Barryroe Partners Agree Farm-Out
Irish explorer Providence Resources and partner Lansdowne Oil & Gas have reached an agreement on farming out a 50% interest in the Barryroe oil and gas field in Ireland's Atlantic zone to Norway's SpotOn Energy.
SpotOn, partnered with international service providers Schlumberger, Aker Solutions, AGR, Maersk Drilling, Keppel FELS and Aibe, entered negotiations in July to farm into Barryroe and fully fund an early development programme (EDP). The exclusivity period had been due to expire on October 31 but was extended to November 30.
The deal's closure will leave Providence with a 40% interest in Barryroe, the company said in a statement on November 30, while Lansdowne will be left with 10%. It is conditional on SpotOn ensuring that at least $166mn of funding for the EDP is in place, as well as on Irish government approval.
SpotOn will also provide a $5mn non-recourse loan to Providence to fund its share of preparatory and permitting work costs. It will also cover 50% of the cost of the EDP and the field's full development, and lend funds to Providence and Lansdowne to cover their half of expenditure.
SpotOn will be entitled to 80% of net production cash flow until the debt is paid, after which its share will fall to 50%. After the EDP work programme is completed and first oil achieved, it will also have an option to subscribe for 60mn shares in Providence at a strike price of €0.17 ($0.20)/share within six months.
Barryroe is primarily an oil project, but the field could also flow up to 120mn ft3/day of gas, Providence CEO Alan Linn told NGW in August. The field's development will provide Ireland with indigenous energy and petrochemical feedstock, increasing the country's energy security, he said in a statement on November 30.
"Over the coming months, we will be working with the SpotOn team to complete the transaction; finalise the project schedule, progress the government approvals and develop the detailed drilling and facilities work programmes," Linn said. "I think Ireland and the Cork area will benefit economically from the field development and subsequent production for many years to come."
The EDP programme will involve drilling three production wells and a water injection well, tied to a subsea manifold and connected to a leased floating production storage and offloading unit. Planning for the wells is at an advanced stage, Providence said, and the SpotOn consortium expects to mobilise a rig to the site in late 2022.