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Providence Resources PLC launches new Atlantic farm-out process offshore Ireland

Providence is opening up a partnering process for the Druid and Drombeg exploration prospects which are now flanked by new neighbours ExxonMobil, StatOil and CNOOC.
New licences offshore Ireland have gone to major international oil companies like Exxon, Statoil, BP and CNOOC.
Talks are already underway with potential new partners in the Spanish Point project.

Providence Resources (LON:PVR) has just launched a new farm-out process for acreage offshore Ireland which, following the Irish government’s licensing round, is now flanked by exploration areas awarded to ExxonMobil, StatOil and the Chinese state oil company.

Providence is now opening up a partnering process for the Druid and Drombeg exploration prospects, in the Porcupine basin off Ireland’s west coast, and the company said that marketing activities are now underway.

These prospects are each estimated to host potentially significant volumes of oil.

In February, Ireland announced the first tranche of licence option awards following its most success bidding round ever.  And the second tranche of awards are expected in May.

The first fourteen awards mainly went to major international oil companies. The news revealed a significant level of interest in Ireland’s Atlantic coast, particularly as it comes at the toughest of times for the oil industry.

Tony O’Reilly, Providence chief executive, described it as “extremely encouraging”.

"From a purely Providence perspective, the First Phase offered awards demonstrate the material interest being shown in our core Porcupine exploration areas,” he said.

O’Reilly added: “It will be interesting to see what other areas will be awarded and to whom when the Second Phase of the Licensing Round is announced in May. 

“Importantly, the arrival of these new players validates Providence's Irish-centric exploration strategy and portfolio.”

Further farm-out talks are underway and continuing for the Spanish Point project.

Providence is already partnered with Cairn Energy in this appraisal project, where a well is slated for 2017. It is also possible that the Rhuadhan exploration prospect, located in an area adjacent to Spanish Point, could be incorporated to that project some point in the future.

Providence is also now preparing for a new seismic programme to explore the Newgrange prospect.

Newgrange is also located nearby to areas now held by ExxonMobil, StatOil, the Chinese National Offshore Oil Company (CNOOC) via its Nexen vehicle, as well as Australian major Woodside Petroleum and a partnership between BP an ENI.

O’Reilly describes Newgrange as being ‘effectively encircled’ by large companies.

Providence also told investors that the Irish government has indicated that applications have been made by third parties for areas directly adjacent to the east and west flanks of the Dunquin licence.

The company’s previously drilled Dunquin North well found evidence of a residual oil column, but not a commercially viable discovery, and the nearby Dunquin South exploration project remains something of a priority in the group’s portfolio.

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