Providence Re­sources is turn­ing the drill bit

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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.

BARRYROE

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).

DIABLO

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.

NEWGRANGE

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.

DUNQUIN SOUTH

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.

AVALON

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.

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