Providence To Extract 280 Million Barrels of Oil

PUBLISHED: Oct 10 2012 @ 09:41 | Comments (0) | More info about Kenneth G. Mondero

Ireland’s soon to be first offshore oilfield is going to inaugurate the establishment of an oil industry in the country, courtesy of Providence Resources (LSE:PVR), which said today it can recover a mean estimate of about 280 million barrels of oil 50 kilometres from the coast County Cork.

Providence disclosed today, it will be able to recover between 17% and 43% of oil or about 27% mean estimate, following a static and dynamic modeling of the main reservoir of the Barryroe discovery, where over one billion barrels of oil was estimated to be present and waiting to be extracted.

The company, however, is to target a 31% recovery rate over a 25-year field life involving 41 horizontal production wells and 22 horizontal water-injection wells – equivalent to over 323 million barrels of oil.

Appraisal wells resulted in a production rate of 3,500 barrels of oil per day back in March 2012 with analysts forecasting around 12,500 bopd.

The recent estimate will result in multi-billion pound revenue for the partners in the licence. Providence holds 80% stake, including San Leon Energy’s (LSE:SLE) 30% working interest, and Lansdowne Oil & Gas (LSE:LOGP) controlling the remaining 20%.

Shares of Providence settled back at £6.95 a share by 1:15 PM GMT, after rising as high as £7.22 minutes after trading commenced in London. In contrast, Lansdowne was down 3.9% to 61 pence. Only San Leon Energy sustained an upward trend, increasing 3.5% to 9.15 pence around the same hour.

Rennaisance

Providence’s Chief Executive, Tony O’Reilly, in an interview with BBC Radio 4, said the development is good news to the company’s shareholders as well as to the Irish economy, bailed out for €85 million during the financial crisis.

“…I think for an Irish perspective, I mean here we have no oil industry, and what this really heralds is the beginning of that industry,” Mr. O’Reilly said in an interview.

Mr. O’Reilly highlighted “enormous benefit” for the Irish economy, mentioning security of supply, job, balance of payment and a “renaissance” of interest in the offshore oil and gas exploration within the Irish territory.

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