French oil company Total has exercised its option to farm into and take operatorship of Providence Resource-operated license offshore Ireland.
The license is located in the Southern Porcupine Basin, some 220 kilometers off the southwest coast of Ireland. It is operated by Providence with Cairn and Sosina as partners.
Providence informed on Thursday that Total has exercised the option to farm-in for a 35% interest and operatorship in FEL 2/14, subject to the approval of the Minister of State at the Department of Communications, Climate Action and Environment.
The agreement with Total E&P Ireland, a subsidiary of Total, will leave Providence with a 28% interest in FEL 2/14.
During 2017 Providence was focused on the planning, consenting and drilling of the 53/6-1 Druid/Drombeg exploration well. The Stena Drilling-owned drillship Stena IceMAX was used for the operations. However, the results were a disappointment for Providence due to porous water-bearing reservoir interval. The drillship departed from the Druid Drombeg well site in late September, following completion of all requisite plug and abandonment operations.
According to Providence, Total’s option over FEL 2/14 allowed the company to deliver on its objective from the 2016 fundraising by securing incremental capital to evaluate the deeper Drombeg prospect alongside the planned drilling of Druid, whilst also providing surplus cash which is now being partially deployed to the Barryroe project.
Namely, Total paid a total of $27 million, $21.6 million to Providence and $5.4 million to Sosina, as part of the exclusive option for a potential farm-in into the license off Ireland.
Total paid the first tranche of $20.25 million to Providence and Sosin back in June. The second payment was made in September, giving the French company an opportunity to exercise the option within 60 business days of the completion (plugging and abandoning) of the then upcoming 53/6-A well targeting the Druid and Drombeg prospects.
In related news, Providence seems to be on track to secure another partner for its SEL 1/11 license off Ireland, which contains the Barryroe oil field, ahead of a multi-well program.
Earlier this month, having reached provisional agreement on key commercial terms with a potential farminee, Providence has granted a period of exclusivity to the farminee in order to conclude contractual negotiations which, if successful, would deliver a multi-well program at Barryroe.
Offshore Energy Today Staff