Providence Resources Reports Positive Year
This year has been Providence's most successful year to date in key areas such as reserve addition, project sanction, portfolio diversification and expansion of partnerships. In 2008, the discovery of gas at Galveston Island A-155, together with the acquisition of the Triangle oil and gas portfolio, substantially grew our reserve base and production levels in the Gulf of Mexico from our initial entry in 2007. Combined with growing oil production from Singleton (onshore UK), the Company has the necessary cash flow to meet its operational requirements going forward. This cash flow has been further enhanced by successful hedges put in place, which saw the Company enter into multi-year contracts at base prices of $100/BL oil and $10/MMCF gas for a significant proportion of its production.
Looking ahead, this production cash flow should further benefit in 2009 from the re-instatement of production which has been compromised since Hurricanes Gustav and Ike, as well as the start up of new production from Galveston A-155 in the Gulf of Mexico. In addition, we are planning to drill the X-10 well at Singleton in Q1 2009, which we believe will enhance production significantly whilst providing important new data which we hope will improve the ultimate reserve potential of this large oil field.
In West Africa, Providence participated in the AJE-4 well which not only successfully achieved its appraisal objectives but also confirmed the presence of a new deeper hydrocarbon system in block OML 113. We believe that the AJE-4 well has materially progressed this project towards Declaration of Commerciality and, together with other companies' recent successes offshore Ghana, confirm the potential of the West African Transform Margin as a future petroleum province. Closer to home, we drilled two wells offshore Ireland in the Celtic Sea, which both encountered hydrocarbons, but the overall results were disappointing and will require further evaluation and analysis before deciding on any next steps.
2008 also saw Providence enter into a new partnership with Chrysaor on Spanish Point. The year also saw Providence further consolidating its relationship with Exxon Mobil through the successful acquisition of the 13 new blocks over the Drombeg prospect in the Porcupine Basin. Providence now holds interests in 27 blocks off the west coast of Ireland in partnership with Exxon Mobil and, importantly, 2008 saw Exxon Mobil assume Operatorship over the Dunquin license and declare it technically "ready to drill."
During the period, we were also delighted to welcome Star Energy/Petronas into Ireland as our partner in the new Kish Bank Licensing Option. This represents the first project sanctioned under our Irish Gas Storage MOU. Not only does this now facilitate Providence to work with two world class companies offshore Ireland, but it also allows Providence to investigate the potential of Irish gas storage opportunities, both methane and CO2, businesses which may become important adjuncts to our existing exploration and production business model. We were also very pleased to see that Star/Petronas has agreed to acquire Marathon's Kinsale gas fields and associated infrastructure, which includes gas production and storage.
Providence Resources enters 2009 with a clear strategy, strong partners and en even more enhanced asset portfolio with a great deal of activity planned. Combined with the solid financial base of production cash flow and our existing credit facility, I am confident that Providence represents a strong investment proposition for shareholders.
- Providence Expects to Drill Druid Prospect in Summer 2017 (Sep 15)
- Newgrange Prospect Could Hold 13.6 Tcf of Gas (Jul 12)
- Providence Offered LO 16/27 Offshore Ireland (Jun 23)