Providence Resources plays down merger speculation
Announcement follows speculation about approach from Norwegian partner
Providence Resources said it is ‘not currently involved in any merger discussions’, following reports that its Norwegian partner has made an approach. Photograph: Finbarr O’Rourke
Providence Resources said on Monday that it is “not currently involved in any merger discussions”, following reports that its Norwegian partner to develop its key Barryroe oil and gas field south of the Cork coastline has made an approach about a tie-up between the two companies.
The Irish exploration firm agreed a partnership, known in the industry as a farm-out agreement, in November with a consortium led by Norway’s SpotOn to bring the prospect to production.
Providence has stated that Barryroe could yield 350 million barrels of oil, enough to supply all the Republic’s needs for almost a decade at current consumption, along with a significant amount of natural gas.
“While Providence, like any plc, considers all opportunities to maximise shareholder value, we are not currently involved in any merger discussions with any party,” the company said in a statement. “We will continue to work closely with SpotOn Energy Limited to deliver the necessary funding to develop the world class Barryroe asset.”
The Business Post reported over the weekend that SpotOn had proposed a merger between it and Providence, though a deal would only be considered once the Norwegian company had secured financing for the Barryroe project. A spokesman for the explorer declined to comment on whether SpotOn had at any stage floated the possibility of a tie up.
SpotOn and its backers have agreed to fund all the early and full-field development programmes. Both sides hope to start drilling the first of four planned wells in late 2022.
SpotOn is set to ultimately end up with a 50 per cent stake in Barryroe, subject to it completing a $166 million (€138 million) fundraising to develop the field and complete the transaction. This will see Providence’s and Lansdowne Oil & Gas’s respective 80 per cent and 20 per cent stakes falling by half.
Barryroe lies about 50 kilometres off the Cork coast in the Celtic Sea under 100 metres of water, which is shallow by modern oil exploration and production standards.
Providence also said on Monday that it has received Government approval to carry out certain seabed and habitat assessment surveys above the Barryroe field, which should ultimately pave the way for applications to carry out appraisals and the development of the project.
Shares in the company rose as much as 8.3 per cent in London trading.