"This is one of the most important stories of it's kind in Europe."
Drilling began last month on the Barryroe licence - the first well of a multi-year, multi-well offshore drilling campaign offshore Ireland. Providence and partners plan to invest upwards of $500 million.
In a recent trading statement the firm's chief executive, Tony O'Reilly, said: "The significance of the appraisal drilling at Barryroe should not be underestimated and the successful demonstration of a commercial flow rate should not only unlock the substantial value of this particular asset, but should also trigger a complete industry re-appraisal of the Irish offshore.”
Q: The autumn months were spent preparing to drill Barryroe. Drilling is now underway. When will it be complete and when should we expect the results?
Providence: Drilling will continue through the Christmas period into the first few weeks of the New Year and we’d expect to get the results during this period.
Q: Please remind us again just what sort of flow rate would render Barryroe economic?
Providence: 1,800 barrels of oil a day or better.
Q: How does a successful drill result affect the economics of the company?
Providence: The RPS assessment (using $85/oil) generated a P50 NPV10 value of $808 million; the P10 NPV10 value is $2.7 billion With 80 per cent equity in the Barryroe field, it would obviously represent a major step change in value for the company.
Q: What happens after this first well is drilled? How quickly might Barryroe come into production?
Providence: We’ll then assess the results and integrate the new data with all the previous wells and the new 3D seismic data. Whilst no firm timeline exists yet, we are anxious to progress the project as quickly as possible and previously, we talked about late 2014 for start up of production. We’ll obviously talk to our partner Lansdowne and who knows, perhaps other players?
Q: Of course this is only the start of what is a high impact exploration and development programme. What can we expect from Providence in 2012?
Providence: More drilling of wells offshore Ireland. We have already made firm well commitments on four other projects/prospects in different basins, which will be drilled in 2012 and 2013. These include two very large exploration prospects at Dalkey Island (Kish Bank) and Dunquin (Porcupine Basin) and two appraisal/development projects at Dragon (St George’s Channel Basin) and Spanish Point (Porcupine Basin). In addition, there are a number of other new prospects and projects worthy of drilling in various basins around Ireland and we’ll spend 2012 advancing these. I’d also expect us to continue to bring new partners into our programme.
Q: What do you hope and expect to have achieved a year from now? What is your definition of success?
Providence: Successful flow tests from Barryroe allowing us to move forward with project sanction, continuation of drilling of other projects/prospects offshore Ireland and increased production form our UK onshore producing field, Singleton.
Ultimately, we want our success offshore Ireland to make it the new “hot exploration area” for the world wide industry, thereby enticing new entrants to Ireland to invest in the region. As the largest acreage holder with so many opportunities, we’ll hopefully be talking to a lot of new entrants.