Oil and gas exploration company Providence Resources has acquired a 10 per cent stake in an oilfield off the coast of Liverpool.

The Dublin-based company yesterday announced the acquisition of the stake in the West Lennox site, where drilling for oil began this weekend.

Providence will invest €750,000 in the project, which its partners estimate should start producing oil by September next year. The acquisition includes a stake in the adjoining Crosby exploration project, which is situated in an area already known to contain hydrocarbons, according to Providence.

"This is a very attractive investment for Providence," said Tony O'Reilly, the group's chief executive. "West Lennox represents the first step in our stated strategy of increasing daily oil production. This new presence in the east Irish sea basin complements our other activities in the Irish Sea area, so leveraging our exploration potential."

Providence, which had group turnover of €1.05 million last year, has licences to drill for oil in parts of offshore Ireland, Nigeria and other areas of the UK.

Yesterday's announcement is in line with the strategy laid out by chairman Brian Hillery at the group's annual meeting last month. He said that, while the group had "plenty of projects", it was considering bidding for other drilling licences.

Providence is only making money from its 20 per cent stake in the Singleton field in the UK. All the other fields are only at the exploration stage.

Like other exploration companies, Providence is benefiting from the recent increase in oil prices, which last month reached a record $70 a barrel, compared with $38 a barrel last year.