Providence to Focus on Ireland after UK Asset Sale

Irish explorer Providence Resources announced Friday that it plans to sell its onshore UK interests for $66 million to IGas Energy.

The transaction will wipe out the company's debt and free it to focus on the completion of its multi-basin drilling campaign in Ireland. Providence has already scored a significant success this year with its Barryroe discovery in the Celtic Sea off the south coast of Ireland, where a potential 1.6 billion barrels of oil has been found.

Under the terms of the agreement, IGas will acquire Providence's 100-percent interest in the Singleton oil field, which is located on UK license PL240 as well as the Irish firm's 50-percent operated interest in Petroleum Exploration and Development Licence 233. Both of these licenses are located onshore in West Sussex, England.

Providence also reported interim results Friday, which showed a first-half net loss of $43 million (1H 2011: $4.1 million), which included a $36.5 million impairment charge for its UK onshore assets. Production during the first six months of the year averaged 541 barrels of oil per day.

Oil sector analysts at London-based investment bank Cenkos Securities noted that the proposed sale of the UK assets "will allow management to focus on realizing the value in its core portfolio".

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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