Standard Exploration Licence 1/11
Through its wholly owned subsidiary Exola DAC, the Company currently holds an 80% working interest in and is operator of SEL 1/11 which contains the Barryroe oil accumulation, but this working interest will be reduced to 40% subject to the closing of the Farm-out Agreement signed with APEC Energy Enterprise Limited as announced on March 28, 2018 (see below).
SEL 1/11 is located in the North Celtic Sea Basin, c. 50 km off the south coast of Ireland, being is situated in c. 100 m water depth. The licence is adjacent to the giant Petronas-operated Kinsale Head Gas Field.
In the past, under different operators, five wells were successfully drilled on Barryroe. All of these wells successfully logged hydrocarbon-bearing reservoirs with three successfully flowing oil to surface. In 2011, having acquired new 3D seismic data, the Company drilled the sixth well on this areally extensive field. In March 2012, the Barryroe partners announced the flow rates from this well, results which far exceeded pre-drill expectations with oil rates in excess of 3,500 BOPD from a 7 m vertical section of reservoir.
Post-well analysis, in conjunction with the new 3D seismic data set, led to a substantial upgrade in the field size to over 1 billion barrels STOIIP (2C). Subsequent work on multiple development concepts, together with detailed engineering studies on recovery factors, led to estimated 2C recoverable resources of over 300 million barrels of oil from the two main tested reservoir intervals.
In April 2013, a Competent Persons Report was issued by Netherland Sewell & Associates Inc. confirming the Company’s previously published figures on the main basal sandstone reservoir. In conjunction with a previous audit carried out by RPS Energy on the overlying secondary Middle Wealden reservoir, the total upgraded resource base at Barryroe is gross 346 MMBOE REC.
Further incremental resource potential has also been identified in logged hydrocarbon bearing intervals within stacked Lower Wealden and Purbeckian sandstones, which the Company estimates contain total associated P90, P50 & P10 in place oil resources of 456 MMBO, 778 MMBO and 1,165 MMBO, respectively.
In 2016, the Company updated on the resource potential of the Upper C-Sand interval. The latest estimated GIIP within SEL 1/11 & OPL1 option area is now estimated at c. 400 BSCF. During 2017, the Barryroe partners were granted a 2-year extension to the current phase of the Barryroe licence (SEL 1/11) to July 2019 as well as an extension to the term of the 2nd phase to July 2021.
Farm-out to APEC
In March 2018, the Company announced that it had signed a Farm-out Agreement with APEC Energy Enterprise Limited in relation to SEL 1/11. APEC is a privately owned Chinese company which has a strategic partnership with China Oilfield Services Co., Ltd and JIC Capital Management Ltd for the investment and development of offshore oil and gas opportunities worldwide utilising Chinese drilling units, services and equipment.
Under the terms of the Farm-out Agreement, in consideration for APEC being assigned a 50% working interest in SEL 1/11, the following terms apply:
APEC will be directly responsible for paying 50% of all the cost obligations associated with the drilling of 3 vertical wells, plus associated side-tracks and well testing (hereinafter referred to as the “Drilling Programme”);
APEC will provide a drilling unit and related operational services for the Drilling Programme;
APEC will finance, by way of a non-recourse loan facility (the “Loan”), the remaining 50% of all costs of the Barryroe Partners in respect of the Drilling Programme;
The Loan, drawable against the budget for the Drilling Programme, will incur an annual interest rate of LIBOR +5% and will be repayable from production cashflow from SEL 1/11 with APEC being entitled to 80% of production cashflow from SEL 1/11 until the Loan is repaid in full;
Following repayment of the Loan, APEC will be entitled to 50% of production cashflow from SEL 1/11 with Exola and Lansdowne being entitled to 40% and 10% of production cashflow, respectively.
Exola will act as operator for the Drilling Programme with technical assistance being provided by the APEC Consortium; and, After the completion of the Drilling Programme, APEC will have the right to become operator for the development/production phase.
The closing of the Farm-out, which is expected to occur in Q3 2018, is conditional on completion of all ancillary legal documentation required to implement the terms of the Farm-out Agreement, and is subject to the approval of the Minister of State at the Department of Communications, Climate Action and Environment and the approval of the Chinese government.
Providence Resources' Barryroe Oil Field - Oil in Place Resource Update
Providence Resources' Barryroe Oil Discovery
Barryroe Well Testing. March 14th, 2012