Following months of delays and several extensions, Irish Providence Resources has not received any funds from its Chinese partner APEC for the Barryroe license off Ireland and it has not agreed any further extension. As a result, APEC no longer has exclusivity over the license and Providence is free to pursue other partners.
The SEL 1/11, which contains the Barryroe oil accumulation, is operated by EXOLA (40%), a Providence subsidiary, on behalf of its partners, APEC Energy and Lansdowne (10%).
The area lies in c. 100-meter water depth in the North Celtic Sea Basin and is located c. 50 km off the south coast of Ireland.
On June 5, 2019, the company announced that it had agreed certain amendments to the farm-out agreement for the Barryroe Project with APEC Energy and, together with EXOLA and Lansdowne, including a revised backstop date with APEC for receipt of the $9 million loan advance to June 14, 2019, which was subsequently extended through various extensions to September 30, 2019.
As at close of business on September 30, 2019, no funds had been received in the company’s account, according to Providence’s statement on Tuesday. Noting this specific contractual non-performance to the amended terms to the updated FOA, the company has not agreed any further extension with APEC to the updated FOA.
Without prejudice to any other legal remedies that the company may have, the company has now advised APEC that it will begin with the license reversion process of APEC’s 50% working interest in SEL 1/11 to EXOLA and Lansdowne on a 40% and 10% basis, respectively.
Additionally, APEC has been advised that it no longer retains exclusivity and that Providence is now free to open up commercial discussions with third parties on the Barryroe asset.
Steve Boldy, Chief Executive Officer of Lansdowne, commented: “We continue to believe Barryroe offers a highly attractive appraisal opportunity in shallow water for a number of potential industry farm-in partners. We are now free to pursue discussions with other interested parties while the door remains open for APEC to deliver funds as called for under the farm-out agreement and proceed with the planned drilling program.
“Barryroe holds substantial 2C resources, independently audited at 346 MMBOE Gross. In the event Lansdowne reverts to 20% working interest, this results in net 2C Resources of 69 MMBOE. At our current share price these 2C resources are valued at only c.12c/BOE. The recent site survey has covered two locations, A & B, that will target both the Middle Wealden and Basal Wealden reservoirs and, combined with the area already appraised by the 48/24-10z well, can address more than 70% of the 2C resource potential.”
Following the approval at the Extraordinary General Meeting held on Monday of the resolution to effect the placing to raise gross proceeds of $3.76 million, the company is now moving forward with the implementation of the redundancy program, where technical and support staff will be made redundant as part of the re-engineering of the company’s business model.
Providence announced its decision to lay off all of its technical and support staff and downsize its board to reduce costs in early August.
As a result, Lex Gamble and Philip O’Quigley, both Non-Executive Directors, have stepped down from the board of directors effective September 30, 2019. The board now comprises Pat Plunkett (Chairman), Dr. Angus McCoss (Senior Independent Director) and Tony O’Reilly (Chief Executive Officer).
The company projects that the restructuring measures will reduce its annual cost base (excluding CAPEX) from $5.3 million currently to $1.9 million, representing an approximate 65% reduction in annualized costs.
Voluntary surrender of Diablo
Providence has also provided an update in relation to Frontier Exploration License (FEL) 2/14, which contains the Diablo prospect.
FEL 2/14 is operated by Total (35%) on behalf of its partners Capricorn (30%), a subsidiary of Cairn Energy, Providence Resources (28%), and Sosina Exploration (7%). The area lies c. 1,300-meter water depth in the southern Porcupine Basin and is located c. 150 km off the west coast of Ireland.
Following further detailed technical assessment of FEL 2/14, the JV partners could not recommend any further prospect maturation and accordingly, Total, on behalf of the JV partners, has now confirmed that it has written to the Department of Communications, Climate Action and Environment confirming that the JV partners will voluntarily surrender the license with effect from December 31, 2019.
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