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Providence Resources reboot continues with new Barryroe agreement

Snapshot

  • New Barryroe agreement
  • Inclusion of gas into Barryroe proposition
  • Finances boosted by equity raise
Drill ship

Quick facts: Providence Resources PLC

Price: 5.1 GBX

AIM:PVR
Market: AIM
Market Cap: £42.93 m
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How is it doing?

Barryroe was envisaged as Ireland’s first commercial offshore oil project, though adaptation in 2020 may see gas elements of the project become more prominent.

Providence Resources PLC (LON:PVR) and Lansdowne Oil & Gas Ltd (LON:LOGP) lost patience with Chinese group APEC in October and took back project stake previously divested under a farm-in plan.

Providence is now free to enter agreements with other partners, and, for now, it retains an 80% stake in the undeveloped field.

In February, Providence confirmed that a new farm-out process is being conducted and Providence noted that, with the inclusion of gas into the development approach, several additional companies not included within the initial process have expressed interest in the project.

By early April, Providence announced a £3mln equity raise and a new preliminary agreement for a farm-out of Barryroe.

The agreement is with SpotOn Energy, a Norwegian group which is effectively an engineer and project facilitator. It works with a consortium of “world leading services providers” to deliver offshore projects.

A term-sheet gives exclusivity until the end of October 2020 to develop new appraisal plans at Barryroe.

Specifically, SpotOn is said to have extensive experience designing and constructing semi-submersible drilling rigs for the North Sea, along with the design, development and management of offshore facilities.

 

More appraisal planned for Barryroe

The prior Chinese farm-out and development plan was centred on the project’s oil potential, but, according to Providence, Barryroe also has a meaningful gas element – which may have strategic implications for the company, Ireland and the government.

Providence was independently verified as containing large volumes of both gas and oil.

The company previously begun planning for appraisal, potentially comprising two wells, to confirm Barryroe as either (a) a large oil field with a gas cap or (b) a large gas field surrounded by an oil rim.

It is anticipated that the programme would also seek to confirm reservoir continuity and potentially explore a previously untested Jurassic age prospect deeper beneath the Barryroe reservoirs.

Independent estimates indicate a mid-case for recoverable hydrocarbons at 346mln barrels oil equivalent, the company noted.

Providence also said it would consider a possible nearby infrastructure redevelopment project, that could potentially deliver a carbon dioxide storage solution - utilising depleted gas fields - which would “minimise the carbon footprint of a Barryroe development”.

 

Management changes

In January, Providence named Alan Linn as the company’s new chief executive.

Linn joins from UK onshore shale firm Third Energy and he has previously held senior positions at Lasmo, Cairn Energy, Tullow Oil, ROC Oil, and with Afren during its restructuring. He is a qualified chemical engineer and lives in Ireland.

“The opportunity to lead the commercialisation of an oil and gas field with the potential of Barryroe is very compelling,” Linn said.

Providence chairman Pat Plunkett added: “I am pleased that Alan has agreed to join Providence at this time of significant opportunity within the company.

“He has the ideal mix of operational and strategic experience for the position, and will bring valuable insights to the board as we rebuild the business after the challenging past year.

“Alan recognizes the considerable potential of the company’s assets, in particular Barryroe, and I am sure he will enhance our options in taking this exciting project to the next stage.

 

Inflexion points

  • New development plan for Barryroe
  • Additional funding 
  • Exploration off the West Coast of Ireland

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