Providence completes Irish license farm-out

Irish oil and gas exploration company Providence Resources has received consent from the Minister of Communications, Climate Action, and Environment for the transfer of 30 percent equity in FEL 2/14 off Ireland to Capricorn.

Providence said on Monday that the consent followed the March farm-in by Capricorn, a subsidiary of Cairn Energy, where Capricorn will partner in the upcoming Druid and Drombeg 53/6-A well, scheduled for late June.

The approval by the Minister of Communications, Climate Action, and Environment means that the farm-in deal is now closed.

According to terms of the deal, Capricorn now has a 30 percent working interest in FEL 2/14 and will pay 45 percent of the drilling costs for the 53/6-A well, subject to a gross well cap of $42 million.

Also, Providence will receive a cash payment of $2.82 million, which is equal to 30 percent of the total sunk costs of $9.4 million incurred through June 30, 2016, by the company and its license partner Sosina. The cash payment will be paid on a pro rata basis.

As a result of this transaction, Providence remains the operator with a 56 percent interest, Capricorn now has 30 percent, and Sosina holds the remaining 14 percent interest.

To remind, Providence has already contracted the Stena IceMAX drillship for the drilling of the 53/6-A, subject to all regulatory consents. The drilling contract for the drillship provides for one firm well, plus an additional option for the drilling of a second follow-on well. The operational rate agreed for the rig is $185,000 per day.

Offshore Energy Today Staff