Oil drilling programmes set to increase

Oil exploration drilling programmes off the Irish coast are expected to increase materially in the coming years, according to Davy Stockbrokers, who view the entry of Kosmos Energy as a potential game changer in Irish oil exploration.

Dallas-based Kosmos — already a partner with Tullow Oil in Ghana and with Fastnet Oil & Gas in Morocco — has taken 85% majority positions in two Europa Oil & Gas licensing prospects in the Porcupine Basin off the Kerry coast in return for funding a 3D seismic study and initial drilling costs.

Davy analyst Job Langbroek said the farm-in by Kosmos is a significant moment for the Irish offshore exploration industry. He said it also reflects well on Providence Resources who have been a leading advocates of the merits of the Porcupine Basin.

“This is important because of Kosmos’s acknowledged expertise in Atlantic margin plays and the pathfinder role it has played in the past in other jurisdictions. It could potentially signal a bout of material interest in the Irish offshore by the global industry.

“Kosmos has farmed into three separate licence options. Two of these licence options (11/7 and 11/8) are held by Europa Oil and Gas, and a third licence option (11/5) is held by Antrim Energy.

“The Europa farm-in includes a fully carried 3D seismic programme and, if election is made to convert to a full exploration licence, a carry value of up to $200m (€152m) spread between two wells. For this, Kosmos will earn an 85% interest,” he said.

Mr Langbroek acknowledges Kosmos is a leading explorer for Cretaceous-aged fan systems in the Atlantic margin.

“It was one of the first companies to spot the opportunity offshore Ghana, which subsequently led to the 500m-barrel-plus Jubilee discovery,” he added.

Mr Langbroek said the outcome of the Kosmos farm-in will, hopefully, ultimately be more wells along the western seaboard.

“With a strong likelihood of a multi-well programme in the Celtic Sea in the coming years, activity levels in the Irish offshore look set to increase materially,” he said.

The massive Eirik Raude drilling rig is currently engaged in a €125m drilling programme at the Dunquin prospect, 150km off the coast of Kerry, for operator ExxonMobil who have 27.5% in the prospect as does Eni, Repsolholds a 25% stake, Providence 16% and Sosina has a 4% interest.