Providence Resources (LON:PVR) took delivery of the GSF Arctic III semi-submersible rig on Saturday.
It will be used to carry out the appraisal programme on the Barryroe field, in the Celtic Sea off the coast of southern Ireland, with drilling expected to get under way in the next two weeks.
Providence is operator and 50 per cent owner of the Barryroe licence. Its partners are San Leon Energy (LON:SLE), which has 30 per cent, and Lansdowne Oil and Gas (LON:LOGP), with 20 per cent.
Discovered in the 1970s, Barryroe previously flowed oil at the rate of 1,400-1,600 barrels a day.
A flow rate above 1,800 barrels a day makes Barryroe economic, according to an independent report compiled by RPS, which also estimates there is 60 million barrels of crude recoverable from 373 million barrels in place.
The economics of the field show that this one development prospect could be transformational.
The P50 reserves figure gives a net present value for Barryroe of just over US$800 million based on a 10 per cent discount rate.
It kicks off a frenetic exploration and development programme worth US$500 million, with the London and Dublin-listed Providence footing US$120 million of that bill.
Following shortly after Barryroe is a re-drill of the nearby Hook Head field. Here Providence owns 72.5 per cent and like Barryroe it is the operator of the field.
Samples suggest it is a mid-gravity, high pour, waxy crude, with 20 million barrels recoverable.
A well was drilled in 2007, which “petered out” due to water ingress, with boss Tony O’Reilly blaming the engineering rather than the geology for the flop.
From these two development plays, the group will then move on to two exploration plays – Dalkey Island off the coast of Dublin and Rathlin Island, off the north-eastern corner of Northern Ireland.
The latter is an onshore-offshore play. It is onshore in that all the drilling, due to get underway in the fourth quarter of this year or early next, can take place on dry land. However, the group is also planning to chase the off-shore licences around the Rathlin prospect.
After that the emphasis changes from east coast to the west, and Providence is heading very much further offshore in the pursuit of oil and gas.
Spanish Point is a gas condensate discovery located 125 miles offshore. It was found in 1981 when Ireland simply did not need gas in the quantities thought to be contained at Spanish Point and there was no infrastructure by which to exploit it – that has all now changed.
Providence estimates there are 200 million barrels of oil equivalent. It owns a 56 per cent stake, which will fall to 32 per cent when partner Chrysaor formally agrees to drill two wells there.
Those who follow Providence closely will know that Dunquin is the big daddy of all its exploration projects, and it has an all-star roster.
ExxonMobil is a 40 per cent shareholder and the operator, while ENI farmed in for a 40 per cent stake in 2009. SOSINA holds 4 per cent, leaving Providence with 16 per cent.
Work is expected to get underway on Dunquin in mid-2012 and will be followed in the autumn of next year by an appraisal well on the Dragon Field, which is equidistant between Wales and Ireland.
It also has a producing asset in Singleton in West Sussex. Oil revenues from this source will be used to help fund the company’s exploration activities.
“In all, with valuation at least partially underwritten by the Singleton productions assets and additional major appraisal and exploration opportunities Providence is an interesting story entering a key phase in its development,” concluded Northland’s McGeary in a recent research note.