Can Larry Goodman, the 85-year-old beef billionaire, avoid becoming another footnote in the continuing saga of Barryroe?
In early 2012, then named Providence Resources, it sparked “black gold” headlines with the discovery of the first commercially viable oil find in Irish waters since offshore drilling began in the early 1970s.
The Barryroe field, in which the company has an 80 per cent stake, some 50km off the coast of Cork, was found at the time to contain high-quality light crude. Its then chief executive, Tony O’Reilly jnr, predicted it would lure international oil giants back to Irish waters.
“It’s just like winning the lottery: you’ve got to buy tickets,” he said that March.
Investors’ appetites suitably whetted, Providence would raise €79 million a month later in a share sale priced, unusually, at a premium to the going rate for its stock in the open market at the time.
All told, the company – which traces its roots back to 1981, when O’Reilly jnr’s father, Sir Anthony O’Reilly, and a group of investors set up Atlantic Resources – has raised more than €270 million in equity over the past dozen years.
A decade on from the oil find, not a drop has been pumped from Barryroe – the only commercial oil and gas prospect to come from 160 wells drilled in Irish waters over the past 52 years
That included an emergency $70 million fundraise in 2016 – backed by the likes of M&G, Capital Group, Henderson Group and Irish businessman Nick Furlong’s Pageant Holdings – where Providence dangled even brighter baubles before investors in the form of its Druid and Drombeg prospects.
These two fields out in the Atlantic were pitched at the time to potentially hold more than five billion barrels of oil – some 14 times the estimated 350 million barrels of recoverable oil at Barryroe. Subsequent drilling at Druid and Drombeg in 2017 revealed little more than water in the reservoirs.
Since then, all bets have been placed on one horse – underscored by the company’s name change in September to Barryroe Offshore Energy.
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But a decade on from the oil find, not a drop has been pumped from Barryroe – the only commercial oil and gas prospect to come from 160 wells drilled in Irish waters over the past 52 years. (There have been four gas discoveries in that time – Kinsale, Ballycotton and Seven Heads off the coast of Cork, and the Corrib field off Mayo.)
The intervening 10 years have seen three planned partnership deals to develop the project fall through, the company succumb to a series of leadership changes after O’Reilly jnr quit three years ago, the Government move last year to ban new applications for exploration licences in response to climate change concerns and, more recently, a reluctance by Minister for the Environment, Climate and Communications Eamon Ryan to grant a key permit to progress work on the existing Barryroe licence.
"We have a fundamental misunderstanding of our housing need."
A year and a half after Barryroe applied for the permit – or lease undertaking – to allow it to drill an appraisal well, Ryan’s department finally got back at the end of October to say the company had not proven it had the financial ability to do the work. Barryroe was down to €2.2 million of cash as of June.
The ball was thrown back to Ryan this week, with Goodman’s Vevan Unlimited vehicle – which had built up a stake of more than 16 per cent in Barryroe in the 15 months to June – stepping forward with a €40 million lifeline.
The backstop, which would cover all the estimated costs around drilling the appraisal well, is not cheap. Funds drawn down will carry a 10 per cent interest rate and will be convertible into shares in Barryroe when the debt matures at the end of 2024.
If the entire facility is used up, Goodman stands to end up owning more than 75 per cent of Barryroe, according to Irish Times calculations. That’s even before warrants entitling the billionaire to buy more shares come into play.
While the energy crisis resulting from Russia’s invasion of Ukraine will hopefully speed up the shift to renewables, it has also driven home how reliant we will remain on fossil fuels for a long time
There is a view, however, that some of the investors who have stuck with Barryroe over the years may come up with fresh funds that would limit the reliance on Vevan. The company had a market value of €36.7 million as of the close of trading on Friday.
While the focus to date has been on Barryroe’s oil, its gas reserves may prove more important.
It shouldn’t need to be said that the days when hydrocarbons are no longer keeping the global economy going can’t come quickly enough for anyone interested in the future of the planet. Depressingly, however, even though more than $3 trillion (€2.9 trillion) has been invested globally in renewable energy over the past decade (according to Bloomberg), such has been the ongoing rise in demand for energy in that period that fossil fuel use has remained “stubbornly high, at around 80 per cent” of the global energy mix, the International Energy Agency (IEA) said in its latest energy outlook report, published last month.
Based on the actions that governments around the world are taking to reduce carbon emissions, fossil fuel reliance will only dip below 75 per cent by the end of this decade and remain above 60 per cent in 2050 – when most of the developed world is targeting net-zero emissions. Much more clearly needs to be done.
While the energy crisis resulting from Russia’s invasion of Ukraine will hopefully speed up the shift to renewables, it has also driven home how reliant we will remain on fossil fuels for a long time. As the fourth most energy-insecure country in Europe (according to the Economic and Social Research Institute), Ireland, currently importing all its oil and 70 per cent of its gas needs, should be looking at its own resources during the transition period.
A spokeswoman for the department declined to say whether the fresh Goodman cash will get the permit over the line. Ryan knows the tycoon has the cash to fund a legal challenge. Who knows, the Green Party leader might relish a court showdown with a billionaire over an oilfield.
It would be a cynical and short-sighted move.
