Providence not to proceed with Kinsale gas transaction

Oil and gas exploration company Providence resources today said it was not going ahead with the planned acquisition of 40% of the Kinsale Head Assets from Malaysia's Petronas due to falling gas prices.

In a statement Providence said "the upfront investment required is now at a significant variance to the original proposal and the economics of the deal have therefore changed materially".

It said it had advised Petronas accordingly.

The proposed deal would have seen Providence's subsidiary Eirgas acquire up to a 40% interest in the 100% operated Kinsale Head Area (comprising the Kinsale Head, South West Kinsale and Ballycotton gas fields) and up to a 40% interest in the 86.5% operated adjacent producing Seven Heads gas field (collectively referred to as the Kinsale Head Area assets).

Providence Chief Executive Tony O'Reilly said the transaction "no longer represented the same opportunity for Providence shareholders".

"Whilst the long term economics of gas storage are compelling, and Kinsale represents a unique world class asset, the short term marked erosion in gas prices, combined with a different planned capital structure going forward, led us to withdraw."