Providence to begin testing oil flow in Celtic Sea finds

OIL AND gas exploration group Providence will begin oil flow testing on its discoveries in the Celtic Sea this summer, its chief executive, Tony O’Reilly jnr told shareholders yesterday.

Around 99 per cent of shareholders at the company’s extraordinary general meeting in Dublin yesterday voted to approve a rights issue which will raise £40 million sterling for Providence.

The money will be used to pay for various exploration and testing operations around the Irish coast through this year and next and to restructure some of its debt.

Mr O’Reilly told the meeting that the exploration and testing work would begin with its Barryroe prospect off the south coast this summer. The field contains about 59 million barrels of oil.

The work this year will test the rate at which oil flows from the wells there, which is a precursor to moving to commercial development, which, if it were to go ahead, Mr O’Reilly said would take place in around 2013.

The company and its partners also intend to begin testing the Dalkey field, an area of the Irish Sea stretching from 10km east of the Dublin coast towards the Isle of Man, that could potentially hold oil or gas.

It will follow this through with further work on Rathlin Island, where it purchased a licence last year, and then around to the west coast.

In the course of yesterday’s meeting, there was some criticism of the fact that retail shareholders have seen their stake further diluted by the latest fundraising round.

Mr O’Reilly pointed out that this was necessary to raise the cash, and explained that the company has brought a range of new high-quality institutional shareholders on board.

London broker, Cenkos Securitites, yesterday recommended Providence as a buy and set a price target of £16.54 for its shares.