Providence optimistic over Helvic field

Providence Resources could generate some $200-$300 million (€210-315 million) by developing the Helvic Sea Oil field following a 70-day drill programme which began earlier this month, Mr Phil Tracy, chief executive, told shareholders yesterday.

Speaking at the company's AGM Mr Tracy said this level of projected turnover was dependent on the company extracting between eight and 12 million barrels of oil over four years and prices remaining above $25 per barrel.

However, he said the company's strategy was flexible and it would be able to "hedge" if the price of oil fell in the future. Even if the oil reserves were not as large as expected, the company would try to make it work by moving out to other projects like "strings of pearls", he said.

Mr Tracy said the Helvic field, which the company has estimated would produce 10,000 barrels of oil per day, could produce oil by June 2002, following the negotiation and completion of a development plan with the Government.

A drill programme to provide further information on the oil in place at the Helvic Oil field began on July 1st and results are expected to be announced in September/ October this year.

This is being financed through the issuing of $12 million in unquoted convertible bonds. Mr Tracy said this had been successful and all the directors had taken up their options on the offer.

Providence Resources is engaged in discussions with Marathon about linking an oil and gas pipeline from its Helvic field to an existing pipeline at the Kinsale gas field, Mr Tracy said.

The company would consider either contracting a floating or fixed rig to extract oil reserves at Helvic. It would cost between $50-$80 million, he said.

Mr Tracy criticised recent media reports which suggested that the drilling and development of the Helvic site was not benefiting the local economy.

The drilling operation was generating £13,000 per day for the local economy and further use of Irish contractors and labour was not possible as the necessary skills and services did not exist, he said.

"A lot of the Irish guys aren't certified to go offshore and would need to be retrained. The last time some were offshore was 10 years ago," he said.

"It's unfortunately a reflection of the fact that the oil and gas industry has been sporadic in Ireland."

He said Irish contractors and suppliers were gaining business worth £1.3 million from a total spend of some £8.8 million for the drilling programme. He confirmed the company was still involved in discussions with SIPTU and Enterprise Ireland on this matter.