Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
All talk on Irish radio today about the price of oil and the need to use less by driving slower, not taking longer journeys and taking up cycling. If someone mentions that we have one of the biggest oil fields in Europe ten miles offshore Cork, I think everyone in the country will be delighted.
Certainly no harm done by writing to TDs as they can mention that they are hearing back from their constitutions that there is a lot of anger out there at the moment that we are not using our own natural resources at this time when everyone is feeling the pain at the pump and a realization that there may be rationing to come. Public opinion will be completely behind the fast tracking of existing licenses in an effort to secure our energy security now that Russian oil and gas will never be used again in Europe. Amazingly the one thing that was stopping Barryroe going ahead - the movement by government away from using our own oil and gas- has now done a complete 360 turn to using our own oil and gas, and the good news for the Irish people is that Ireland has one of the biggest oil and gas fields in Europe
Just the headline I am afraid but the public are going to annoyed with Eamon Ryan when they read it.
https://www.thetimes.co.uk/article/how-ireland-is-freewheeling-into-a-possible-energy-crisis-lfn9r0xzc
I totally agree. The softly softly approach may have been the correct approach ten days ago but now everything has now been turned upside down. The Minister for Agriculture is asking farmers to plant extra wheat and barely. All environmental restrictions on fertilizer use will be thrown out the window in order to do this. Similarly all environmental restrictions on offshore drilling for oil and gas need to be lifted immediately in order that we can, hopefully, secure a supply of oil and gas next winter. The PR department for Providence already has an excellent narrative as to why Barryroe should be developed. The Russian invasion of Ukraine has crystalized that narrative with the Irish public.
Now might be a good time to mention that we have one of the largest oil and gas fields in Europe off the coast of Cork that is sitting beside the oil refinery in Cobh. We have eight months to have it up and running before next winter sets in. Brid Smith and others who stand against NATO will try to prevent the Irish people using their own natural resources in a time of war. A Russia oil tanker will port in Dublin next week with much needed oil. It has travelled a journey of thousands of miles to arrive here. Oil from Barryroe will travel a journey of ten miles to the oil depot in Cobh.
With anti Russia sentiment at an all time high and people turning against using Russia oil and gas it is a perfect time to remind people that importing oil and gas adds another thirty percent emissions to every litre of petrol and every cubic meter of gas and the Irish people would rather use oil and gas that is not soaked in the blood of women and children and even though Brid Smith stands against using our own oil and gas and blames NATO expansion for the invasion of Ukraine it is possible that her views represent less than one percent of the Irish people.
@GMF78 noted on Twitter that this is one of the more interesting lines in the RNS.
The Board has initiated preliminary discussions with a number of potential industry partners, one or more of which may be attracted to participate in the Barryroe licence at this stage, subject to the grant of the Ministerial consent to the Lease Undertaking. Were such discussions to be concluded positively, then both the PVR share of the field and its costs would be reduced.
If Eamon Ryan grants consent for the lease undertaking it should give some confidence to industry partners to invest in Barryroe. Also worth noting that by not giving consent for the lease undertaking he is going against stated Government policy.
If there is not some last minute sign off on something today they should have realized the RNS this morning.
Thank you for posting the article Brendanor. It will be interesting to see the update from Providence tomorrow. There has been a constant narrative about energy security in the last while which will made Providence, once they break cover, not only the most logical choice for security of supply of gas, but as a company that can play a part in carbon capture.
Thank you for posting the articles Brendanor. Great to know that the government will allow Barryroe proceed. A much more easy sell to the public compared to fracked gas from America. Wondering if you have assess to the article about the Mexican state owned oil company Pemex moving 327 euros into its Irish subsidiary. Maybe they will invest it in Barryroe, even if it is only for tax purposes.
