Providence seeking €50m for drilling

OIL AND gas exploration group Providence plans to raise almost €50 million to fund a drilling programme around Ireland and Britain, where it has a series of proven and potential discoveries.

The Dublin- and London-listed company has a number of licences around the Irish coast and in the Irish Sea, including a potential oil find off Dalkey Island to the immediate south of Dublin.

Providence said yesterday it had agreed the terms of a placing of 16.1 million new shares at €3.03 each to raise over €48 million.

The offer was subsequently oversubscribed, and the shares closed in Dublin at €3.07, a 1.3 per cent premium on the placement price and nearly 10 per cent higher than its opening quote of €2.80.

Providence intends to use the cash to pay for further drilling in existing and proven discoveries, mainly around the Irish coast, and to double production from its Singleton field in Britain to 1,500 barrels of oil a day.

Most of the drilling will be designed to appraise these discoveries to establish their commercial worth. Providence has a number of partners in each licence.

The total value of the drilling programme will be around €370 million. Providence said yesterday it was the largest such programme ever undertaken off the Irish coast.

The programme will take in Rathlin Island off the north coast and Dalkey in the Irish Sea, St George’s Channel and the Celtic Sea off the south coast, Drombeg and Dunquin off the southwest, and the Burren and Spanish Point, which are 80km south of the Corrib gas field off the west coast.

The resources include both oil and gas; around 70 per cent of the investment will be in drilling for oil with the balance devoted to natural gas.

Dalkey’s estimated reserves are 250 million barrels of oil. Providence has a 50 per cent interest in this and is the field’s operator.

Two prospects in the Celtic Sea, Barryroe and Hook Head, could hold 78 million barrels between them. The Spanish Point gas discovery, in which Providence has a 56 per cent holding, could have the equivalent of 200 million barrels of oil. Providence has 16 per cent of Dunquin, a gas discovery that could hold the equivalent of 1.7 billion barrels of oil.

Its chief executive, Tony O’Reilly, said yesterday the proceeds of the placing would allow the company to retain a meaningful interest in the assets involved and test the oil and gas potential off the Irish coast.

The placing is subject to shareholders’ agreement, which the company will seek at an egm on March 11th, and on the shares being admitted to trade on the Dublin and London markets.