Providence has been formally notified by its partner, Chrysaor, that subject to Ministerial approval, Chrysaor is exercising its pre-agreed option to increase its equity stake in the Spanish Point area (Frontier Exploration License ("FEL") 2/04) and adjacent license (FEL 4/08). These licenses are located in the Main Porcupine Basin, c. 200 km off the west coast of Ireland and are situated in c. 400 meter water depth. Providence operates both licenses on behalf of partners Chrysaor and Sosina Exploration Limited ("Sosina").
Under the terms of the 2008 farm-out agreement, Chrysaor have now confirmed that following analysis of the 2009 3D seismic data, they have elected to exercise their option to drill up to two appraisal wells on the Spanish Point discovery. In return for committing to such a significant work program, Chrysaor will double its equity participation in FEL 2/04 and FEL4/08 from 30% to 60% and assume the drilling management role for the Spanish Point program. As a result, Providence's equity will decrease from 56% to 32% with Sosina's equity reducing from 14% to 8%. As part of the option, there will be a cap on Providence's and Sosina's financial exposure to the drilling.
The partnership has already high-graded the primary appraisal well location and planning will now commence for the Spanish Point well program together with the sourcing of a suitable rig for a planned 2012 program.
Commenting, Tony O'Reilly, Chief Executive Officer of Providence said, "The exercise of this option by Chrysaor is further validation of the significant potential of the Spanish Point Project and adjacent acreage. We look forward to working with Chrysaor and Sosina on this appraisal drilling, which forms part of Providence's previously announced multi-year, multi-basin Irish drilling program."
Phil Kirk, Chief Executive of Chrysaor said, "We're very pleased with how our partnership with Providence and Sosina is working and hope the success the group has had over the last few years will be mirrored in the future as we more fully appraise Spanish Point and move towards a development project."
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