NO OIL RUSH AS DRILL TEAM FINDS ONLY WATER

SHARES in Irish oil exploration company Providence Resources took a beating on the stock markets following news that its search for oil off the Kerry coast had come up dry.

Last July Providence Resources commenced exploratory drilling at the Drombeg Well in the Porcupine Basin about 220 kilometres off the coast of Kerry.

Providence had hoped the well contained some 1.9 billion barrels of oil but after two months drilling – at a cost of around €162,000 a day – the crew of the StenaIceMAC drilling ship found no oil and just a buried reservoir full of water.

The company – which is led by Tony O’Reilly Jnr and based in Dublin – said the well is now being plugged and abandoned.

In a statement to investors issued on Monday Providence said the crew of the StenaIceMAX had drilled down 5,281 metres to reach the well which is located in the deepest water of an exploration ever drilled off the Irish coast.

The exploration did find traces of bitumen suggesting the presence of oil in the well previously but it appears that it had long since leaked from the huge buried cavity.

Providence CEO Tony O’Reilly Jnr said the results of the Drombeg exploration were disappointing.

“The well results at the Drombeg level are disappointing and we will now assess these well data in order to understand what implications they have for prospectivity within the licence,” he said.

Mr O’Reilly added that thanks to the firm’s pre-drill deals with energy companies Cairn and Total – for options on approximately 70 per cent of any oil found – Providence’s financial exposure to the Drombeg well had been significantly reduced.

News that the exploration off Kerry had failed saw shares in Providence tumble on both the Stock Markets in London and Dublin where shares plummeted by around 35 per cent during early trading on Monday.

The shares did recover slightly finishing down 16 per cent in Dublin and down 29 per cent in London at the close of trading on Monday evening.

Based on the projected daily cost of the twomonth drilling operation the failed search for oil in the Drombeg Well has cost its backers over €10 million.

News that the well contains no oil will also come as a blow to Fenit and Dingle both of which had been identified as potential service harbours for Providence’s operations if oil had been found in the Porcupine Basin prospects.

Last month Providence said that its exploration of the Druid prospect, near the Drombeg Well, had also proven unsuccessful.