Providence shares down 9% after drilling delayed until 2015

Shares at Providence Resources are down 9 per cent in London trading after the company announced that drilling at the Spanish Point appraisal well off the west coast of Ireland has been delayed until 2015.

The Irish oil and gas exploration and appraisal company said that due to extensive delays in the refurbishment of the Blackford Dolphin drilling rig, which had been scheduled to drill the well, drilling operations would not be able to commence until at least October, thereby putting the Spanish Point drilling operations into the winter period.

As a result, Providence has terminated the contract with Dolphin for the Blackford Dolphin has been terminated and tendering for another rig to carry out the planned well operations in 2015 has commenced.

Prices fell the most in almost four years in London trading this morning, by 12.2 per cent to 122.5 pence, after the announcement, but have since recovered slightly to 127 pence at 2.30pm, down 8.96 per cent on yesterday’s share price.

Tony O’Reilly, chief executive of Providence, said that the postponement is “regrettable”.

“As the rig refurbishment delays became apparent, the operator evaluated various options to re-schedule the Blackford Dolphin rig and/or to secure another drilling unit for 2014, but this proved unsuccessful. Our ability to commence drilling in the autumn was further constrained by the rig’s operational capabilities at the Spanish Point location during winter and thus the decision was taken to terminate the contract and seek a new drilling unit for 2015. This procurement process has commenced and we will provide further updates as they are confirmed by the operator”.

Separately, the comapny also announced that, subject to regulatory approval, the planned 3D seismic surveying programme over Spanish Point South is going ahead as originally scheduled.