Exploration boost as Exxon Mobil takes stake in prospect
US giant Exxon Mobil - a so-called 'supermajor' of the oil industry - has taken a 50pc stake in an Irish exploration prospect due to be drilled next year.
The move is a huge boost for the Irish exploration sector, as an entity with deep pockets commits to a drilling project that will boost the rest of the industry if the result is positive.
Providence Resources has exploration acreage adjacent to the block which is known as the Iolar prospect. The prospect is located off the south-west coast in an area known as the Porcupine Basin.
It is operated by Nexen - another large company owned by Chinese state company Cnooc.
The deal is structured as an equity swap. Exxon is taking 50pc of the prospect in return for giving Nexen 25pc in each of two other Irish prospects.
Nexen will continue to operate the project which is scheduled for drilling in the summer of 2019.
The drill will coincide roughly with Providence's plans to drill at Barryroe, after completing a deal with a Chinese consortium which will see as many as seven wells drilled at the prospect, located off the Cork coast.
Exxon - formerly run by ex-US secretary of state Rex Tillerson - teamed up with Providence a number of years ago to drill at an area known as Dunquin North, but no commercially viable oil or gas was recovered. Their decision to try again at Iolar will be seen as encouraging for the Irish exploration sector.
The oil price has risen from $45 a barrel in June 2017 to over $85 a barrel at recent highs. Oil markets look "adequately supplied for now" after a big production increase in the last six months, but the industry is coming under strain, the International Energy Agency said on Friday.
US sanctions on Iranian oil exports could reduce market supply - putting upward pressure on the oil price and encouraging more exploration activity.
Additional reporting Reuters