Providence shares soar after Nemo deal
Published 29/09/2010 | 05:00
Shares in Providence Resources, the oil and gas explorer, soared yesterday after the company said it has agreed a deal to farm out part of an oil discovery off the Irish coast.
Providence was trading at €2.10, up 7.69pc, after the company said it would farm out a 65pc equity interest in the Nemo heavy oil discovery to Britain's Nautical Petroleum.
The discovery was made in the North Celtic Sea Basin, about 60km off the south coast of Ireland. It is believed to hold about 230 million barrels of oil.
In return for an initial 25pc stake, Nautical will fund and carry out a focused work programme on the development feasibility of the Nemo discovery.
Nautical has an option to increase its stake up to 65pc and assume operatorship should it elect to drill an appraisal well on Nemo before the end of next year.
Providence currently holds a 72.5pc interest in Nemo, with Atlantic Petroleum and Sosina Exploration holding the balance. The transaction is subject to governmental approval.
In April, Nautical farmed into the Baltimore heavy oil discovery in the Celtic Sea, where a development feasibility study is ongoing.
Last week, Providence and Nautical announced the discovery of a new "significant" gas prospect in the area, and have since been granted an extension in the license option area by Communications, Energy and Natural Resources Minister Eamon Ryan.
Providence chief executive Tony O'Reilly said: "We are very pleased to be collaborating with a company like Nautical that has significant heavy oil expertise that will help unlock the potential of the Nemo discovery and other heavy oil discoveries in the Celtic Sea."