas shows characteristic of either a light oil or rich gas were encountered while drilling, the group said.

For last year the group saw sales rise 45%, boosted by higher oil prices in 2006.

The company reported turnover of €1.99m, with profit for the year coming in at €143,000, compared with €106,000 in 2005.