No news in the Sunday Business Post today, but one article about the Shannon LNG terminal and one article about an Mexican oil company pumping $327 into its Irish subsidary. Just the headlines available
https://www.businesspost.ie/energy/shannon-lng-terminal-can-go-ahead-if-planning-is-granted-varadkar-says-503e39b8
https://www.businesspost.ie/companies/mexican-state-oil-company-pumps-eur327m-into-irish-subsidiary-b91c9dbd
Hopefully this happens in Europe as well
Low-Rated U.S. Oil Firms Raise Record $20 Billion In Bonds
By Tsvetana Paraskova - Mar 22, 2021, 11:30 AM CDT
The recovery in oil prices this year has increased investor appetite for high-yield bonds of low-rated U.S. energy firms, helping them to raise a record more than US$20 billion on the bond market so far this year, the Financial Times reported, citing data from companies tracked by Refinitiv.
In light of the rising oil prices since November last year, debt investors have grown more interested in high-yield energy bonds, after having steered clear of the sector for most of the past two years.
As a result, the riskier lower-rated U.S. oil firms have managed to raise a total of over U$20 billion this year alone, a record amount in data going back to 1996, according to Refinitiv estimates cited by the FT.
For example, Chesapeake Energy – the poster child of U.S. shale firms “drilling themselves to oblivion,” which filed for bankruptcy last year and emerged from Chapter 11 in January this year – issued in February US$1 billion in senior notes, with part of the proceeds expected to fund the company’s emergence from Chapter 11.
Many other companies have managed to price bond issues this year, as debt investors have started to look more positively at the short-term prospects for oil firms.
In the longer term, however, the keyword is caution, and investors advise caution because of the possible negative effects of the energy transition on the oil industry.
Earlier this year, S&P Global Ratings warned it could downgrade the ratings on some of the world’s biggest oil firms, citing increased risks coming from the energy transition, price volatility, and weaker profitability. The credit rating agency revised its industry risk assessment to ‘moderately high risk’ from ‘intermediate risk’, due to the challenges the energy transition poses to companies, the pressure on the firms’ return on capital, and the volatility in oil and gas prices.
A few weeks later, S&P Global Ratings downgraded Exxon, Chevron, and ConocoPhillips by a notch to AA-.
By Tsvetana Paraskova for Oilprice.com
Data centers will be using a third of all he electricity in Ireland. Barryroe has a big part to play in Ireland's energy needs going forward.
https://twitter.com/greenparty_ie/status/1370313618638696448?s=09
You are completely right 1Cagney. I suppose the increasing oil price and knowledge that oil and gas will play a part in the energy needs of Ireland for the duration of the Barryroe field is nice back round music. Would sound even nicer of course if funding was in place and drilling was due to start this year. Hopefully we will hear something soon, as discussions are well advanced. Looking at it more closely, GIEK have pulled out, but the remaining consortium members which make up 80% of the funding are still in place. So hopefully they will take up the slack. I wonder is there a possibility of another investor coming on board? Anyway it is all wishful thinking on my part. Interesting to see Oil Man Jim repeating his assertion that Spoton Energy are a £1 company, implying they are some sort of scam company. Find out soon enough I suppose. Here is a relevant part of the RNS:
However, the financing structure has had to be adjusted to reflect the fact
that GIEK is unable to participate in the Barryroe funding consortium in the form originally proposed.
GIEK’s original commitment was for c. 20% of the overall funding. An alternative funding structure
has been proposed by SpotOn involving an increased contribution to the financing by the
Consortium and the Bond Investors. Discussions to secure this increased commitment are well
advanced.
