Providence shares soar on news of oil find off south coast
SHARES in Providence Resources soared yesterday after the company reported that it has found crude oil at what could be a large oil reservoir off the south coast of Ireland.
"We've delivered on what we said," Providence chief executive Tony O'Reilly said yesterday. "The markets are reacting."
The shares rose as much as 25pc in Dublin after Providence said it had found light crude oil in a large sandstone reservoir about 7,550ft under the sea off the south coast. Providence found the crude oil while drilling an appraisal well -- its fifth in the area.
All the wells have shown evidence of oil, which suggests the field could be larger than previously hoped. Oil samples from the reservoir have now been sent for testing in a UK laboratory.
"This is uniformly good news for Providence shareholders," said Joe Langebroek, of Davy Stockbrokers. "The next step is the flow test but so far so good."
Providence, which owns 80pc of the Barryroe oil field, expects to conduct a flow test in few days' time. That test will give a good indication of whether the find is commercial and the results could be made public in early March.
Analysts said the well must produce about 1,800 barrels of oil or gas equivalent every day to make commercial sense. Any oil could eventually be transported by pipe to the Whitegate refinery in Cork.
Providence is engaged in the biggest drilling programme in Irish history as it looks for oil and gas off the Irish coast. Barryroe was one of the first areas to be drilled because it has proven reserves. Providence hopes new drilling techniques and better computer imaging mean that it will be possible to find commercial oil.
"The market is moving to us," Mr O'Reilly said. "Prices and technology are helping."
Technical director John O'Sullivan said Providence could now look forward to materially progressing the project.
"These sands, which appear to have an intact overlying pressure seal, sit directly on proven, mature and oil-prone source rock and therefore open the route to significant resource volumes within the Barryroe licence area," he said.
Providence holds an 80pc interest in the licence and operates it on behalf of its partners, San Leon Energy and Lansdowne Oil and Gas. The shares closed up 77c, or 22pc, at €4.20 in Dublin yesterday.