Barryroe drilling plan at advanced stage

Providence Resources has said that planning for a resumption of drilling at its highly-anticipated Barryroe field off the Cork coast, as well as plans to bring in a development partner for the asset, are at an advanced stage.

The Tony O’Reilly-led explorer has been hampered in its efforts to farm-out around half of its 80% stake in Barryroe by a major drying up of deal activity surrounding mainstream European oil and gas assets. However, at Providence’s AGM last month, Mr O’Reilly said that a deal on Barryroe should be finalised in the near future; adding that a good level of interest had been shown by international parties.

A return to drilling at Barryroe is envisaged for next year, with first oil flow aimed for by the end of 2017.

Speaking yesterday, Mr O’Reilly said the farm-out deal remains management’s main priority.

“Negotiations are now at an advanced stage and we are working hard to satisfactorily conclude this with the objective to return cash to the business and obtain capital funding, whilst also ensuring that Providence retains a material stake in Barryroe, with a clearly defined road map for the timely drilling and development of the field,” he said.

Providence, yesterday, also reported a first-half net loss of just under €3.4m for the six months to the end of June, down from a profit of €1.33m for the same period last year. However, last year’s interim net profit was mainly based on a profit gained from the sale of the company’s UK onshore operations.

Mr O’Reilly also said that Providence is in discussions regarding farm-out agreements on a number of its other Irish offshore assets, particularly where it currently holds high percentage stakes. These are understood to include west coast fields such as Newgrange and Drombeg and the Dragon gas field in the St George’s Channel.

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.

A rig is currently being sought for next year’s drilling. Mr O’Reilly told shareholders at the recent AGM that Providence will not see another year of non-activity, in terms of drilling.

Fellow Irish explorer San Leon Energy whose chief assets are now in northern Africa and mainland Europe, yesterday reported a pre-tax loss of €6.8m for the first half of 2014; down from a profit of €1.11m in the corresponding period last year.

Last year’s profit included one-off acquisition gains linked with a transaction in Poland. First-half revenue fell from €540,000 to €400,000 this year. San Leon’s remaining Irish-based asset is a 4.5% net profit interest in the Barryroe field, which will see the company gain said percentage of field-wide profits from the asset without any capital exposure.