Providence aims to complete Spanish Point farm out in 2016
Irish exploration firm Providence Resources is aiming to offload 32pc of its stake in its promising Spanish Point licence inside the first half of next year.
The company formally announced yesterday that it is farming out 32pc of its 58pc stake in the project.
It also announced that drilling, which it was hoped would take place this year, has been pushed back until 2017.
Spanish Point is located off the west coast of the country in the Atlantic Margin, which recently saw record interest in the latest exploration licensing round. Preliminary analysis has indicated that there could be a recoverable resource of up to 337m barrels of oil equivalent at Spanish Point.
Capricorn Ireland Ltd, a wholly owned subsidiary of Scottish-based Cairn Energy, operates the licence and has a 38pc share in the well.
Spanish Point is regarded as one of Providence's most promising prospects, second only to the Barryroe oil field. Providence increased its stake from 32pc to 58pc in February by acquiring the Irish arm of UK-based explorer Chrysaor.
Drilling had been scheduled on the license in 2014 but has been delayed several times.
Speaking after the company's set of annual results in June chief executive Tony O'Reilly Jr said Providence still hoped to drill at Spanish Point during 2016. However, the company confirmed yesterday that drilling will not take place until 2017. Speaking to the Irish Independent, Mr O'Reilly said that he expects the farm out process will be completed within the first six months of 2016.
"It will take several months, we would be hoping to have it done in the first half of 2016, that then gives us time to gear up for drilling in 2017," he said. "Our plan is to be drilling on other projects in 2016 such as Barryroe."
When asked why drilling had been delayed, he said: "It is what the operator has decided after they appraised their commitments, [but] drilling and capital costs have gone way down, some rig costs are a third of what they were two years ago. The resource will stay at the same size, but if the costs can halve, why not wait?"
Shares in Providence fell 13pc to 20.5 pence at in mid-afternoon trading in London yesterday.
Davy analyst Job Langbroek said that the in drilling to 2017 "may disappoint", but added: "The well will benefit from the very large reductions in offshore operating costs that are increasingly available."