Providence boss O'Reilly says oil price slump hits investment
O'Reilly backed explorer "working very hard" to bring in new partner
The plummeting price of oil has had a dramatic impact on investment in oil and gas exploration, Providence Resources chief executive Tony O'Reilly has admitted, as the search for a deep pocketed backer for his oil company's most promising asset drags on.
"Short term machinations have drastically impacted investment" he said, describing the price decline as a "short term decimation", an "outstanding drop".
The cost of brent crude oil has fallen 60pc since June as Saudi Arabia flooded the market.
The resulting slump in oil prices has delayed Providence in finding a partner to develop its most promising Irish oil field, Barryroe, sources said.
Providence repeatedly told shareholders over the past twelve months that it was nearing a deal, but none has materialised.
Speaking to industry peers at a Society of Peteroleum Engineers event, Mr O'Reilly reiterated that a deal is coming.
"We are currently in discussion to bring in an industry partner. We are working very hard… watch this space."
The company will also seek a partner later this year to help commercialise its Newgrange license off the south west coast, he said. "Newgrange will be the subject of farm-out talks later in 2015".
Providence is concerned about oil and gas prices in 2017 and 2018 rather than today's prices, he said, because that is when it expects to selling hydrocarbons.
Falling prices have a "silver lining", he added, because they also bring down costs.
"This is the time to invest", Mr O'Reilly said. "Oil prices more than halved in 2008 in less than six months... and the market righted itself again in 2009."
"The oil market is cyclical."
Mr O'Reilly noted the Ireland's track record for oil and gas is poor. "It would be fair to say that Ireland hasn't had much success yet"
Meanwhile, Cathal Friel's Fastnet Oil and Gas also confirmed that it has stalled some previous plans and begun cost-cutting after massive falls in the price of oil and gas.
Fastnet's chief financial officer Will Holland left the company last week. The listed group recently took on a new chief executive, Houston-based Carol Law.
In Dublin during the week, Ms Law said Fastnet was "belt-tightening" to allow it to look at opportunistic mergers and acquisitions in the summer and to do more in the Celtic Sea.
Finding partners to develop oil and gas fields - known as "farm-out" deals - has become difficult, she said. Fastnet has been seeking farm-in partners for the Tendrara Lakbir field inMorocco since the middle of 2014.
"Big companies are waiting to see clarity before they farm in. The bottom may be three or six months ago, it is hard to tell" Ms Law said.
"The main consequence for everyone [as a result of the price decline] has been general belt-tightening. But we don't panic... we have been through this before. People don't stop working because the price of oil falls".
Sunday Indo Business