Skip to main content

Providence Resources: Preliminary results for the year ended 31 December 2011



  • Memorandum of Agreement with Shell to negotiate an oil off take sale and purchase agreement in relation to future potential oil production in the Celtic Sea Basin.
  • Announced upgraded resource potential to 300 BCF.
  • Well commitment made on FEL 2/04 by partners.
  • Partners made exploration well commitment to Irish Government

Providence Resources P.l.c., the Irish oil and gas exploration and production company, whose shares are quoted in London (AIM) and Dublin (ESM), announces Preliminary Results for the year ended 31st December 2011



Commencement of $500m, multi-well drilling programme (from 2011 through 2013) covering both appraisal and exploration projects in six geological basins offshore Ireland. This is the largest, multi-basin, offshore drilling programme in the history of Ireland. It represents an investment of up to $500 million by Providence and its partners

Drilling activities commenced in November 2011 with the successful drilling on the Barryroe oil discovery, which has delivered the first indicative commercial flow rate of oil, far above pre-drill expectations. As part of the testing programme, a gas interval was also tested

Further new drilling activities are ongoing at Singleton, onshore UK

A summary of the scheduled drilling programme offshore Ireland and onshore UK is as follows:



Celtic Sea Barryroe Appraisal Completed
Kish Bank Dalkey Island Exploration Q4 2012
St George's Channel Dragon Appraisal Q4 2012/ Q1 2013
South Porcupine Dunquin Exploration Q2 2013
Main Porcupine Spanish Point Appraisal Q2/Q3 2013
Rathlin Rathlin Exploration Q4 2013
Weald Singleton Production Ongoing

*Operator estimates based on relevant permit requirements and equipment availability/procurement.


Barryroe Oil Discovery

  • Memorandum of Agreement with Shell to negotiate an oil off take sale and purchase agreement in relation to future potential oil production in the Celtic Sea Basin
  • 3D seismic survey successfully acquired and interpreted over the Barryroe oil discovery (240 sq km)
  • SEL 1/11 granted over an increased Barryroe area
  • Commenced drilling of Barryroe appraisal well
  • Increased equity in SEL 2/11 to 80% (from 50%)
  • Post Year end - Flow testing results from Barryroe of 3,514 BOPD + 2.93 MMSCFGD (4,000 BOEPD) from main basal sandstone package. 7 MMSCFGD and 1,350 BOPD (c 2,516 BOEPD) was also flow tested (comingled test) in restricted conditions from an upper mainly gas bearing section
  • Ongoing: Post well analysis and data assimilation, including seismic inversion, revised mapping and updating of in place resource figures and recoverable reserves

Dragon Gas Discovery

  • Announced upgraded resource potential to 300 BCF
  • Launched farm out campaign
  • Post Year end - Out of Round award by UK DECC of exploration licence over UK side of Dragon
  • Ongoing: Plans being finalised for an appraisal well to be drilled in late 2012

Spanish Point Gas Condensate Discovery

  • Well commitment made on FEL 2/04 by partners
  • Chrysaor exercised option to increase its stake to 60.0% in FEL 2/04, with Providence and Sosina retaining 32.0% and 8.0%, respectively
  • 3D seismic survey successfully acquired over adjacent licence FEL 4/08
  • CPR (Competent Persons Report) issued on resource potential of FEL 2/04 and FEL 4/08
  • Ongoing: Plans being finalised for an appraisal well to be drilled in summer 2013


Dalkey Island Oil Prospect

  • Partners made exploration well commitment to Irish Government
  • Geochemical study indicated presence of highly mature oil prone source rock
  • Awarded Standard Exploration Licence 2/11
  • Post year end: Foreshore licence application underway for planned late 2012 exploration drilling

ULYSSES gas storage

  • AMEC Study confirms ULYSSES gas storage concept is economically and technically feasible

Dunquin Oil/Gas Prospect

  • Farm-in by Repsol to licence (FEL 3/04) leading to revised equity percentages of ExxonMobil (27.5%), ENI (27.5%), Repsol (25.0%), Providence (16.0%) and Sosina (4.0%)

Post year end: Drilling preparations ongoing with exploration drilling scheduled for Q2 2013

Rathlin Oil Prospects

  • Awarded 6 offshore blocks in Rathlin Basin under UK Seaward 26th Round
  • Ongoing: Plans being finalised for an exploration well to be drilled in Q4 2013


  • Awarded 4 new offshore Licensing Options in Atlantic Margin area:
  • LO 11/11 - Newgrange (partners: Repsol (40.0%) and Sosina (20.0%))
  • LO 11/9 - Drombeg - (partner: Sosina (20.0%))
  • LO 11/12 - Kylemore/Shannon (partner: First Oil Expro (33.3%))
  • LO 11/2 - Spanish Point South (partners: Chrysaor (58.0%) and Sosina (10.0%))
  • Post year end: Repsol assumed Operatorship of Newgrange (LO11/11)
  • Post year end: Identification of further gas potential in the Slyne Basin (LO 11/12)


