SpotOn Energy gains exclusivity for Barryroe farm-in
- Business developments & projects
Irish oil and gas exploration company Providence Resources has moved to raise about $3 million through the issue of new shares and entered into an exclusivity deal for the farm-out of the Barryroe field, located offshore Ireland, with SpotOn Energy.
Providence said on Monday that if the fundraising was not successful, its ability to continue beyond the middle of May will be “materially compromised” and the outcome of the Barryroe farm-out process would be negatively impacted.
It is anticipated that the proceeds of the fundraising will be used principally to provide general working capital for the business to cover general administration, licensing, and placing costs until April 2021.
If the amount raised under the fundraising is increased as a result of excess demand, this will provide the company with additional working capital which will take it beyond this date and ensure greater financial flexibility.
The company also agreed on a non-binding deal with SpotOn Energy concerning the farm-out of its Barryroe oil and gas field in the Irish Sea.
The Barryroe oil and gas field is located on the Standard Exploration Licence (SEL) 1/11. The license is operated by EXOLA, a wholly-owned subsidiary of Providence, on behalf of its partner Lansdowne Celtic Sea Limited.
According to the term sheet agreement, the company granted SpotOn Energy a period of exclusivity until October 31, 2020, during which time SpotOn Energy will seek to agree to an appraisal work program for the Barryroe field and develop commercial terms to conclude a binding farm-out agreement within that period.
SpotOn Energy is a Norwegian offshore oil and gas field development company, registered in the UK. The company has experience designing and constructing semi-submersible drilling rigs for North Sea deployment and also in the design, development, and asset integrity management of offshore facilities.
Providence also confirmed that SpotOn agreed to invest an initial £300,000 ($370,000) into the company by subscribing directly with the company for subscription securities under the subscription and that it intends to make a further investment of £200,000 within six weeks through a subscription for new ordinary shares at the prevailing market price.
It is worth stating that the company completed a re-engineering of its business and had materially reduced its running costs. Also, a review of Providence’s exploration portfolio is now complete and is expected to result in additional license and work program cost reductions through 2020.
The company’s capital raising in September 2019 provided working capital for general, administrative, and license operating costs for the period to the beginning of February 2020.
While this period was extended, Providence stated that it had an urgent need for additional working capital to allow it to continue the Barryroe farm-out process with SpotOn.
It is worth adding that Providence recently submitted a planning application to undertake a site survey on a third Barryroe field appraisal location.