Shares in Providence Resources soared on Thursday after the oil and gas explorer said it had entered exclusive talks to sell a stake in its Barryroe oil prospect off the Cork coast to an unnamed partner.
Providence, led by chief executive Tony O’Reilly, said in a trading update it had been working on plans for drilling at the appraisal well and expected to issue an invitation to tender early in 2018 for the procurement of a drilling unit.
The company also said it had granted a “period of exclusivity” with an unidentified party to take a stake in the prospect, or what is known in the industry as a farm-in, which could lead to a “multi-well programme at Barryroe”. Providence currently has an 80 per cent stake in Barryroe and Lansdowne Oil & Gas holds the remaining 20 per cent.
A previous farm-in agreement for Barryroe – which was found in 2012 to have more than 300 million barrels of recoverable oil – fell through in 2015 after the chosen partner, Sequa Petroleum, failed to raise the necessary funds to participate. Providence warned on Thursday that there was no certainty that the current talks would lead to a deal.
Share price rise
Shares in Providence rose as much as 38 per cent to 8.125p in London on Thursday to claw back a fraction of their losses during 2017, when the group abandoned its Druid and Drombeg prospects some 220km off the southwest of Ireland after initial drilling revealed little more than water in the reservoirs. Shares in the company are down about 48 per cent since the start of January.
Providence said on Thursday that French oil major Total was exercising its option to take a 35 per cent interest in the Druid/Drombeg/Diablo fields, subject to Government approval, which would dilute the Dublin-based company’s interest to 28 per cent. UK-based Cairn Energy had acquired a 30 per cent stake in the fields before the disappointing drilling results in the third quarter of 2017.
Providence said surplus cash, following its abandonment of the Druid/Drombeg fields, would now be partially deployed to the Barryroe prospect.
Cairn has let lapse its option to take a 20 per cent stake in another oil prospect 150km off the west coast of Ireland, known as Avalon, Providence said in the update. Total has a 50 per cent interest in the field, while Providence holds 40 per cent.
