PVR Providence Resources Plc

 
TIDMPVR 
 
 
   Providence Resources announces extension of farm-out agreement 
 
   This announcement contains inside information for the purposes of 
article 7 of the Market Abuse Regulation (EU) 596/2014. 
 
   Dublin and London -- March 1st - Providence Resources P.l.c. (PVR LN, 
PRP ID), the Irish based resource development company ("Providence" or 
the "Company"), announces an extension to the farm-out agreement for the 
Barryroe licence. 
 
 
   -- Farm-out agreement with SpotOn Energy extended for a period of two months 
 
   -- Additional time required to finalise agreement with participants in 
      financing structure 
 
   -- No change to overall development proposal 
 
 
   Providence announces that it has agreed to extend the current farm-out 
agreement with SpotOn Energy by an additional two months, until April 
30(th) , 2021. The overall structure of the farm-out as set out below 
remains and SpotOn's funding obligations remain unchanged. However, the 
conditions to be fulfilled to attract investment from the Norwegian 
Export Credit Agency (GIEK), have altered from those originally 
proposed. SpotOn are negotiating a restructuring of the funding 
components and the extension is designed to provide time to complete the 
funding. 
 
   Reason and Background to Extension of Agreement 
 
   In November 2020 (RNS 30(th) Nov) the Barryroe partners completed a 
farm-out agreement with SpotOn Energy Limited, a Norwegian Resources 
company, for a 50% share in SEL 1/11 located off the south coast of 
Ireland and which includes the undeveloped Barryroe oil and gas field. 
In return for this 50% share in the project SpotOn Energy Limited and 
its Consortium partners, a group of International oil and gas industry 
service companies, undertook to fund, develop and produce the Barryroe 
field. 
 
   A conditional part of the farm-out agreement involves SpotOn securing a 
minimum of $166m in funding to finance 100% of the costs associated with 
an early development programme for Barryroe. 
 
   The Barryroe partners have been advised that SpotOn is confident of 
raising the funds set out in the farm-out agreement.   However, the 
financing structure has had to be adjusted to reflect the fact that GIEK 
is unable to participate in the Barryroe funding consortium in the form 
originally proposed. GIEK's original commitment was for c. 20% of the 
overall funding. An alternative funding structure has been proposed by 
SpotOn involving an increased contribution to the financing by the 
Consortium and the Bond Investors. Discussions to secure this increased 
commitment are well advanced. SpotOn has confirmed that it believes that 
funding will be completed within the period granted under the extension. 
The overall scale and shape of the development proposal remains 
unchanged. 
 
   The backstop date for the completion at the time of the farm-out in 
November was set at 28(th) February 2021. That date has passed and in 
accordance with the original agreement, the Barryroe partners have the 
option to either terminate or extend the Farm out. The Board has elected 
to extend the agreement for no more than two months. The extension will 
allow SpotOn sufficient time to complete funding commitments. 
 
   Main Commercial Terms of Barryroe Farm-out 
 
   -- SpotOn farms-in to a 50% interest in SEL 1/11 which includes the 
Barryroe oil and gas field. EXOLA, will retain a 40% interest, and 
Lansdowne will retain a 10% interest in SEL 1/11. 
 
   -- The farm-in is conditional upon SpotOn confirming that a minimum of 
US$ 166 million in funding (the Agreed Funding), for the Early 
Development Programme (EDP) is in place and that Irish government 
approval for the Farmout agreement has been received. 
 
   -- SpotOn provides a $5million non-recourse loan to Providence to fund 
EXOLA in the preparatory and permitting works required to progress the 
EDP Work Programme for the Barryroe oil and gas field. 
 
   -- SpotOn is directly responsible for paying 50% of all cost obligations 
associated with the EDP Work Programme and the Full Field Development of 
the Barryroe oil and gas field. 
 
   -- SpotOn will also provide finance, by way of non-recourse loan 
facilities, for the remaining 50% of the agreed cost obligations 
attributable to EXOLA & Lansdowne in respect of the EDP Work Programme 
and the Full Field Development. 
 
   -- The funding will incur a blended annual interest rate of less than 8% 
through the repayment period which will be repayable from SEL 1/11 
production cashflow. SpotOn is entitled to 80% of the nett production 
cashflow from SEL 1/11 until the debt is repaid. 
 