From the Sunday Business Post.
https://twitter.com/OffshoreIreland/status/1368857796515667970?s=20
You are welcome Wraith. It is a binary outcome depending on the bond been secured or not, making it a share for people who can afford to lose money or who enjoy gambling. I suppose that is true for all shares really. We will know in a couple of weeks, hopefully sooner. Spoton have gone down the road a long way to securing the bond, signing up big names along the way to bring Barryroe to development. Things in our favor: Strong demand for oil and gas in this decade. An Irish economy that needs jobs, revenue and security of supply for oil and gas. The big thing against us the climate change movement but Alan Linn has provided all the answers in regards to this issue.: Carbon Capture, lower emissions by removing the up to 30 percent emissions associated with transporting fossil fuels half way around the world. ( Fracked gas from America a better option than gas from Barryroe?) Security of supply as stipulated by the EU. Having said all that Wraith, we just have to wait and see what way things go.
What is understood: interpret or view (something) in a particular way.
Is considering: to think over carefully : ponder, reflect
Will provide: make available for use; supply
Will defer: put off (an action or event) to a later time; postpone
What is understood is that Pareto Securities, a Norwegian investment bank, has agreed to lead but not underwrite the raising of a $50m 10-year bond to partfund the project. On foot of this, the big French bank, Société Générale, is considering a $35m 10-year loan and the Norwegian government will provide a $45m export credit guarantee on the basis of using Norwegian drilling and service companies.
DEFERRED FEES
On top of this, SpotOn says that its consortium partners will defer part of their fees to the tune of $35m. This appears to bring the total inferred funding to the $165m that SpotOn signed up to.
A Huge thank you to JODO on the other board for posting this message:
Part I
Providence shareholders prepare for bond boost
IT WAS reported in the Business Post recently that Providence Resources’ farm-out partner, SpotOn Energy, had approached the Irish exploration company about a potential merger. This was not too surprising as Providence’s chairman, Pat Plunkett, and CEO Alan Linn had previously outsourced the job of finding farm-in partners to SpotOn rather than doing it themselves. The good news for investors is that the expected €50m bond placement at the end of next month could set a fire under the shares. This would not be surprising given that the company is currently valued at about 1% of its potential €5bn share of the profit from any successful development of the Barryroe oilfield.
SpotOn injected £0.5m into Providence last year courtesy of two placings and, in response to press speculation about a merger, Linn issued something of a nondenial denial earlier this month: “We are not currently involved in any merger discussions with any party.” He went on to add, however, that “we will continue to work closely with SpotOn Energy to deliver the necessary funding to develop the world-class Barryroe asset”. Linn did not say Providence has not been approached by SpotOn, simply that he is not involved in any merger discussions. Reading between the lines, if SpotOn can deliver the “necessary funding” for the agreed early development programme (EDP), then it might see little purpose in having Providence just sitting there as a sleeping partner. Rather, it would make sense to merge with Providence and run the whole show. At that stage, Linn would have no obvious central role to play despite being on a generous salary. Linn finds himself tied into SpotOn, much like Tony O’Reilly Jnr and John O’Sullivan were to Apec three years ago, which was supposed to come up with $200m funding for a five-well drilling programme, instead failing to pay even the initial $5m. Plunkett eventually pulled the plug. Why Plunkett chose Alan Linn as the new CEO remains something of a mystery. He is a chemical engineer by training, rather than a geologist or geophysicist. While he did work for major operators like Exxon, Lasmo and Cairn, it was not at a really senior level. In 2008, Linn joined Roc Oil as COO and rose to CEO in 2010 but in 2014 Roc Oil lost €31m and was subsequently suspended from the Australian Stock Exchange.
Linn then opted to jump ship and became CEO of the distressed African oil and gas company, Afren, which went into administration in July 2015 and was delisted from the London Stock Exchange. In 2017, Linn moved to Third Energy as COO but “following a strategic review of the business, the decision was made to divest the offshore business and focus on the onshore”. Linn ended up as CEO of the offshore business in July 2019 but exited six months later to join Providence in January 2020.
