Oil and gas exploration company Providence Resources plans to begin drilling for oil in Nigeria within the next two weeks.

The company, which also has licences to search for oil in parts of offshore Ireland and the UK, said that if the test drilling goes to plan, it hopes to start extracting oil from the Aje field offshore Nigeria at the end of 2007. The company will make no money from the site until that date.

Speaking at the group's AGM yesterday, chief executive designate Tony O'Reilly said it was a "very exciting" time for the company.

"Things are going very well and the business has great potential," he said, adding that the rise in the price of oil is providing a great boost for Providence.

He said projects that were initially deemed too small to generate large profits, such as the Singleton field in the UK, now look much more interesting financially.

The average price of of oil has risen to $60 a barrel currently, from an average of $38 a barrel in 2004.

While Providence has several licences to search for oil in Ireland and the UK, its 20 per cent interest in the onshore Singleton site is the only one currently making any money.

Group turnover increased 39 per cent in 2004, to €1.05 million, all of which came from the Singleton field. Pretax profit was €165,000, compared with a year-earlier loss.

Mr O'Reilly said the group plans to double production capacity at the Singleton site within the next month. Last year, the site produced about 500 barrels a day from four wells.

Providence also has three other licences to search for oil off the UK in the North Sea. In Ireland, Providence has stakes in 11 exploration licences, including in the Celtic Sea, the Porcupine Basin and St George's Channel.

It is already in talks with several major oil companies about partnering exploration at its Porcupine Basin site off the west coast, a project Mr O'Reilly described as being "very exciting" and having "truly enormous" potential recoverable reserves.

He said he hopes to have some more definite positive news to report back to shareholders about the site by this time next year.

Chairman Brian Hillery said that while the company had plenty of projects to be going on with, it was still considering bidding for other licences. He also said that the group, which raised €4.63 million earlier this year through the exercise of warrants, has enough money to fund its current projects.

Despite the news, Providence shares were unchanged on the ISEQ at just over 5 cent.

On London's AIM, where they began trading in June, they closed at 4 cent. The company told shareholders yesterday that it was talking to the London market about being quoted in sterling on the AIM.

Tony O'Reilly, whose father Sir Anthony, holds a 45 per cent stake in the group, takes up the position of chief executive in September.