Providence: Celtic Sea Farm-out Discussions Continue

Irish explorer Providence Resources said Thursday that discussions regarding the farm-out of its 80 percent-owned Barryroe oil discovery, and the development of other assets offshore Ireland, are continuing in spite of the low oil price environment.

In an update about its Celtic Sea assets Providence said that – as well as the ongoing farm-out discussions – it was considering a proposal from an alliance of contractors to drill Barryroe under a risk-sharing cost model. This alliance consists of "a major rig operator, drilling management and well service company". Providence estimates the cost of drilling an appraisal well at Barryroe to be GBP 16 million ($23 million).

Providence also said that an evaluation of the upper gas-bearing C-Sand reservoir at Barryroe confirms significant productivity and resource potential across the eastern portion of its license. It has produced a model that has initial production rates of 30 million cubic feet per day of gas from a vertical well, with gas in place of up to 400 billion cubic feet.

At Providence's Helvick oil discovery (in which it holds a 72.5-percent stake), the firm said that it has secured a two-year lease from the Irish government that starts on March 1, 2016, to allow for the evaluation of low-cost development options. The award of this lease triggers a staged 50-percent farm-in by Marginal Field Development Company (MFDevCo), which used to be known as ABT Oil & Gas. Providence has another two-year lease undertaking granted by the Irish government for the Dunmore oil discovery that will also feature a farm-in by MFDevCo.

Meanwhile, the firm plans to begin a farm-out process for its Silverback prospect in the south Celtic Sea Basin in March.

Providence Chief Executive Tony O'Reilly commented in a company statement:

"Despite the difficult operating environment, Providence has continued to progress its activities across its portfolio of assets in the Celtic Sea basins. The Barryroe farm out remains our key focus and whilst we are not yet in a position to confirm the structure of a transaction, we continue to work to that end. In that regard, the most recent cost dynamics illustrate the highly competitive new cost environment for drilling.