Part II
Providence has one significant asset – its now 40% stake in the Barryroe oilfield, which has 350 million barrels recoverable and has flowed on oil on test the five times that it was drilled, most recently in 2012. While Linn is right to focus on Barryroe, it is hard to justify the dumping of all Providence’s deep water Atlantic margin licences simply in order to save money. Linn has no experience or background in the Irish offshore resource sector and as a chemical engineer does not have the academic training to fully understand the rather complex Barryroe field. This helps explain the decision to farm out the development of this field to a third party with more knowledge and experience. It was, of course, Plunkett who was in situ as chairman when Providence raised €70m in a share placing back in June 2016 at a price of 16c and then signed off on the disastrous farm-out agreement with the Chinese Apec consortium. A more obvious choice for Plunkett to have picked as CEO is Steve Boldy, the current CEO of Lansdowne Oil & Gas, Providence’s 10% minority partner in the Barryroe consortium. Boldy worked as a petroleum geologist in the Department of Energy and then spent 19 years with Amerada Hess (now Hess Corporation) as its UK and international explorations manager. In 2013 Boldy joined Ramco, which developed the Seven Heads gas field off Co Cork, just above Barryroe, before moving to Lansdowne in 2006 where, for the last 14 years, he has been studying the Barryroe oilfield. Presumably he could have been poached from Lansdowne, where he is on a salary of only €70,000. SpotOn’s own website asks if you are “looking to sell or farmout your off-shore oil and gas field for development?”. The Norwegian entity claims to have “a new approach to cost-effective offshore oil and gas field development”, whatever that means. CONSORTIUM SpotOn boasts of working with “a consortium of world leading service providers”. One of them we now know to be Schlumberger, an American oil service company that works with an array of operators so the tie-in is far from interesting. SpotOn also claims to be working with the Norwegian oil services investment company, Akastor.
Part III
OTHER PLAYERS
SpotOn does have interests in providing well design and drilling project management, reservoir and field management services, as well as having an interest in the Odfjell Drilling company and Awilco Drilling, which owns some semisubmersible rigs. These are all minority investments. SpotOn also notes an association with the Norwegian engineering firm, Aker Solutions, which specialises in low-carbon emission designs, but again works with a lot of other players. The agreement Linn drew up with SpotOn in April last year offered it “exclusivity until October 31, 2020” to assess the potential of the Barryroe field and agree farm-out terms. The key to this, obviously, was funding, which would make it easy to find a service company and drillers to do the job. By the end of October, however, SpotOn had failed to deliver so Linn allowed a further one-month extension but even by then thegoods had not been delivered. Despite this, Linn went ahead and agreed a 50% farm-out deal with SpotOn, which presumably provided evidence that it was close to securing funding. This reduces Providence’s stake in the field from 80% to 40%. What is understood is that Pareto Securities, a Norwegian investment bank, has agreed to lead but not underwrite the raising of a $50m 10-year bond to partfund the project. On foot of this, the big French bank, Société Générale, is considering a $35m 10-year loan and the Norwegian government will provide a $45m export credit guarantee on the basis of using Norwegian drilling and service companies.
DEFERRED FEES
On top of this, SpotOn says that its consortium partners will defer part of their fees to the tune of $35m. This appears to bring the total inferred funding to the $165m that SpotOn signed up to. What investors need to ensure is that the key initial $50m bond is in place at the end of next month. With oil prices recovering to $60 a barrel, prompted by the rollout of vaccines worldwide and the predicted economic recovery expected to follow, the odds of this bond being put in place have decreased. What is exciting about this is that according to SpotOn’s feasibility study, the estimated breakeven point for Barryroe is $25 a barrel. This means that with 350 million barrels recoverable, the profit on the field could be of the order of $12bn, leaving the value of Providence’s potential profit share here at close to $5bn. Providence shares are currently trading at 7c, which is 99% off the €7 they traded at back in 2012 when the exploration company had just completed its last successful drilling. The current price values Providence at €50m, which is about 1% of its potential profit share from a successful development on Barryroe. This makes Providence shares look like the most underrated share on the market and they are likely to fly on the back of any confirmation that the $50m bond is actually in place.