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Providence Resources PLC ends farm-out for Barryroe project


The latest farm-out deal has come and gone, and now Providence says it will lead project development and funding arrangements.

() shares opened lower on Thursday as it announced the termination of a partnership to develop the Barryroe oil field offshore Ireland.

Spot-On Energy – a Norwegian vehicle with ties to a number of service providers including Schlumberger, Maersk Drilling, and others – previously agreed to team-up with Providence to advance Barryroe towards production, but today the Irish company confirmed that conditions to close the deal had not been met.

It is the latest Barryroe farm-out deal to fall by the wayside.

In London, Providence shares fell 12.33% in Thursday’s early deals to change hands at 3.2p.

The oil field project, off Ireland’s south coast, has been drawn up for several years but an additional phase of appraisal work is needed before it can be greenlit for development.

Estimates for the project envisage Barryroe is worth US$560mln (net present value) to Providence based on the recovery of some 48mln barrels of crude and assuming an oil price of around US$60 per barrel. For context, though, the 48mln barrels represents only 16% of the whole Barryroe oil resource.

Providence said today it would now lead the project development and funding arrangements.

The company said it intends to build upon many positive elements in SpotOn’s project development and financing model, and it will take a similar approach – including payment deferrals by individual service providers on equivalent or better terms and a Nordic bond issue.

It described its work to achieve a funding solution as “well advanced” and told investors that it expects to conclude the financing by the third quarter, allowing a drill programme in 2022.

“We are looking forward and actively building a revised development partnership with key service providers and a financing package designed to meet the needs of the project,” said Alan Linn, chief executive.

“We have been encouraged by the support we are receiving from service providers and banks and the commitments being offered to work with us in progressing the project. We are currently working with key service providers to structure direct long-term partner ships on a risk / reward basis and we are also in discussions with brokers to raise a Nordic bond.”

Pageant Holdings, a substantial shareholder in Providence, has in the meantime offered to underwrite a US$2.5mln share placing, priced at 3p per share, along with an issue of share warrants that could potentially raise a further US$2.5mln.

Linn described the interim funding as “very welcome” and noted that it confirms the continuing support for the project.

“The Barryroe early development scheme is an attractive investment which offers excellent returns, even in a low oil price environment,” Linn added.

“We look forward to completing the funding process and appreciate the support and patience of shareholders.

“The early development scheme will be of considerable benefit to the local economy and contribute to Ireland’s energy security as we move towards a low carbon economy.”



Read More: Providence Resources PLC ends farm-out for Barryroe project

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