Providence Resources Reports 2018 Trading Update

Source Press Release
Company Providence Resources PLC 
Tags Strategy - Corporate
Date January 03, 2019








Providence Resources, the Irish based Oil & Gas Exploration Company, has provided a trading update on its activities through the end of 2018.


In September, EXOLA and Lansdowne Celtic Sea signed an updated Farm-out Agreement ('Updated FOA') with APEC Energy Enterprises over Standard Exploration Licence ('SEL') 1/11 which contains the Barryroe oil accumulation. SEL 1/11 is operated by EXOLA (40%), a wholly-owned Providence subsidiary, on behalf of its partners, APEC (50%) and Lansdowne (10%), collectively referred to as the 'Barryroe Partners'.

Under the terms of the Updated FOA, APEC is providing a fully cost-carried firm programme comprising of the drilling and testing of four vertical wells and one horizontal side-track, plus the optional drilling of two additional horizontal wells, together with cash advances to EXOLA for certain agreed project and operational costs totalling $19.5 million.

Over the past 3 months, the Barryroe Partners have been working on progressing multiple work streams to deliver the Drilling Programme, including the contractual arrangements with key service providers. To effect this Drilling Programme, the Barryroe Partners have nominated China Oilfield Services Limited ('COSL') as the key project contractor. The Barryroe Partners are in the final stages of concluding an Integrated Project Management Contract with COSL, who are to be contracted to provide all services and equipment required to conduct the Drilling Programme, including the provision of the nominated semi-submersible drilling unit. Further announcements will be made in due course.


In November, an application for a judicial review was taken by An Taisce against the Minister of Communications, Climate Action and Environment and the Attorney General of Ireland, challenging the legality of the permission granted to EXOLA to conduct well-site survey operations at Barryroe. This matter between An Taisce and the State has been subsequently adjourned until January 15th, 2019.

As notified by RNS on November 30, 2018, noting the potential delay and uncertainty that such a review could have caused, the Barryroe Partners took a decision not to act on the well site survey permission with immediate effect. As a result of this voluntary decision not to act on the well site survey permission, EXOLA elected to postpone the planned well site survey for Q4 2018. Accordingly, EXOLA will now apply to the Minister for a new permission to carry out well site survey activities as early as practicable in 2019.


Without prejudice to the site survey application process, EXOLA is planning to be in a position to conduct its well-site survey operations in spring 2019. Separately, other consenting workstreams required to conduct the Drilling Programme are underway, and subject to the conclusion of contractual arrangements, and the receipt of requisite approvals and consents from the relevant authorities, the updated timeline for the commencement of the Drilling Programme is Q3 2019. Further announcements will be made in due course.


In October, the Company provided an update on Frontier Exploration Licence ('FEL') 6/14 that contains the Newgrange Prospect. FEL 6/14 is operated by Providence Resources on behalf of its partner Sosina Exploration (20%). Following the acquisition of a site survey during the summer over the proposed Newgrange well location, subsequent detailed analysis of the survey data has confirmed the presence of 262 seabed pockmarks with seabed samples demonstrating both biogenic and thermogenic hydrocarbon sourcing signatures indicating a potential link to active hydrocarbon migration. Discussions with potential third-party farminees continue and depending on the outcome of these discussions, drilling could take place in 2020 (subject to regulatory consent).


In November, the Company provided an update on FEL 3/04 located in the southern Porcupine Basin, which contains the undrilled Lower Cretaceous 'Dunquin South' carbonate explorationprospect as well as the adjacent 'Dunquin North' carbonate build-up, which hosts a residual oil column. FEL 3/04 is operated by Eni Ireland (36.913%) on behalf of its partners,  Repsol Exploracion Irlanda (33.557%), Providence Resources (26.846%) and Sosina Exploration (2.684%), collectively referred to as the 'FEL 3/04 Partners'. In agreeing the 2019 work programme and budget, the FEL 3/04 Partners have sanctioned the acquisition of a well-site survey over the Dunquin South prospect next year, which is a prerequisite for future drilling.

Commenting on this announcement, Tony O’Reilly, Chief Executive of Providence said:

'2018 has been another year of significant progress for Providence with our main focus being the finalisation of the Barryroe farm-out in advance of the implementation of a multi-well drillingprogramme planned to start in 2019. Importantly, this programme provides a roadmap to take this project, subject to the results of the drilling & regulatory consents, to project sanction and then on to production. Notably, the future development of Barryroe will, in tandem with existing production from Corrib, further facilitate national energy independence at a time of growing geopolitical risk within global energy markets. Importantly, the development of Barryroe will also reduce Ireland’s impact on global carbon emissions, through reduced importation of hydrocarbons.

We are pleased to report that good progress has been made on finalising the key operational and rig arrangements with COSL, the conclusion of which will allow us to advance the specific consents for the drilling programme. We were obviously very frustrated by the delay to the planned site survey, especially as we had complied fully with all environmental and planning regulations in applying for and subsequently receiving the site-survey operational consent. With the site-survey permission being subject to a legal challenge and the vessel being delayed due to bad weather elsewhere, we felt that it was in the best interest for the overall programme not to act on the granted site-survey permission and re-apply, thereby avoiding any unnecessary costs and possible further delays associated with the judicial review proceedings.

Whilst this rescheduling will delay the planned commencement of drilling at Barryroe, we believe that it does not materially impact the timing of the overall delivery of this significant drillingprogramme. Subject to contract finalisation and the receipt of all necessary permits and consents, we currently envisage rig mobilisation and drilling to commence in Q3 2019.

Elsewhere in our portfolio, we continued to advance a number of high impact exploration prospects in the Atlantic Margin. With Providence having an interest in four significant exploration prospects (Diablo, Dunquin South, Avalon and Newgrange) in the southern Porcupine Basin, we will keenly follow the CNOOC-Nexen/ExxonMobil Iolar well, which is planned to be drilled in the basin next spring. This is another key exploration well for the basin specifically and the Irish offshore sector in general and we wish them every success.

In November, we were pleased to confirm that the FEL 3/04 partners approved the budget for the acquisition of a well-site survey over Dunquin South in 2019, which is a prerequisite for the drilling of an exploration well on this high impact exploration prospect. We also were pleased with the results of our site survey at Newgrange which should further enhance the attractiveness of this asset, where we are running a farm-out campaign.

Looking ahead, we will continue to focus on delivering our various programmes and here, with the planned programme at Barryroe, we continue to be by far the most active player offshore Ireland in terms of drilling activity, commercial deals and collaborations with world-class partners. Looking ahead, we have the portfolio, partners, people and financial resources in place to advance our portfolio through exploration & appraisal drilling for the benefit of all our shareholders and to progress energy independence for Ireland.'

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