Boost for Providence as oil production estimate rises
SHARES in Providence Resources jumped yesterday after the company said a study found that it could extract far more oil from a field off Cork than had been previously believed.
The company said a technical analysis of the Barryroe oil field showed that up to 280 million barrels of oil could be taken from the field. This is far more than had been expected.
Providence, which has been looking for oil around Ireland for decades, said last March that the Barryroe Field in the Celtic Sea near Kinsale could contain more than 1 billion barrels of oil.
A previous report on how much of that is "recoverable" said about 16pc of them could be taken with relative ease.
Now a study by RPS Energy that modelled the recovery factor at Barryroe has indicated that somewhere between 17pc and 43pc of the reserves in place could be recovered. That would equate to around 280 million barrels.
Overall, the recovery factor is estimated at around 31pc. In the North Sea, around 38pc of reserves are taken out.
Providence controls some 80pc of the Barryroe Field, with the balance owned by Lansdowne Oil and Gas.
Company chief executive Tony O'Reilly said news of the recovery factor was a "big moment" in oil and gas in Ireland.
"What this heralds is the beginning of an oil industry here. Among the other factors that make this good news for Ireland is that it will provide security of supply and jobs.
"It should also herald a renaissance of interest in Irish exploring and will encourage companies to look here," he added.
Analysts welcomed the results.
Davy stockbrokers' Job Langbroek said the study "publicly confirmed" that Barryroe offered "significant economic value".
"The announcement is in part a watershed and moves the thinking away from the relatively small-scale development options being considered in earlier reports.
"We feel it is still quite early in the process though. In fact, the type of development is not so much the issue; rather, it is that an economic quantity of oil exits in a secure north European context, close to markets and in relatively shallow water," he said.
Dolmen Stockbrokers took a similar view, claiming the quantification of such a recoverable level in the first of four reservoirs is positive for Providence as it looks to progress from discovery to production.
Providence climbed as much as 4.5pc in Dublin before falling back to end the day at €8.75, a gain of 2.94pc.