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Exxon Mobil to take 50pc stake at Iola prospect, Jimmy would you comment on the significance of this from a PVR standpoint, will this help get a farmout on Newgrange completed before end of year, thanks.
Stuck in this since the dark days of 2015, so many false dawns, could this be the start of something meaningful with PVR, I truly hope so, good luck to all.
BARRYROE FARM OUT FORMALISED Dissemination: 20 September 2018 08:10 BST Providence Resources (PVR LN) has announced the formalisation of its farm out agreement for the appraisal of its Barryroe field, offshore Ireland. The deal, which was originally announced in March this year, will see a Chinese consortium, headed by APEC Energy Enterprises finance a comprehensive appraisal drilling campaign in 2019. The farm-in offer originally constituted three firm wells, plus any required sidetracks, however the deal has subsequently improved from Providence’s perspective, with the programme now comprising four firm vertical wells, one horizontal sidetrack and two optional horizontal wells. On top of this, APEC will now pay PVR US$9m upfront and a further US$10.5m ahead of the campaign, to cover any early costs associated with the project. Importantly, in spite of this expanded work programme Providence is not required to relinquish substantially more than originally expected, with APEC still farming into a 50% stake, halving Providence’s original 80% interest. We see today’s news as significant on a number of counts. Although we considered transaction risk low, sign off was required from multiple parties including both the Irish and Chinese governments, and therefore the fact that the agreement is now binding quells any concerns that the transaction would not complete. Secondly, despite industry cost inflation since announcement of the deal, the committed appraisal programme has grown in size – indeed the committed capital investment by APEC has more than doubled on our numbers to c.US$250m (gross) from c.US$100m, assuming that both horizontal well options are exercised. In our opinion, this is a clear demonstration of APEC’s enthusiasm for the project, and its intent to press ahead as quickly as possible. From Providence’s perspective, it now has a fully funded appraisal campaign, worth some US$100m net to PVR’s residual 40% stake, due to commence within the next 9 months. The campaign will determine Barryroe’s commerciality, and could add to the field’s c.350mmbbls of already discovered resource (gross, 2C recoverable). The company released the news alongside interim results, which bear only limited significance. Cash on the balance sheet at the end of June totalled just over €12m, with zero debt – down from €19.5m at the start of the year. Naturally this does not include the benefit of today’s cash injection, which, after accounting for PVR’s carry on Barryroe, leaves the company in rude financial health. Authors: James Midgley, Energy Research Analyst [email protected] +44 (0)20 3167 7273 Tim Hurst-Brown, Energy Research Analyst [email protected] +44 (0)20 3167 7276
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