Providence may gamble on farm-out timing

Providence Resources may opt to push out the intended farm-out of its stake in the much-anticipated Spanish Point prospect, off the south-west coast, to next year in a bid to take advantage of the recent upsurge in interest in exploration opportunities in Irish waters.

The Tony O’Reilly Jr-led exploration firm shares the prospect with the Scottish explorer Cairn Energy, which holds a 38% stake.

Providence upped its holding by 26%, to 58%, earlier this year when it bought out the interests of junior partner, Chrysaor.

Providence now plans to sell down a large chunk, potentially up to the same 26%, of its share and it was hoped such a move was going to be achieved by the end of this year.

Analysts have also suggested that it would need to meet that deadline if a planned drilling round for 2016 is to become a reality.

Speaking earlier this week, on the back of his company’s interim results, Providence chief executive Tony O’Reilly Jr said landing a development partner for Spanish Point by the end of 2015 could still be possible.

However, he added that Providence could also opt to push the issue into 2016 and “widen its net” to search for more interested parties.

That logic is based on the stronger-than-anticipated interest shown in the Government’s latest licensing round, which closed last month.

Providence owns prime acreage off the west coast and the 2015 Atlantic Margin Licensing Round received 43 applications, a three-fold increase on the number received in the State’s last licensing round in 2011.

Expected participants in this round include majors, mid-cap companies, and smaller firms.

Mr O’Reilly said the strong interest in the licensing round should further enhance the value of Providence’s exploration and appraisal asset portfolio.


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