Providence to focus on Irish portfolio as it sells Gulf assets
The Dublin-headquartered oil and gas exploration company — which is headed up by Tony O’Reilly Jnr — will receive an initial cash payment of $15m from Houston-based company Dynamic Offshore Resources, for the nine-well asset located in the Gulf of Mexico. The consideration will be boosted by a further $7m depending on Dynamic being able to reach certain agreed production levels from any new wells drilled on three blocks in the Gulf before January 2013.
The proceeds raised from the sale will chiefly go towards lowering the company’s loan from BNP Paribas. Providence’s Gulf of Mexico portfolio currently has a combined production level of around 700 barrels of oil equivalent per day (boepd).
Although historically a relatively key asset in Providence’s international portfolio, Mr O’Reilly said that the disposal makes sense at this time. “Whilst production from the Gulf of Mexico has played an important role in the development of the company over the past three years, it’s now less material going forward,” he noted yesterday.
“With our major multi-year, multi-basin drilling programme offshore Ireland starting — combined with our ongoing investment programme at Singleton [in England] — the investment focus for the company is now very clear. As such, the opportunity to realise cash from the Gulf of Mexico portfolio, and to deleverage the core business, made sense,” Mr O’Reilly added.
While it is unclear if Providence is turning its back on foreign investment — it still holds its operations in Nigeria — it is an indication of how much of its efforts will be going into the Irish and UK operations in the coming years. The company’s upcoming drilling round is set to be the largest ever undertaken in Irish waters and will come with a $500m investment from Providence and partners.
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