DUBLIN-BASED EXPLORATION FIRM Providence Resources has abandoned its prospective oil well off the coast of Kerry after “disappointing” drill results.
In July the company started drilling for oil in the southern Porcupine Basin, about 220 km off the south-west coast of Ireland.
The project was one of the first undertaken by an indigenous firm in Irish waters in several years, and it was hoped that a successful drill could yield hundreds of millions of barrels of oil.
However, the firm announced this morning that it did not find a significant oil presence during drilling.
The well is being plugged and abandoned and the Stena ‘IceMAX’, a deep-water drillship contracted for the venture, is being demobilised from Irish waters.
Providence chief executive Tony O’Reilly said that the well results are “disappointing”, and added that the company will now assess what this means for its other licences in nearby areas.
The company’s share price dropped sharply in the wake of the announcement. At the time of writing it was down by about a third compared to its closing price on Friday.
O’Reilly said that the company will now focus on its Barryroe oil field, which is located in the Celtic Sea south of Cork and is estimated to hold slightly over 300 million recoverable barrels of oil.
Providence has been working for years to progress the field, and analysts now hope it is finally close to drilling at the site.
In a briefing note Davy stockbrokers echoed that the result was a disappointing one.
However, it added: “The crucial difference between this and other high impact wells the group has drilled is that it remains well financed to drill the next well in its programme, which is likely to be the Barryroe prospect in the Celtic Sea.
“Frontier drilling is high risk but the Porcupine continues to be an area with significant potential.”
It added: “The onus now shifts back to Barryroe. The latest indication is that an appraisal well will be drilled next year.
“To this end, a statement of interest with respect to tendering for the drilling of the 2018 Barryroe well was sent out recently, further underpinning the group’s resolve to drill the well.”