PROVIDENCE RES. Providence Resources P.L.C. - Standard Exploration Licence 1/11 - Barryroe, North Celtic Sea Basin
September 20 2018 - 1:00AM
UK Regulatory
TIDMPVR
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
STANDARD EXPLORATION LICENCE 1/11
BARRYROE, NORTH CELTIC SEA BASIN
-- BINDING BARRYROE FARM-OUT AGREEMENT SIGNED
-- DRILLING PROGRAMME OF 5 FIRM WELLS AND 2 OPTION WELLS SET TO COMMENCE IN
2019
-- CASH ADVANCE PAYMENTS OF $19.5 MILLION TO EXOLA AGREED
Dublin and London - September 20, 2018 - Providence Resources P.l.c.
(PVR LN, PRP ID), the Irish based Oil & Gas Exploration Company
("Providence" or the "Company"), today provides a commercial update on
Standard Exploration Licence ("SEL") 1/11 that contains the Barryroe oil
accumulation. SEL 1/11 is operated by EXOLA DAC ("EXOLA", 80%), a
wholly-owned Providence subsidiary, on behalf of its partner, Lansdowne
Celtic Sea Limited ("Lansdowne", 20%). The area lies in c. 100 metre
water depth in the North Celtic Sea Basin and is located c. 50 km off
the south coast of Ireland.
Binding Barryroe Farm-Out with APEC
Further to the RNS announcement of March 28, 2018 regarding the signing
of a Farm-Out Agreement ("FOA") with APEC Energy Enterprises Limited
("APEC"), the Company is pleased to now confirm that, following the
completion of all required ancillary documentation and the receipt of
both governmental consents, EXOLA, Lansdowne and APEC (collectively
referred to as the "Barryroe Partners") have signed an amended and
restated Farm-Out Agreement ("Updated FOA") which assigns 50% equity in
SEL 1/11 to APEC.
Summary of Updated FOA Terms & Conditions
The Updated FOA provides for a fully cost-carried firm programme
comprising of the drilling and testing of four vertical wells and one
horizontal sidetrack (collectively the "Drilling Programme"), plus the
optional drilling of two additional horizontal wells, together with cash
advances to EXOLA for certain agreed project and operational costs such
as well site survey acquisition totaling $19.5 million.
Commenting today, Tony O'Reilly, Chief Executive Officer of Providence
Resources said:
"We are very pleased to confirm that, having received governmental
approval for the assignment of equity in Barryroe to APEC, we have now
executed a revised Farm-out Agreement with APEC.
The finalisation of these binding farm-out terms with APEC is
transformational for Providence as it delivers a firm and comprehensive
drilling programme comprising of four vertical wells and one horizontal
sidetrack, cash advances for certain operational costs of $19.5 million,
plus the financing of two further optional wells. Subject to regulatory
consents and appropriate arrangements with contractors, we expect
mobilisation to commence in Q2 2019. In this regard, we are also
pleased to confirm that we have contracted Gardline's Ocean Observer
vessel to carry out the requisite site surveys during Q4 2018.
This drilling programme is a significant step forward for Barryroe as it
is designed to provide modern dynamic data that will assist in the field
development to production. Importantly, the structure of the farm-out
transaction means that Providence has no upfront risk or capital
exposure for the drilling programme, whilst also providing a roadmap to
take this project, subject to the results of the drilling and subsequent
regulatory consents, to project sanction and then on to production."
As certain operational, financial and commercial terms of the
transaction have changed from those previously announced on March 28,
2018, the section below provides the final details of the Updated FOA:
Cash Payments
-- With the signing of the Updated FOA, APEC will now proceed with the
payment of $9.0 million to EXOLA for certain agreed front-loaded project
related costs;
-- A further $10.5 million payment will be made to EXOLA to cover future
operational costs, such payment to be made 14 days prior to the
commencement of drilling.
Drilling Programme
-- The drilling of four vertical wells allowing for the evaluation of the
main Basal Wealden reservoir interval;
-- The first well to include the drilling of a sidetrack to provide a
200-metre horizontal reservoir section in the Basal Wealden;
-- Drill-stem testing is planned for three of the four vertical wells, as
well as the horizontal sidetrack;
-- The four vertical wells are located across the geographic extent of the
Barryroe structure and are designed to test the full potential of the
Basal Wealden;
-- Drilling to the underlying Purbeckian and Upper Jurassic section is
planned in three of the four wells;
-- Planning for the drilling of these wells is already advanced, together
with the consenting of the recently contracted Gardline "Ocean Observer"
vessel to carry out the well site survey operations during Q4 2018,
subject to regulatory approval;
-- Rig procurement, based on a Q2 2019 mobilisation for the Drilling
Programme is also well advanced, as are contract discussions with various
oil field service providers;
-- At the completion of the Drilling Programme, APEC also has an option to
drill, test and complete two further additional horizontal wells to the
Basal Wealden reservoir interval ("Option Wells");
Financing
-- APEC is directly responsible for paying 50% of all cost obligations
associated with the Drilling Programme, and the Option Wells (if
applicable);
-- APEC to finance, by way of a non-recourse loan facility (the "Loan"), the
remaining 50% of all cost obligations attributable to EXOLA and Lansdowne
in respect of the Drilling Programme as well as the Option Wells (if
applicable);
-- The Loan, drawable against the budget for the Drilling Programme, will
incur an annual interest rate of LIBOR +5% and will be repayable from
production cashflow from SEL 1/11 with APEC being entitled to 80% of
production cashflow from SEL 1/11 until the Loan is repaid in full;
-- Following repayment of the Loan, APEC will be entitled to 50% of
production cashflow from SEL 1/11 with EXOLA and Lansdowne being entitled
to 40% and 10% of production cashflow, respectively;
-- The 4.5% Net profits Interest, held by San Leon Plc, has not been
assigned to APEC and so remains the obligation of EXOLA.
