Providence shares jump on Barryroe deal
Shares in Irish explorer Providence Resources jumped by over 8% on the back of it formally getting its long-awaited farm-out deal for its flagship Barryroe field over the line and a significant drop in first-half losses.
The Tony O’Reilly Jr-led company formally announced revised and improved terms of its previously-agreed deal to introduce Chinese consortium APEC Energy as the development partner for the Barryroe field off the Cork coast, after receiving the relevant regulatory approval.
APEC, which will have a 50% stake in Barryroe, will pay Providence a cash advance of $19.5m to cover project and operational costs and the deal will now see the drilling of four vertical wells and one extended horizontal well — as opposed to three vertical wells previously — and the option to drill and test two further optional wells.
APEC’s funding removes any capital exposure or upfront risk for Providence for the drilling programme.
Drilling is expected to commence in the second quarter of next year. Mr O’Reilly said the finalisation of the farm-out deal is “a major milestone” and “transformational” for Providence and represents “a major step forward” for Barryroe.
“Barryroe would be Ireland’s first commercial oil field development, which in tandem with Corrib, would further facilitate national energy independence at a time of growing geopolitical risk within global energy markets,” he said.
For the six months to the end of June, Providence generated a pre-tax loss of just under €2.4m, nearly 30% down from a loss of €3.44m for the first half of 2017.
Mr O’Reilly said Providence is committed to advancing its total portfolio of assets. “Looking ahead, we have the portfolio, partners, people and financial resources in place to advance our portfolio through exploration and appraisal drilling,” he said.
“We think the revised deal is a strong endorsement of Providence’s efforts to advance the Irish offshore and it also secures a solid financial arrangement for the group,” said Davy.
