As part of the farm-out deal agreed in 2008, and for committing to up to two appraisal wells, Providence’s partner Chrysaor will double its stake in the two licences covering the project to 60 per cent and will become the operator.
It leaves Providence with 30 per cent and the technical experts Sosina with 8 per cent and puts a “financial cap” on their exposure to the appraisal drilling costs.
Spanish point lies 200 kilometres off the west coast of Ireland in 400 metres of water and has 200 million barrels of recoverable oil potential.
A discovery well drilled in 1981 by Phillips Petroleum and Providence’s predecessor, Atlantic Resources, which flowed at 1,000 barrels of oil a day and five million standard cubic feet of gas.
However the low commodity prices and a lack of infrastructure meant it was deemed uneconomic.
Providence has burnished its reputation as Ireland’s leading oil and gas explorer by unlocking commercial potential of the Barryroe block in the Celtic Sea.
The results from its first well far exceeded pre-drill expectations and led to a significant lift in the company’s share price.
Barryroe and Spanish point are part of an ambitious exploration and development programme which could deliver significantly more value for investors.
Providence chief executive Tony O'Reilly said: "We are delighted to confirm that the pre-drill activities for the Spanish Point appraisal well have commenced and that a spud date has been scheduled.
“Next year should prove to be pivotal in assessing the exploration and development potential of hydrocarbons in the Porcupine Basin, with drilling now planned at Spanish Point, as well as at the Dunquin exploration prospect to the south.
“Similar to our recent success at Barryroe, we believe that the application of modern well completion technologies, driven by the state of the art 3D seismic data can unlock material value at Spanish Point.
“We welcome Chrysaor as new Operator offshore Ireland and we look forward to working with them as we finally return to Spanish Point to turn the drill bit after a 30 year absence."