Providence sees Druid exploration well cost at $35m

The cost of drilling an exploration well at Providence Resources’ Druid field in the Atlantic ocean will be 30 per cent lower than previously planned as the company hired another company to manage the process next year.

The Tony O'Reilly jnr-led oil and gas exploration company said it and its licence partner for the Druid prospect have appointed Senergy Wells Ltd, a subsidiary of global engineering group Lloyds Register, to provide well-management services for the planned drilling programme in June 2017.

Providence has previously estimated the Druid field, some 220km off the west coast of Ireland, could ultimately deliver 3.9 billion barrels of oil, a multiple of the 311 million barrels of recoverable oil its Barryroe oil field south of Cork is estimated to hold.

The company now estimates the cost of drilling the Druid exploration at about $35 million (€31.4 million), some 30 per cent lower than a previous estimate.

Drilling costs have slumped globally following a drop in oil price in recent years.

The planning of the first of several wells over the next two years and the reduced cost to drill that first well is positive and positions the group at the front end of the new wave of anticipated drilling along the Irish western margin," said Job Langbroek, an analyst with Davy in a note on Wednesday.

Providence raised $70 million last month, mainly to pay off $4 million remaining on litigation costs stemming from a court battle with a company that provided drilling services for Barryroe, repay more than $20 million owed to its main creditor, Melody Capital, and cover drilling costs at Druid.

However, Mr O’Reilly said at the time that a number of “super majors” were looking at taking a stake in the Druid prospect, as it also sought a partner for Barryroe.

This year has seen industry giants such as ExxonMobil, Statoil, BP, Eni and China National Offshore Oil Corporation, or CNOOC, successfully bid for options to search for oil and gas off Ireland’s shores, following what the Government said was a record level of applications.