Providence Resources is turning the drill bit
As one of the longest standing operators offshore Ireland, Providence Resource’s
(PVR:AIM) first mover advantage was instrumental in securing its significant portfolio.
Providence’s strategy of partnering with majors allows it to leverage significant industry co-investment, where, over the past 18-months, the company has completed four major farm-out transactions.
Providence’s present and past partners include Total, ENI, Repsol, Cairn Energy (CNE),
APEC, ExxonMobil, Petronas, Chrysaor, Lansdowne Oil & Gas(LOGP:AIM) & Sosina.
Following the 2018 farm-out to APEC, Providence holds a 40% interest in the Barryroe oil project, which is located in SEL 1/11 (North Celtic Sea Basin). With 2C (contingent) audited resources of 346 million barrels of oil equivalent recoverable, Barryroe is one of the largest undeveloped fields in north-west Europe and is now the subject of a multi-well appraisal programme in 2019, comprising four vertical wells and one horizontal well, plus two optional horizontal wells.
This programme is fully funded by APEC, who pay its participating 50% share and finance Providence’s 40% interest through a nonrecourse loan repayable from future Barryroe production cashflow.
The drilling programme is designed to fully appraise Barryroe by gathering new dynamic data across the field to assist with the progression of any future Field Development Plan. A secondary objective involves deepening three of the four vertical wells to allow for the assessment of the exploration potential of other reservoir intervals (around 750 million barrels of stock tank oil-initially-in-place).
Providence holds a 28% interest in the Diablo exploration prospect, which is located in FEL 2/14 (southern Porcupine Basin) and is operated by Total, following a 2017 farm-out 2017. Diablo is a large structure which lies beneath Druid & Drombeg, which were drilled in 2017 but which were not commercial.
Diablo is of key interest as it is more proximate to the interpreted source rocks in the basin and is a similar play to the large proven oil accumulations in the Flemish Pass Basin, offshore Eastern Canada. In 2019, CNOOCNexen and ExxonMobil will drill a similar structure (Iolar) in the adjacent licence, that will have read through implications for Diablo.
Providence holds an 80% interest in the Newgrange exploration prospect, which is located in FEL 6/14 (Goban Spur Basin). Newgrange is a large four-way dip-closed Cretaceous carbonate structure covering an area equivalent to four North Sea blocks and hosting significant resource potential.
Having acquired a site survey in 2017 to get it ‘drill ready‘ should a rig of convenience appear, Newgrange is now the subject of a farm-out process for drilling.
Providence holds a 26.8% interest in the Dunquin South exploration prospect, which is located in FEL 3/04 (southern Porcupine Basin). Originally licenced by Providence in 2004, ExxonMobil farmed into the licence in 2006 and operated the Dunquin North well (2013). That well, the first well to be drilled in the southern Porcupine Basin, encountered a large, low saturation residual oil accumulation which had breached, but did prove an oilprone system in the Basin.
In 2017, under the Operatorship of ENI, the Dunquin JV licenced 3D seismic data to try to differentiate between the 2 identified carbonate buildups – the ‘breached’ Dunquin North structure and undrilled Dunquin South prospect.
This 3D data shows the faulted nature of Dunquin North and a major fluid escape feature but notably, it does not appear to show escape features over Dunquin South, nor any significant faulting. As such, Dunquin South has now been high graded for future drilling.
Providence holds a 40% interest in the Avalon exploration prospect, which is located in LO 16/27 (southern Porcupine Basin). Licenced originally by Providence in 2016, Total farmed into the licence in 2017 and assumed the role of Operator. Under the terms of the farm-out with Total, Providence gets a 1.2 to one carry up to a well cap ($42m) if a well is drilled.
Avalon is a similar play-type to Druid, but it has a more robust structural closure in the proximal sediment transport direction and it lies close to the Dunquin North breached oil accumulation and so it may have accessed some of the oil which escaped from that trap.
TURNING THE DRILL BIT
Providence’s strategy has been to assemble a portfolio of large, world-class, multibillion barrel potential resource opportunities, leverage in significant industry coinvestment and then be in a position to turn the drill bit – thereby giving its shareholders access to multiple opportunities for significant value creation.
With the implementation of this strategy, Providence represents a truly unique opportunity to be involved in multiple large drilling opportunities offshore Ireland over the next few years.