The Sunday Times - Business
The Sunday Times February 12, 2006
O’Reilly and Exxon team up to drill for offshore gas
Tracey Boles
Providence Resources....quoted on the London AIM
symbol PVR
EXXON MOBIL, the American oil giant, has signed a deal with Providence Resources, the Irish company part owned by Sir Anthony O’Reilly, to drill for natural gas in what could turn out to be one of western Europe’s most significant reserves.
The joint venture between Exxon and Providence, which will be announced on Monday, will see Exxon invest at least $50m (€42m) in exploring the Dunquin field, 200km off Ireland’s west coast.
If the field turns out to be as big as initial studies indicate, some analysts say it could be worth up to $25 billion.
Providence is 45% owned by O’Reilly, who also owns nearly a third of Independent News and Media. It is run by his son, Tony junior, previously a senior executive with Arcon Resources and Waterford Wedgewood.
Seismic studies have indicated the 700km square Dunquin field, which Providence holds the exploration licence for, might contain up to 25 trillion cubic feet of natural gas and four billion barrels of oil.
The Irish company, whose market cap is about £70m (€102m), is a minnow compared to Texas-based Exxon, which reported record $36 billion profits at the end of January.
Under the terms of the deal with Providence and its minority partner Sosina, Exxon will take an 80% stake in Dunquin and shoulder 100% of the exploration costs. Detailed seismic studies will now be conducted ahead of the first drilling, expected this summer.
A trillion cubic feet of natural gas would generate revenues of at least $1 billion and potentially between $5 billion and $10 billion over the life of the asset, according to analysts.
Providence earlier this month secured a €50m revolving credit facility for the acquisition of new production assets as well as the development of new projects. The facility was advanced by Macquarie Bank of Australia and will have an initial duration of 48 months.
O’Reilly has been searching for the right oil and gas reserve to develop for 30 years.
His first exploration venture was Atlantic Resources, which merged with Conroy Petroleum in 1992 to form Arcon. Providence was spun off from Arcon in 1997.
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