Subject to regulatory approval and contract, Providence's interest in the Singleton Oil Field will therefore increase from 20% to 99.125%. The remaining 0.875% of the field is owned by Noble Resources.
The principal terms of the proposed transaction are as follows:
--A total cash consideration of US $ 22 million --Star and Providence agree a 50:50 JV on a proposed CNG (Compressed Natural Gas) Project --Star to be given a first option to utilize the Singleton Oil Field for Gas Storage purposes in the future, working with Providence on a 50:50 basis --Providence and Star agree to work together on future gas storage opportunities in the Republic of Ireland, again on a 50:50 basis.
Tony O'Reilly Jr., Providence's Chief Executive, said:
"This is a pivotal transaction for Providence as it allows us the opportunity to substantially increase our daily oil production to approximately 600 BOPD (circa. 219,000 barrels per annum). This will ensure a solid operating cash flow on which to build our operations.
"Having owned 20% of Singleton for over 15 years, we are very comfortable with its operational parameters as well as its geological opportunities and we see upside in both these areas going forward.
"We are also very pleased to continue working with Star Energy, both on the CNG Project at Singleton as well as agreeing to work together on gas storage opportunities in Ireland."
Roland Wessel, Chief Executive of Star, said:
"The sale of our stake in Singleton underlines the Company's strategy to focus on building a significant multi-site gas storage business. Singleton is a valuable, producing asset but, with limited gas storage potential, it was no longer core to our business. The proceeds will be reinvested in pursuit of our gas storage strategy.
"Having worked with Providence for many years at Singleton, we look forward to working with them in developing gas storage opportunities in Ireland, where we believe there are many suitable structures, and where Providence is the largest offshore license holder."
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