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Company Q&A: Providence Resources Barryroe boosted by US$10bn cash-flow estimate

Published: 08:45 25 Jul 2013 EDT

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What’s the news? 

Providence Resources (LON:PVR) has posted a summary of the estimated cashflows attributable to Providence 80.0% equity ownership from the Barryroe Basal Wealden A oil sands. 

Didn’t Providence do this in April? 

In April 2013, Providence published the estimated oil in place and recoverable estimates from the Basal Wealden Oil sands, as presented in the Competent Person’s Report (CPR) prepared by Netherland, Sewell & Associates, Inc (NSAI), a world leader in resource auditing and the #1 choice for SEC reserves reporting. 

This update reports on the financial analysis in terms of estimated undiscounted and discounted cashflows from the Basal Wealden A sand only. The contingent resources and cashflows attributable to the Middle Wealden were published in 2011, as prepared by RPS Energy Ltd. 

What were the results? 

The estimated cashflows were presented on the same basis as the oil in place volumes and associated recoverable resources reported in April 2013; namely, a low estimate (1C), a best estimate (2C) and a high estimate case (3C) for the Basal Wealden oil sands, shown on an undiscounted and discounted basis.

1C (Low Case) Total: US$2.7bn Discounted cashflow: US$709.7mln

2 C (Best Case) Total: US$10.6bn Discounted cashflow: US$2.6bn

3 C (High Case) Total: US$28.2bn Discounted cashflow: US$6.9bn

 

Why does this financial audit only refer to the Basal Wealden A sand?

A separate CPR (issued by RPS in 2011) had been previously published on the Middle Wealden oil sands.

 

The figures from that 2011 CPR on the Middle Wealden sands are incremental to those reported on today by NSAI for the Basal Wealden A sand. As such, final field economics would include estimated cashflows from both the Middle Wealden and the Basal Wealden sands, with some adjustment for optimisation of costs, removal of double costs.

 

What next at Barryroe?

 

With the resources CPR issued in April and with the Phase 2 Development Engineering Study completed, in May 2013, Providence retained the services of Rothschilds to act as financial advisors to manage a formal farm out campaign. This farm out process is now well underway and is expected to take several months. The Company has received significant amount of international industry interest. In addition, through-out this period, ongoing work on environmental and planning assessments has continued.

 

What else for Providence?

The Barryroe well was the first well of Providence’s six basin drilling programme which is continuing for the next year and a half, with a combination of low risk appraisal wells at Spanish Point in the Main Porcupine Basin and Dragon in the St. George’s Channel Basin, as well as frontier exploration wells at Dunquin in the South Porcupine Basin, Polaris in the Rathlin Basin and other targets in the Kish Bank Basin.

 

The second well in the programme was the Dunquin exploration well, which just concluded drilling last week.

 

 

Though this well was deemed water wet, the geological play model of the Porcupine Basin was confirmed and an interpreted c. 150 ft residual oil column was encountered in the top of the reservoir, thereby providing very useful data for the continued exploitation of Providences’ high impact exploration portfolio. And, as announced two weeks ago, the next well to be drilled will be the Cairn operated Spanish Point appraisal well in Q2 2014.

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