Providence and Shell sign production deal on two future Celtic Sea assets

PROVIDENCE Resources has agreed a deal with the Shell International Trading & Shipping Company relating to the sale of future oil produced from two of its assets in the Celtic Sea.

The Tony O’Reilly Jnr-headed oil and gas exploration company announced yesterday, via a short statement, that it has signed a memorandum of agreement with Shell’s trading and distribution division to negotiate an “oil off-take sale and purchase agreement” relating to future potential oil production from the Irish company’s Barryroe and Hook Head oil discoveries, both located in the North Celtic Sea Basin off the south coast.

This marks the first time Providence has worked with Shell and is the first agreement signed regarding either of the assets.

It is not known if Shell will have exclusive rights to oil produced from the Celtic Sea assets, nor is it known how valuable a deal it is for Providence. The Irish company’s share price shot up by nearly 5% — or 14c — to €2.95 on the back of the news.

Providence holds a 72.5% stake in Hook Head, although it recently offered one of its partners, Sosina Exploration a 50% equity interest in the asset in return for it drilling an appraisal well this year.

Providence also owns 50% of Barryroe — which is directly below the successful Seven Heads Gas Field, where oil has already been successfully tested at flow rates of between 1,300 and 1,400 barrels of oil per day (bopd) — with partners San Leon Energy and Lansdowne Oil & Gas controlling the remainder.

Providence has estimated that the Hook Head asset potentially holds around 120 million barrels of oil (mmbo), with Barryroe holding an estimated 373 to 893mmbo.

Both assets are former discoveries that will be redrilled, or re-entered, this year.