Under the terms of the deal, CMCSL will take a 10% interest in the Spanish Point Project, leaving Providence and its partner Sosina with 72% and 18% stakes, respectively. Further farm out discussions continue with other third parties.
Commenting on this important farm out agreement, Tony O'Reilly Jr., Providence's Chief Executive, said:
"This is a very important step forward in progressing the Spanish Point field and we are absolutely delighted to be working with our very experienced partners at CMCSL/ GlobalSantaFe. In a very tight rig market, it is extremely important to secure partners that can add value to a Project and GlobalSantaFe, being the second largest rig owner in the world, will be able to do exactly that.
"Having secured this initial farm out agreement with CMCSL, Providence looks forward to progressing its discussions with other third parties with a view to assembling a drilling syndicate to drill the Spanish Point Project as early as possible."
About Spanish Point
Providence holds an 80% interest and is operator of FEL 2/04, which covers blocks 35/8 & 9 located in the Porcupine Basin, off the west cost of Ireland. The blocks are situated in 300-400 meters of water and are located approximately 200km of the coast.
The Spanish Point field was discovered in 1981 by Phillips Petroleum and a consortium which included Atlantic Resources Plc, Providence's predecessor company. The discovery well (35/8-2) flowed circa 1,000 BOPD and 5 MMSCFGPD from a hydrocarbon column (total thickness of 1,400 ft) over sandstones of Upper Jurassic Age. However, due to a combination of low commodity prices and production tests at that time, the Project was not declared economic and the license was subsequently relinquished. Chevron subsequently held the license until 2001.
Providence Resources Plc applied for and became operator of the Spanish Point license in November 2004, and now holds the license for a 15 year-term. Providence's geological team carried out a geological and geophysical analysis which supported and improved the 1981 post-drill analysis of volumetrics of hydrocarbon in place. Providence also reviewed the work carried out by Chevron Corporation. The combination of this new analysis, coupled with advances in technology and an improved oil/gas price, now suggest that commercial development of Spanish Point is now possible.
Accordingly, the Board of Providence commissioned extensive studies to confirm reservoir profiles, development options and economics. These studies, comprising the work of in-house engineers as well as third party consulting engineers, demonstrate a feasible and robust economic development plan with substantive potential economic value.
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