PVR.L Share News (PVR)

(Sharecast News) - Providence Resources updated the market on its optimisation strategy for the Barryroe Field on Friday, calling for "regulatory urgency" to progress the project.
The firm operates the field, which lies in shallow water around 50 kilometres off the south coast of Ireland, with its AIM colleague Lansdowne Oil & Gas holding a 20% interest.

It said that since its update on 20 December, it had twice written to the Minister for the Environment, Climate and Communications, Eamon Ryan, requesting him to grant consent for the lease undertaking.

The board said it set out a number of considerations, and noted that a decision not to grant the lease undertaking, or a "protracted delay", would mean that Barryroe's potential would not be realised.

"In our view, this would represent a serious failure in the national effort to transition the Irish economy to carbon neutral status by 2050," the Providence board said in its statement.

"The board unreservedly supports government and EU policy in relation to tackling climate change.

"Given that gas and oil will be essential energy sources for many years to come, the board is confident that the potential offered by successful exploitation of the Barryroe Field would be an important element in Ireland's energy transition."

It said that additionally, the Barryroe Field had the potential to provide "significant strategic and fiscal value" to the Republic of Ireland economy, at "no cost" to taxpayers.

Looking at its technical strategy, Providence said it had completed its review, and made a decision to proceed with an appraisal well in 2023 and, assuming a satisfactory outcome, to proceed to first production in 2026, initially focused on the Central Area in Barryroe only.

A new competent persons report by RPS Energy Consultants confirmed 81.2 million stock tank barrels of gross 2C oil resources that could be accessed through the initial two-phase project.

The company said the report, which remained consistent with the last independent assessment in 2013, confirmed a net present value of $401m to Providence's interest in the initial project, based on a 10% discount factor and a Brent oil price of $70 per barrel.

It said the initial project was also expected to advance the potential for further development of other Barryroe reservoirs, including its gas resources.

"The board believes this technical strategy to be optimal and pragmatic in balancing risk and optimising value," the directors said.

"It also maximises shareholder value, both for shareholders and the country."

Finally, on the financial front, Providence said it now had a "clear understanding" as to the funding requirement for the initial development in the Central area.

It said that fresh equity funding would be required in 2022 to finance an appraisal well in 2023, as well as preparatory work around the initial development project.

"With the benefit of four new technical studies, including a competent persons report prepared by RPS, the board is confident that there is an attractive economic and technical case for moving forward with our plans to optimise the value of the Barryroe Field," said executive chairman James Menton.

"At this time, the board's main focus is on securing ministerial consent for the lease undertaking as a matter of urgency.

"The board is confident that Barryroe offers a highly valuable resource that can contribute meaningfully to Irish energy security and will have a crucial role to play in Ireland's energy transition."

Steve Boldy, chief executive officer of Lansdowne, said the new studies indicated that an oil development of the core area of Barryroe through both the phase 1A and 1B developments could deliver around 20,000 gross barrels of oil per day - equal to around 15% of Ireland's current oil consumption, 100% of which was currently imported.

"Such indigenous oil production would have a much lower carbon footprint than imported oil and would increase security of supply in these uncertain times," Boldy said.

"Lansdowne also highlights that the RPS report has only addressed the oil in the Basal Wealden A Sand, which allows it to be correlated to the earlier work carried out by NSAI.

"Gas was proven in the Basal Wealden C Sand reservoir in the 48/24-10z well that overlays the oil reservoir and this has previously been estimated to hold a potential gas resource of around 400 billion cubic feet of gas initially in place."

Boldy said Lansdowne believed the "significant" gas resource could make a "vitally important" contribution to Ireland's energy mix, as it transitioned to a zero-net carbon economy, adding that it expected any future phased development programme would include consideration of the "important" gas resource.

"In order to help identify the separate oil and gas potential in the K area, it is expected that the future appraisal well will address both the A and the C Basal Wealden Sand reservoirs respectively."

At 1139 GMT, shares in Providence Resources were up 3.45% at 3p, while those in Lansdowne Oil & Gas were 3.43% firmer at 0.54p.