Providence Resources PLC (LON:PVR) chief executive Tony O’Reilly has confirmed that the Irish oil firm intends to drill a new well on the Barryroe field without a new partner.
The company, which owns 80% of the undeveloped Celtic Sea oil field, had been frustrated in its efforts to secure a new partnership for Barryroe, but, in the wake of a recent exploration disappointment off Ireland’s west coast, the project has provided something of a silver lining for investors.
Providence raised new capital for the Atlantic adventure, and it also landed investment from blue-chip oil partners too. As a result, the exploreris left with sufficient funds to take new steps at Barryroe.
O’Reilly, in Providence’s half yearly results statement, told investors: “At Barryroe, we have continued farm-in discussions - but to date, no deal has been consummated. Whilst discussions continue, the board has taken a decision to advance drilling at Barryroe.
“Noting the significant value attributable to Barryroe and prevailing low rates for rigs and associated offshore services, we have moved forward with planning for drilling (and possibly a side-track).
“Last month, we issued a request for expressions of interest for the supply of a mobile offshore drilling unit and have started the consent process for drilling.
“The details on the forward dates for the planned drilling programme will be communicated once the schedule is finalised.”
A breakout success at Barryroe back in 2012 sent Providence shares soaring, only to fall back as farm-out negotiations stalled amid increasingly challenging oil markets as the falling price of crude took growth project off the table for ‘Big Oil’.
Providence sees Barryroe as a 100,000 barrel per day operation at its anticipated peak but it is understood that further appraisal work is required for the development.
While Providence is prepared to drill without a new exploration partner, the support of a development partner would still be needed to take the major project into production.
Atlantic disappointment
Providence shares have tumbled some 60% in recent weeks following the disappointing results from the Druid-Drombeg exploration well – which targeted two prospects that could’ve held some 5bn barrels of crude but were found to be water bearing.
The explorer had executed commercial deals with Cairn Energy and Total for the Atlantic Margin project.
Presently, Providence is awaiting a decision from Total which has an option to participate in the exploration area moving forward, with other un-tested targets such as Diablo still on the board for Providence.
READ: Providence Resources to focus on new Barryroe drilling after Drombeg disappointment
Similarly, Cairn has an option to participate in the exploration of the Avalon prospect and Providence is also waiting for the partner to make a decision.
“The drilling of the 53/6-1 Druid/Drombeg exploration well was a major operational undertaking for Providence, being situated in the deepest water depth ever drilled offshore north-west Europe,” O’Reilly said.
“The results from the 53/6-1 well were disappointing as, while both reservoir sections were encountered within the pre-drill depth prognosis, both were water bearing.
“The possible presence of bitumen was reported in drill cuttings within the Drombeg reservoir interval, which may indicate that it received an oil charge which was not retained at this location. However, further studies will be required in order to confirm this interpretation and its implications for the wider prospectivity within FEL 2/14.”
The Providence boss added: “Providence remains the most active explorer offshore Ireland, with over 20 years' operational experience generally and specifically some 13 years since it first licensed acreage in the Porcupine Basin.
“Looking ahead, we will continue to seek to capitalise on the significant and unrealised value of our portfolio for the benefit of our shareholders."