Providence Snaps Up Stake in Kinsale Head Assets Offshore Ireland
Providence Resources announced that its wholly owned subsidiary, EIRGAS Limited ('EIRGAS'), has exercised its option (the 'Option') to acquire a 40% interest in the 100% operated Kinsale Head Area comprising the Kinsale Head, South West Kinsale and Ballycotton gas fields from Labuan Energy Corporation Limited, a wholly owned subsidiary of PETRONAS International Corporation Ltd. ('PICL').
As part of the same transaction, EIRGAS has also exercised the option to acquire a 40% interest in the 86.5% operated adjacent producing Seven Heads gas field ('Seven Heads'). EIRGAS is a special purpose vehicle established by Providence to invest in gas production, storage and trading opportunities offshore Ireland and in the United Kingdom. PICL is a wholly-owned overseas investment arm of Petroliam Nasional Berhad ('PETRONAS'), the national oil company of Malaysia.
Under the terms of the Option Agreement, which was originally entered into on June 15, 2009, EIRGAS will purchase its stakes in the
Kinsale Head Area assets on the same pro-rata terms by which PETRONAS acquired its stake from Marathon Oil Corporation in April 2009. That transaction had a total value of US $180 million, with an effective date of January 1, 2008. In conjunction with the formal notification of its exercise of the Option, Providence has made an initial cash payment of $3.8 million to PETRONAS with the balance due at Closing.
The Closing of this transaction is subject to Irish regulatory approval and is expected to be completed by no later than the end of Q1 2010. It is planned that the financing for the balance of the transaction will be met through existing cash resources and banking facilities.
Commenting, Tony O'Reilly, Chief Executive of Providence, said, "This transaction allows Providence to capitalize on our extensive
operational experience offshore Ireland in combination with PETRONAS' proven track record in gas production, storage and trading. Upon
completion, not only will Providence's attributable daily production double to over 4,000 BOEPD, but we will also gain exposure to
existing and new gas storage and trading opportunities, which we see as a huge potential future growth area for the Company. Additionally,
the deal also provides EIRGAS with an opportunity to potentially monetize gas from some of Providence's adjacent gas discoveries in
the Celtic Sea, as well as from third party fields."
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