The Tony O’Reilly Jr-led company is due to drill at its 80%-owned Druid prospect, off the west coast, next June.
Last month, it opened a tender process for drilling rig firms and yesterday updated by saying it has issued a ‘letter of intent’ to a “leading contender”.
Druid and the nearby Drombeg prospect — also controlled by Providence — contains an estimated 5bn barrels of oil.
Mr O’Reilly hailed the news as “another key milestone” for Providence’s planned drilling at Druid, “further demonstrating the progress that we are making in pursuing the continued development of our significant portfolio offshore Ireland”.
“The letter of intent signals that Providence is looking to complete a well in the Irish offshore Porcupine Basin in 2017,” said Job Langbroek of Davy Stockbrokers.
“The well is expected to be completed at rock bottom pricing for drilling units. It has been signalled for some time, and the final contract looks to be near completion.”
Providence’s update coincided with latest earnings from Shell and BP, which showed better-than-expected figures.
BP reported a near halving in third-quarter earnings and slashed another $1bn from its 2016 investment plan, while Shell saw an 18% rise in profits and lowered next year’s capital spending to the bottom of the expected range.
At $2.8bn in the third quarter, Shell’s net income was above Exxon’s third quarter net income of $2.65bn.
Both Shell and BP maintained their dividends unchanged. As well as slashing spending, oil companies have scrapped new projects, cut tens of thousands of jobs, renegotiated supply contracts and increased borrowing since prices began a sustained fall in June 2014.
The prospects for an oil price recovery are still unclear, said Shell CEO Ben van Beurden, despite attempts by the Organization of the Petroleum Exporting Countries (Opec) and other producers to agree to a deal that can limit output and reduce the global glut which has pushed oil prices down by 50% since June 2014.
Oil prices edged higher yesterday as a weaker dollar boosted greenback-denominated commodities, although worries that Opec will not do much to reduce a global glut kept the market near one-month lows.
Brent was up at just under $49. A growing number of Opec members have said they are unwilling or unable to cut, casting doubts on what the group could do when it meets this month in Vienna.
Additional reporting: Reuters