Oil swap deal earns $60m for Providence Resources

IRISH oil and gas exploration company Providence Resources — which is due to begin its much-anticipated two year drilling campaign off the coast of Ireland in September — has raised $60 million (€68m) via a pre-paid oil swap deal with Deutsche Bank.

Deutsche approached Providence over the deal; the funds from which the explorer will use to further develop its Singleton oil field in the south of England. Providence is also using part of the money to fully repay its existing lending facility with BNP Paribas. That €80m facility — not all of which was drawn down by Providence — had been due to mature in 2014.

This new six and a half year debt facility with Deutsche sees Providence sell a percentage of oil found at Singleton for a fixed price, as of current market prices. Commodity swap deals are more common in the North American exploration market and this is one of the first known instances in the European market.