Providence ‘close to’ farm-out deal on Barryroe

Providence Resources is understood to have reached the stage where it is finalising commercial terms with potential development partners for its highly-anticipated Barryroe oil field off the Cork coast.

The Irish explorer has been looking to farm out around half of its 80% stake in Barryroe for a year or so, but has largely been hampered by a drying up of deal interest in mainstream European exploration assets. However, despite hinting at frustration at the length of time the Barryroe farm-out has taken, Providence’s management said at the company’s AGM in Dublin yesterday, that discussions were ongoing, that a good level of interest had been shown by international parties — and the conclusion of a deal remained the board’s chief focus.

Speaking after the meeting, chief executive Tony O’Reilly Jr said that: “Providence envisages a return to drilling at Barryroe next year, with first oil flow expected by the end of 2017. He added that a farm-out deal should be finalised in the “very near future”.

Drilling at the Spanish Point South prospect, off the west coast, which Providence co-owns with Scottish explorer, Cairn Energy, should now take place in the second quarter of next year. This had been due to be the only drill action in Irish waters this year, but was delayed due to lack of rig availability.

Mr O’Reilly told shareholders yesterday that the company was all about drilling now and would not see another year of non-activity.

Providence also announced a number of other plans yesterday. It is actively looking to enter farm-out agreements on some of its other Irish offshore assets where it currently holds high percentage stakes — including west coast fields such as Newgrange and Drombeg and the Dragon gas field in the St George’s Channel. It is also considering building a new gas interconnector at the latter field, linking Ireland with Wales, which it said would remove energy supply concerns.

Furthermore, despite previous failed drilling at the much-touted Dunquin prospect denting shareholder confidence last year, newly-acquired data shows that originally, 1.2 billion barrels were contained there. However, after leakage, that estimate reduced to 600 million barrels of residual oil. While largely immovable and not commercial, Providence has said the surveying results indicate that the south Porcupine Basin off Ireland’s west coast could be a significant oil territory.