Drilling is expected to start next year on the Dunquin oil and gas licence off the West coast of Ireland — which is 16%-owned by Providence Resources.
The 700sq km licence — one of the most highly anticipated in Irish waters — was previously 80%-owned by Providence, but after a series of farm-out deals the Irish company’s control has decreased, even though it is still a key value element of its portfolio.
Dunquin is predominantly owned by global oil giant ExxonMobil and Spanish company Repsol, who control 27.5% and 25% respectively. Providence and the UK-based Sosina own 16% and 4% respectively.
ExxonMobil has lodged a notice on the Government’s public sector procurement website — E-tenders — for offshore drilling services over the next 12 months, a development that suggests the company is preparing to drill the Dunquin well some time next year.
“The tender document looks to be definitive confirmation that the giant US oil major will drill along the Atlantic margin next year,” said Job Langbroek, an exploration analyst at Day Stockbrokers.
“This will prove to be a seminal event for Providence and has enormous value implications,” he said.
“We carry the well at £1.36 [€1.69] on a risked basis in our £14 valuation of Providence.
“However, the [Dunquin] target is so large that a success case would, in our estimate, be worth over £20 per share to Providence. The well is high risk, but returns are commensurate. While attention is rightly focused on Barryroe for now, there is considerably more to the group, as the Dunquin well demonstrates.”
Providence’s management were declining to comment on the matter yesterday, ahead of the company’s AGM this morning.
© Irish Examiner Ltd. All rights reserved