Operations
-- EXOLA will remain as Operator of SEL 1/11 for the execution of the
Drilling Programme;
-- Following completion of the Drilling Programme, APEC will have the right
to become Operator for the development/production phase (subject to
Ministerial consent).
Working Interest
-- Following governmental approval for the assignment of equity to APEC, the
revised working interest will be APEC (50%), EXOLA (40%), and Lansdowne
(10%), with EXOLA retaining the role of Operator of SEL 1/11.
Warrants
-- Upon completion of the Drilling Programme, APEC will be able to subscribe
for warrants over 59.2 million shares in Providence at a strike price of
GBP0.12 per share (the "Warrants").
-- The Warrants, representing circa 9.9% of the current issued share capital
of Providence, are exercisable for a period of 6 months following the
completion of the Drilling Programme
INVESTOR ENQUIRIES
Providence Resources P.l.c. Tel: +353 1 219 4074
Tony O'Reilly, Chief Executive Officer
Dr. John O'Sullivan, Technical Director
Cenkos Securities plc Tel: +44 131 220 9771
Neil McDonald/Derrick Lee
J&E Davy Tel: +353 1 679 6363
Anthony Farrell
Mirabaud Securities Limited Tel: + 44 20 3167 7221
Peter Krens
MEDIA ENQUIRIES
Powerscourt Tel: +44 207 250 1446
Peter Ogden
Murray Consultants Tel: +353 1 498 0300
Pauline McAlester
ANNOUNCEMENT
This announcement has been reviewed by Dr John O'Sullivan, Technical
Director, Providence Resources P.l.c. John is a geology graduate of
University College, Cork and holds a Masters in Applied Geophysics from
the National University of Ireland, Galway. He also holds a Masters in
Technology Management from the Smurfit Graduate School of Business at
University College Dublin and a doctorate in Geology from Trinity
College Dublin. John is a Chartered Geologist and a Fellow of the
Geological Society of London. He is also a member of the Petroleum
Exploration Society of Great Britain, the Society of Petroleum Engineers
and the Geophysical Association of Ireland. John has more than 25 years
of experience in the oil and gas exploration and production industry
having previously worked with both Mobil and Marathon Oil. John is a
qualified person as defined in the guidance note for Mining Oil & Gas
Companies, March 2006 of the London Stock Exchange. Definitions in this
press release are consistent with SPE guidelines. SPE/WPC/AAPG/SPEE
Petroleum Resource Management System 2007 has been used in preparing
this announcement.
ABOUT PROVIDENCE RESOURCES
Providence Resources is an Irish based Oil & Gas Exploration Company
with a portfolio of appraisal and exploration assets located offshore
Ireland. Providence's shares are quoted on the AIM in London and the
ESM in Dublin. Further information on Providence can be found on
www.providenceresources.com
ABOUT APEC
APEC Energy Enterprise Ltd. was established in 2014 as a Hong Kong
registered company with headquarters in Beijing. In addition to its
original focus on offshore oil & gas services, APEC provides upstream
energy acquisition advice and management services in partnership with
Chinese Oil Companies, offshore and onshore service providers, and SOE
investment groups. www.apecenergy.com. In 2017, APEC established a
strategic partnership with COSL and JIC for the investment and
development of offshore oil and gas opportunities worldwide, utilising
Chinese infrastructure and equipment (most notably Chinese offshore
drilling units/vessels) to earn equity positions in projects.
ABOUT LANSDOWNE
Lansdowne Oil & Gas (LOGP.LN) is a North Celtic Sea focussed oil and gas
exploration company quoted on the AIM market and headquartered in
Dublin. Lansdowne holds acreage in the north Celtic Sea Basin, Ireland.
For more information on Lansdowne, please refer to
www.lansdowneoilandgas.com
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Providence Resources plc via Globenewswire
http://www.providenceresources.com/html/
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September 20, 2018 02:00 ET (06:00 GMT)
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