Providence producing gas in Louisiana

PROVIDENCE Resources, the Irish oil and natural-gas explorer, said it began to produce natural gas at its Vermillion 60 field off the US state of Louisiana.

The existing A7 well was re-entered and the production zone is flowing at 5 million standard cubic feet of gas a day, the Dublin-based company said yesterday in a statement distributed by Hugin.

“This new zone has excellent reservoir characteristics,” Providence said. The Aries Marine Lift Vessel Ram VIII was used to enter the well.

The Vermilion field was part of the Triangle acquisition in which Providence acquired a number of producing and development assets in the Gulf of Mexico for $67.5m (€48.25m) in 2008.

Ongoing remedial and development work on its US assets will increase Providence’s net production by 900 boepd by mid-Q3.

Davy analysts Caren Crowley said in a note to clients that overall, Providence is targeting group production of 3,000 boepd by the end of the year – up from 2,000 boepd in July 2008.

“Although US gas prices are weak and reflect an oversupplied market, Providence has hedged a significant portion of its gas production under multi-year contracts with $10 per mcf as the base price,” she said.

Providence Resources is an independent oil and gas exploration and production company listed on the AIM market in London and on Dublin’s IEX market. The company was founded in 1997, but with roots going back to 1981 when its predecessor company, Atlantic Resources, was formed by a group of investors led by Anthony O’Reilly.

Providence’s active oil and gas portfolio includes interests in Ireland, Britain, the United States (Gulf of Mexico) and West Africa (Nigeria). Providence’s portfolio is balanced between production, appraisal and exploration assets, as well as being diversified geographically.