Providence prepares for upcoming farm-down of Barryroe prospect
PROVIDENCE Resources expects to begin farming down part of its share in a potentially lucrative oil field off the Cork coast by the end of the year.
The company currently holds an 80pc share in the Barryroe discovery, about 50km off the south coast. However, it is expected to reduce its holding to near 40pc as part of a process that will see bigger players come in with the resources to put into developing the field and bring the oil there to market.
Oil was discovered at the site several years ago but had been deemed not worth developing at the time. In March, Providence discovered oil in much greater quantities -- and of a better quality -- than had been previously thought.
Speaking after the company's annual general meeting yesterday, chief executive Tony O'Reilly said the farm-out would be dependent on updated oil reserves that Providence expects to release in July.
"The farm-out is in its early days but we need to update the 'oil in place' numbers for the discovery first.
"We need to put out the updated information. The report in July will estimate how many barrels are there and people will take their own views on that.
"We also need to update all our data, and once we put out our revised oil in place reserves, it will be interesting to see what inquiries we get then."
An audit carried out in 2010 estimated Barryroe had between 59 million and 104 million barrels of oil that could be recovered, but the revised numbers are expected to be much higher than that.
Mr O'Reilly also dismissed concerns that a falling oil price could hurt the investment, saying as little as $50 a barrel would still sustain the business.
"The major producing economies are built on higher prices, so can accept a lower price, but others, like, say, Saudi Arabia, needs $75 a barrel. The average finding and development cost in Norway is $60 a barrel, and if it falls to that we still do well."
Providence closed yesterday up 3.18pc at €6.17.