Pictured: Tony O’Reilly, Chief Executive, Providence Resources.
Providence Resources has partnered with Chinese consortium, Beijing-headquartered Apec, to develop the Barryroe oil field in the Celtic Sea.
After five years searching for a partner to develop the Barryroe oil field in the Celtic Sea, Providence announced today that a Chinese consortium led by Apec Energy Enterprise has agreed to take a 50% interest in the project in return for the cost of three wells and associated side-tracks.
Known in the industry as a farm-out agreement, the sale sees Providence’s 80% holding drop to 40% and Lansdowne Oil & Gas PLC surrender 10% of their 20% holding.
Under the terms of the agreement APEC will be responsible for 50 per cent of costs associated with the drilling of three wells, the company will provide a drilling unit and it will finance the remaining half of all costs of the Barryroe prospect.
Providence, through its Exola subsidiary, will remain in charge of the drilling programme though beyond the three well deal Apec has the option to take over the development.
Tony O’Reilly, Chief Executive of Providence, said the deal was a significant transaction that would allow exploration of the different parts of the Barryroe field and give it the tools to bring the field into production.
In operational terms, Exola will act as operator for the drilling programme with technical assistance being provided by the Apec consortium and, after the completion of drilling, Apec will have the right to become operator for the development and production phase.
The announcement is good news for Providence’s share price, which took a hammering last year after abandoning the Druid and Drombeg prospects some 220km off the southwest of Ireland after initial drilling revealed little more than water in the reservoirs.