Providence refines Eirgas ownership

PROVIDENCE Resources is planning to dilute its 100% ownership of gas storage subsidiary company Eirgas – probably through a farm-out agreement – some time next year.

Speaking after the oil and gas exploration company’s AGM in Dublin, yesterday, chief executive Tony O’Reilly Jnr said that the ownership structure of both special purpose vehicles (SPVs) Eirgas and Exola “could be refined in the next year or so”.

Currently, Providence owns both companies outright. Exola was established earlier this year to sniff out opportunities relating to so-called “heavy” or “unconventional” oil off the Irish coast (basically, crude oil which doesn’t flow as freely as lighter oil due to its density), with Eirgas set up to further Providence’s interests in gas storage. The latter, earlier this week, pulled out of its proposed acquisition of a 40% stake in the Kinsale Head Area gas field/storage assets.

Providence is likely to take on a strategic partner for both companies, which would take an equity stake in return for putting up the appraisal investments.

With regard to Providence’s core interests of exploration and production, Mr O’Reilly said that management would still strongly consider selling its 6.7% interest in the AJE field off the coast of Nigeria, if a suitable offer was made, in order to lower its debt further.

Mr O’Reilly also told shareholders at yesterday’s meeting that Providence would likely start drilling on an as yet unspecified asset off the west coast of Ireland next year. This would not, however, be its Spanish Point asset, which will not see drilling before 2012. In addition, he said that news regarding a timeframe for drilling at the much-anticipated Dunquin site in the Porcupine Basin off the west coast (in which ExxonMobil has a controlling stake and Providence owns a 16% interest) should be forthcoming “in the very near future”.

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