Providence forges partnership to develop two promising oilfields
Providence Resources, the company spearheading a €500m exploration programme in Irish waters, has forged a new partnership to help develop two dormant but promising oilfields off the coast of Ireland.
The agreement, known in the industry as a "farm-in", will see UK joint venture ABT use its unmanned mining technology to further investigate oil discoveries at two locations, Helvick and Dunmore.
Providence currently holds a 72.5pc stake in Dunmore and a 62.5pc stake in Helvick, in which Providence partner Lansdowne Oil and Gas also has 10pc interest.
Helvick is located 36km off the south coast of Ireland while Dunmore is located 20km off Hook Head in Co Wexford.
Both fields were discovered during the 1980s. The two sites house reasonably substantial oil flows but were previously deemed to be non-commercial, based on drilling methods and oil prices at that time.
Calling the deal "sensible", Davy analysts said there was little to lose by allowing another party to re-examine the options in light of new technological advancements.
"All the more so as no cost is being incurred by Providence," the stockbroking firm pointed out.
The value of the new deal has not been announced, but it allows ABT, which is backed by UK mining company Enegi Oil, to gradually increase its equity stake in the oilfields. In exchange it will fund a work plan broken down into three stages.