Irish oil firm says drilling will go ahead at key well

IRISH oil and gas exploration company Providence Resources has confirmed that drilling will take place at the highly rated Dunquin prospect, which is situated off the south-west coast of the country. The date has yet to be specified.

Providence holds a 16% stake in the Dunquin well with ExxonMobil Exploration and Production Ireland (Offshore) holding a combined 40% and London-headquartered company Sosina Exploration controlling 4% and Italian company Eni holding the remaining 40% — having concluded a farm-in agreement with the other owners earlier this week.

Although the announcement that drilling will, at some stage, commence at Dunquin — the operators have notified the Department of Communications, Energy and Natural Resources of their decision to enter a second phase of the Dunquin licence, which carries with it a firm “well commitment” clause — comes as no surprise; it had — until yesterday — not been confirmed. The news boosted Providence’s share price by more than 10% yesterday to 4c.

Analysts matched investors’ welcoming of the news. “A deepwater Atlantic margin well, in 1,600m of water and 200km off the west coast of Ireland, implies serious financial expenditure, comfortably in excess of $100m (€70.4m) per well. Consequently, the commitment implies a strong belief in the targets. Existing seismic studies in the Dunquin area indicates the presence of two deepwater exploration targets with multi-TCF (trillion cubic feet) potential, even using mid-case scenarios. Upside prospectivity is even more material,” said Caren Crowley of Davy Stockbrokers. Although it has already been mooted that drilling work at Dunquin could get under way before the end of this year, a spokesperson said no timeframe is in place.

At Providence’s recent AGM, chief executive Tony O’Reilly Jnr told shareholders that he hoped to be in a position to be telling them much more details on Dunquin by next year’s AGM.

“To have one prospect like this is every little exploration company’s dream and we have three,” he said.

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