Providence boosted by 'high value' oil find
INVESTORS in Providence Resources received a boost yesterday after the company said the quality of the oil it found off the Cork coast in March had been confirmed by outside analysis, boosting confidence that the discovery will be commercially viable.
In a stock exchange announ- cement yesterday, the explorer said an independent report on a sample of the crude oil from Barryroe found the oil to be a premium light crude with a low sulphur and low metal content. Barryroe's oil had previously been thought to be quite waxy, making it expensive to transport but the company said its sample had been found to have a 17pc wax content -- lower than expected. Further testing will now be carried out on the site.
Company chief executive Tony O'Reilly said the results of the assessment "vindicated" his company's interest off Ireland.
"This vindicates our proposition that high-value crudes exist in the shallow waters off the south coast of Ireland.
"Our well-testing results, and subsequent horizontal modelling, has demonstrated that these crudes can be produced at commercially attractive rates. Our post-well studies are continuing apace and we look forward to providing further updates over the coming months," he added.
Meanwhile, Dragon Oil is to buy back about $200m (€160m) of its shares, in a move that will be cheered by most investors.
In a statement, the company said it would purchase up to 5pc of the firm's issued share capital in a scheme that will run until the end of the year.
Dragon said the move was "in recognition of the group's strong financial position and significant cash generating abilities".
"The board believes that a share buyback programme offers an efficient route to return surplus cash resources to shareholders and will not impact upon the Group's ability to grow production."
Providence surged early on before closing down marginally at €6.65 in Dublin. Dragon Oil gained 7.92pc to close at €6.48.