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Providence Resources Druid well scheduled for June 2017

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Oilfield Technology,

Providence Resources P.l.c. (PVR LN, PRP ID), the Irish based Oil and Gas Exploration Company, has provided an operational update on Frontier Exploration Licence (FEL) 2/14, which lies in c. 2250 m water depth in the southern Porcupine Basin and is located c. 220 km off the south west coast of Ireland. The licence is operated by Providence Resources P.l.c. (Providence) (80%) on behalf of its partner Sosina Exploration Limited (Sosina) (20%), collectively referred to the “Druid Partners”. FEL 2/14 contains the Paleocene “Druid” and the Lower Cretaceous “Drombeg” exploration prospects.

Issuance of Rig ITT

Further to the RNS of August 31, 2016, confirming the Druid Partners’ appointment of Senergy Wells Limited (a wholly owned subsidiary of Lloyds Register) to provide integrated well management services for the planned 2017 Druid drilling programme, an invitation to tender for the rig contract has now formally been issued to the market. It is expected that the rig contract will be signed during 4Q 2016 to facilitate summer 2017 drilling.

Well engineering and design

The detailed well engineering and design for the 2017 Druid exploration well is continuing with the well currently being designed to TD at a depth of c. 4,200 metres true vertical depth subsea (TVDSS), which allows for a full evaluation of the resource potential of the Paleocene Druid exploration prospect. The well is also being designed to allow for a potential deepening of the well to encounter the underlying vertically stacked Lower Cretaceous Drombeg prospect at c. 5,200 m TVDSS. This deepening could occur should the Druid exploration well be drilled significantly within the current budget and/or if a third party farminee were to provide additional capital to the project.

Well cost estimate

As disclosed by RNS on August 31, 2016, the latest gross (100%) well cost for the Druid exploration well is now estimated at c. $35 million, which compares to the previous estimate of $46 million. Based on the latest market intelligence, the additional cost for the deepening of the well to penetrate the Drombeg prospect amounts to c. $15 million.

Farm-out process

As disclosed by RNS on March 11 2016, the Company launched a farm out process in March 2016 with physical data-rooms commencing in late May 2016. The successful financial restructuring of the business with the provision of specific capital to undertake the Druid drilling operations, together with the substantially lower costs, has allowed the Druid Partners to move forward with the planned drilling operations. Noting the significant interest shown in the recent Atlantic Licensing Round, the Druid Partners are continuing this farm-out process which has garnered very good industry interest.

Project timeline

In addition to the preparation and issuance of the ITT for the rig, other service contracts are now being prepared for the planned Druid drilling operations. Based on the latest project timeline and, subject to standard regulatory consents, the 53/6-A Druid exploration well is currently expected to spud in June 2017.

Speaking today, Tony O’Reilly, Chief Executive of Providence said:

“Thanks to the support of our shareholders, plus the substantially lower forecast cost profile, we are making solid progress with our planned drilling operations in FEL 2/14 for summer 2017. As previously stated, our base case programme continues to be a test of the c. 3 BBO resource potential of the Druid exploration prospect. We are, however, also engineering the planned well to allow for the penetration of the underlying c. 1.9 BBO Drombeg exploration prospect should the opportunity arise.”

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Adapted from a press release by Louise Mulhall

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