Oil explorers no longer welcome in Ireland says veteran Teeling
"Ireland is no longer welcoming" to oil exploration, according to industry veteran John Teeling.
Big companies' interest in investing in Irish oil exploration has waned, and the recent ban on onshore fracking, as well as attempts by the Green Party to ban new offshore exploration licences, were part of a toxic cocktail that put investors off, Mr Teeling warned in an update to investors in London-listed Petrel Resources.
Petrel's main focus in recent times has been exploration licences off the Irish coast, particularly the Porcupine Basin, where Providence Resources is also active.
In an update to shareholders yesterday, Mr Teeling said results from the Porcupine Basin had been "mixed" and said that despite extensive work by Petrel, the company had found no interest from likely partners in joint venturing two options it holds there.
It is working on a separate project with Australian business Woodside.
That's despite a recovery in global oil prices, that might have made the offshore prospects more enticing.
"Unfortunately there is growing political uncertainty in Ireland in relation to resources. Oil exploration dollars are nomadic. They will go where they are welcome. Ireland is no longer welcoming.
"A ban on onshore fracking and a bill to outlaw new offshore oil exploration licences currently in the Dáil sends out bad messages. Combine these with the increases in taxation and royalties introduced in 2015 and you have a toxic cocktail," Mr Teeling said.
Deep water exploration off the Irish coast is difficult and expensive, and the added political climate has made it harder for small explorers, like Petrel, to find partners for the expensive drilling work.
"Exploration in deep hostile expensive waters with unknown potential is high risk. Add political uncertainty to this and the inevitable consequence is reduced interest," Mr Teeling said.
Petrel, like other small listed explorers is oriented around the farm out market for early stage projects, whereby junior explorers do the initial work including licensing prospects and geological surveys, then bring in majors to do the drilling.
Mr Teeling is among the best-known figures in the industry here. He has established several companies in the oil, gas and resource sectors although is now best-known as the founder of Cooley Distillery which he started in 1987 and sold to Jim Beam in 2011 for over €70m.
He is also the chairman of listed companies Connemara Mining, Clontarf Energy, and Botswana Diamonds.
Petrel has interests in Ghana and Iraq, as well as Irish offshore prospects.
The results published yesterday showed a loss for the year of €4.4m, mostly reflecting a €4.1m impairment to an investment in Iraq, reflecting the uncertain political situation there, although the company has maintained its interests.
"It is very early days, but it does look as if Iraq is slowly reopening for business, and we want to be there," Mr Teeling said in the results notice.
Stripping out the Iraq impairment, the underlying loss for the year was roughly €300,000.
The company said it was time to reassess its strategy, saying it may look to take on new opportunities. It said it would continue to work with its partners in the Ghana interest and with Woodside in the Irish offshore prospects.