   -- Following debt repayment, SpotOn will be entitled to 50% of the nett 
production cashflow from SEL 1/11 with EXOLA & Lansdowne being entitled 
to 40% and 10% of nett production cashflow, respectively. 
 
   -- On receipt of the proceeds from the first lifting of oil, following 
completion of the EDP Work Programme, SpotOn will have an option to 
subscribe for warrants of 60 million shares in Providence at a strike 
price of EUR0.17 per share. The warrants are exercisable for a period of 
6 months. 
 
   Barryroe Description 
 
   Barryroe, located in the north Celtic Sea Basin, off the south coast of 
Ireland, has had six wells successfully drilled on the structure. 
Hydrocarbons have been logged in all six wells, with flow test results 
from four wells. Four wells were drilled in the 1970's by Esso with a 
further appraisal well drilled in 1990 by Marathon Oil. The sixth well 
was drilled by Providence & Lansdowne in 2011/12. The oil is light (43o 
API) with a wax context of c. 17-20%. The successfully tested reservoir 
sands are of Cretaceous Middle and Lower Wealden age located between c. 
4,500' TVDSS and 7,550' TVDSS. 
 
   The field is covered by both 2D and 3D seismic, the latter which was 
acquired in 2011. Following acquisition and interpretation of the new 
2011 3D seismic data together with the subsequent drilling and testing 
of the 48/24-10z Barryroe appraisal well in 2012, Providence retained 
the services of Netherland Sewell & Associates Inc. (NSAI) to carry out 
a third party contingent resource audit (CPR) of the in-place 
hydrocarbon and recoverable resources for the Basal Wealden oil 
reservoir. NSAI reported that the Basal Wealden oil reservoir has a 2C 
in-place gross on-block volume of 761 MMBO with recoverable resources of 
266 MMBO and 187 BCF of associated gas, based on a 35% oil recovery 
factor. A third party (CPR) audit of the overlying Middle Wealden, which 
was carried out by RPS Energy (RPS) in 2011, reported a 2C in-place 
gross on-block volume of 287 MMBO with technically recoverable resources 
of 45 MMBO and 21 BCF of associated gas, based on a 16% oil recovery 
factor. The total combined audited gross on block 2C recoverable 
resources at Barryroe therefore amount to 346 MMBOE, comprising 311 MMBO 
and 207 BCF. The following table summarises the range of total gross 
audited on-block Barryroe oil resources: 
 
 
 
 
                                     1C      2C      3C 
                                   (MMBO)  (MMBO)  (MMBO) 
Basal Wealden STOIIP (NSAI)           338     761   1,135 
Basal Wealden Recoverable (NSAI)       85     266     511 
Middle Wealden STOIIP (RPS)            31     287     706 
Middle Wealden Recoverable (RPS)        4      45     113 
TOTAL STOIIP                          369   1,048   1,841 
TOTAL RECOVERABLE OIL RESOURCES        89     311     624 
 
 
   Note: The table above excludes recoverable solution gas (i.e. 207 BCF or 
34.5 MMBOE in the 2C case) 
 
   Further incremental resource potential has been identified in logged 
hydrocarbon bearing intervals within stacked Lower Wealden and 
Purbeckian sandstones which Providence has previously estimated contains 
total associated P90, P50 & P10 in place oil resources of 456 MMBO, 778 
MMBO & 1,165 MMBO respectively. As there is currently limited reservoir 
and well test data available over these two intervals, future well data 
over these specific zones would be required in order to firm up their 
associated final recoverable resource estimates. 
 
   Ends. 
 
   INVESTOR ENQUIRIES 
 
   Providence Resources P.l.c.                                                                              Tel: +353 1 219 4074 
 
 
   Alan S Linn, 
 
   Chief Executive Officer 
 
   Job Langbroek 
 
   Investor Relations 
 
 
 
   J&E Davy 
Tel: +353 1 679 6363 
 
   Anthony Farrell 
 
   Murray Consultants                                                                                             Tel: +353 87 6909735 
 
 
   Joe Heron 
 
 
 
 
 
 

(END) Dow Jones Newswires

March 01, 2021 02:00 ET (07:00 GMT)

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