Singleton Oil Field, Onshore UK

  • Produced levels increased to 196,661 BO (2010: 185,151 BO); production levels would have been higher but for interruptions due to the drilling of the two new wells (X-11 and X-8v) in Q1 and the commencement of drilling operations on the X-12 well in Q4
  • The latest view of the X-12 programme indicates the completion of drilling activities in late June 2012, with commissioning happening immediately thereafter. The X-12 well represents the longest well drilled at Singleton (circa 16,000 feet) and as a multi-lateral well, it should increase reservoir exposure at the field by some 50%
  • Current production has been running at 750 BOEPD, with production levels being interrupted by the ongoing drilling operations on the X-12 well. Normalised production rates are 900 BOEPD
  • Target for increased production to 1,500 BOEPD attainable within the next year through various initiatives, including planned production from the X-12 well, other well stimulations and the installation of generators to monetise flared gas
  • Chris Beard appointed to head up PR Singleton Limited, which oversees the Company's UK operations



  • Successful Placing of 16.1 million new ordinary shares in March 2011 at £2.55 per share, raised gross proceeds of £41.0 million (c. US$ 65.7 million)
  • Post year end: Successful Placing of 13.1 million new ordinary shares in April 2012 at £4.80 per share, at a 5% premium to the then existing share price, raised gross proceeds of £63.1 million (c. US$ 100.0 million)


  • Receipt of US$ 15 million proceeds from sale of Gulf of Mexico portfolio with the proceeds being used to retire debt


  • Sold Nigerian subsidiary, which held its interest in OML 113, for a total consideration of US$ 16.0 million, with US$ 10 million received at the end of December 2011 and the balance of US$ 6 million received in April 2012. The proceeds were used to partially re-pay the €42 million Convertible Bond


  • 62.4% of bonds accepted early repayment offer resulting in a reduction of the bond amount by €18.5 million in addition to the saving on bond interest up to the date of redemption. The remaining balance of €11.1 million will be redeemed on July 29th, 2012. This early tender resulted in interest savings of approximately €0.760 million


  • US$ 60 million pre-paid oil swap transaction agreed with Deutsche Bank AG in July 2011 with the proceeds being used to repay the BNP Paribas reserve based lending facility and to fund the ongoing development plan at Singleton


  • Revenue from continuing operations of €13.752 million (2010: €11.080 million)
  • Operating profit of €0.031 million (2010: €1.466 million) reflected large impairment charge of €6.635 million (2010: €1.263 million) relating to once off impairment charge of €4.9 million related to unfinished drilling at Singleton (X-8v well) and write downs in the Celtic Sea of €1.73 million
  • Loss before tax and discontinued operations of €5.213 million (2010: loss of €5.965 million)
  • Loss for the period of €13.940 million (2010: loss €41.601 million)
  • 20.78 cent loss per share for continuing operations (2010: loss 29.54 cent)
  • Cash and cash equivalents at December 31st of €36.054 million (of which €17.491 million was restricted cash)


  • As a result of the post year end events (proceeds from the sale of AJE, the April 2012 share placing and the part prepayment of the bond), the Company has presented an additional unaudited pro forma Consolidated Statement of Financial Position reflecting these transactions.
  • As a result, the Pro forma Cash and Debt would be €70.659 million and €46.516 million, respectively

Commenting on today's results, Tony O'Reilly, Chief Executive of Providence, said:

"2011 has undoubtedly been the most important year in our Group's history. It saw us commence our multi-basin, multi-year drilling campaign in Ireland - the biggest in the country's history - and we were particularly delighted that Barryroe, the first well of the campaign, came in far above all the pre-drill expectations in March 2012. This not only demonstrated the significant scale of the Barryroe oil field, but it has also opened up many other opportunities in the Celtic Sea and has helped to redefine the industry view on the Irish offshore and its potential. The successful flow of high quality light sweet crude at indicative commercial rates at Barryroe has enabled the Company to take a giant leap forward in advancing its plans to commercialise Ireland's first oil field.

"However, with its extensive portfolio, there has been more to the past year than just Barryroe. The Company made great strides across all of its operations, from the quality of its portfolio to the strength of its balance sheet. During the year, we streamlined our operations by divesting our assets in the Gulf of Mexico as well as in Nigeria. This allowed us to reduce debt levels by over $30 million. Furthermore, a proportion of the recent equity proceeds will be used to retire the remaining portion of the convertible bond, with a result that debt levels will have decreased by some $75 million in just 18 months.

"The Company has also remained focused on pushing recovery and production rates at the Singleton oil field, onshore UK. The year saw the successful completion of the X-11 well and the commencement of drilling of the X-12 well, where operations continue. And we were particularly pleased that Chris Beard joined us from Wytch Farm to head up our UK operations.

"We now have the leading acreage position offshore Ireland with 4 new licence authorisations being awarded off the west coast of Ireland, as well as new acreage being awarded by the UK government in the Rathlin Basin and the St. George's Channel Basin, which hosts the Dragon gas discovery. The Company also welcomed major new partners Repsol and First Oil Expro. They join our existing group of co-venturers offshore Ireland, including ExxonMobil, ENI, Petronas, Nautical, Sosina, Lansdowne and Atlantic Petroleum.

"The focus for 2012 and beyond is to continue to turn the drill bit on our extensive portfolio of production, appraisal and exploration assets in Ireland and the United Kingdom. The aim is to advance proven discoveries to project sanction whilst proving up new exploration opportunities - both in terms of individual assets and entire new basins. As our recent success at Barryroe demonstrates, advances in technology, infrastructure and commodity pricing have combined to present a truly unique opportunity to test the commercial potential of a number of these Irish assets. Simultaneously, the field re-development programme at Singleton, onshore UK, allows the Company to continue to access higher production rates and larger reserves.

"In summary, Providence has a very clear strategy, with the necessary financial resources, to play a significant and defining role in developing the Irish offshore".

Posted Date: 
14 May 2012