PROVIDENCE RES. Providence Resources P.L.C. - Standard Exploration Licence 1/11 - Barryroe, North Celtic Sea Basin

 
TIDMPVR 
 
 
   THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION 
 
   STANDARD EXPLORATION LICENCE 1/11 
 
   BARRYROE, NORTH CELTIC SEA BASIN 
 
 
   -- BINDING BARRYROE FARM-OUT AGREEMENT SIGNED 
 
   -- DRILLING PROGRAMME OF 5 FIRM WELLS AND 2 OPTION WELLS SET TO COMMENCE IN 
      2019 
 
   -- CASH ADVANCE PAYMENTS OF $19.5 MILLION TO EXOLA AGREED 
 
 
   Dublin and London - September 20, 2018 - Providence Resources P.l.c. 
(PVR LN, PRP ID), the Irish based Oil & Gas Exploration Company 
("Providence" or the "Company"), today provides a commercial update on 
Standard Exploration Licence ("SEL") 1/11 that contains the Barryroe oil 
accumulation.  SEL 1/11 is operated by EXOLA DAC ("EXOLA", 80%), a 
wholly-owned Providence subsidiary, on behalf of its partner, Lansdowne 
Celtic Sea Limited ("Lansdowne", 20%).  The area lies in c. 100 metre 
water depth in the North Celtic Sea Basin and is located c. 50 km off 
the south coast of Ireland. 
 
   Binding Barryroe Farm-Out with APEC 
 
   Further to the RNS announcement of March 28, 2018 regarding the signing 
of a Farm-Out Agreement ("FOA") with APEC Energy Enterprises Limited 
("APEC"), the Company is pleased to now confirm that, following the 
completion of all required ancillary documentation and the receipt of 
both governmental consents, EXOLA, Lansdowne and APEC (collectively 
referred to as the "Barryroe Partners") have signed an amended and 
restated  Farm-Out Agreement ("Updated FOA") which assigns 50% equity in 
SEL 1/11 to APEC. 
 
   Summary of Updated FOA Terms & Conditions 
 
   The Updated FOA provides for  a fully cost-carried firm programme 
comprising of the drilling and testing of four vertical wells and one 
horizontal sidetrack (collectively the "Drilling Programme"), plus the 
optional drilling of two additional horizontal wells, together with cash 
advances to EXOLA for certain agreed project and operational costs such 
as well site survey acquisition totaling $19.5 million. 
 
   Commenting today, Tony O'Reilly, Chief Executive Officer of Providence 
Resources said: 
 
   "We are very pleased to confirm that, having received governmental 
approval for the assignment of equity in Barryroe to APEC, we have now 
executed a revised Farm-out Agreement with APEC. 
 
   The finalisation of these binding farm-out terms with APEC is 
transformational for Providence as it delivers a firm and comprehensive 
drilling programme comprising of four vertical wells and one horizontal 
sidetrack, cash advances for certain operational costs of $19.5 million, 
plus the financing of two further optional wells.  Subject to regulatory 
consents and appropriate arrangements with contractors, we expect 
mobilisation to commence in Q2 2019.  In this regard, we are also 
pleased to confirm that we have contracted Gardline's Ocean Observer 
vessel to carry out the requisite site surveys during Q4 2018. 
 
   This drilling programme is a significant step forward for Barryroe as it 
is designed to provide modern dynamic data that will assist in the field 
development to production.  Importantly, the structure of the farm-out 
transaction means that Providence has no upfront risk or capital 
exposure for the drilling programme, whilst also providing a roadmap to 
take this project, subject to the results of the drilling and subsequent 
regulatory consents, to project sanction and then on to production." 
 
   As certain operational, financial and commercial terms of the 
transaction have changed from those previously announced on March 28, 
2018, the section below provides the final details of the Updated FOA: 
 
 
 
   Cash Payments 
 
 
   -- With the signing of the Updated FOA, APEC will now proceed with the 
      payment of $9.0 million to EXOLA for certain agreed front-loaded project 
      related costs; 
 
   -- A further $10.5 million payment will be made to EXOLA to cover future 
      operational costs, such payment to be made 14 days prior to the 
      commencement of drilling. 
 
 
   Drilling Programme 
 
 
   -- The drilling of four vertical wells allowing for the evaluation of the 
      main Basal Wealden reservoir interval; 
 
   -- The first well to include the drilling of a sidetrack to provide a 
      200-metre horizontal reservoir section in the Basal Wealden; 
 
   -- Drill-stem testing is planned for three of the four vertical wells, as 
      well as the horizontal sidetrack; 
 
   -- The four vertical wells are located across the geographic extent of the 
      Barryroe structure and are designed to test the full potential of the 
      Basal Wealden; 
 
   -- Drilling to the underlying Purbeckian and Upper Jurassic section is 
      planned in three of the four wells; 
 
   -- Planning for the drilling of these wells is already advanced, together 
      with the consenting of the recently contracted Gardline "Ocean Observer" 
      vessel to carry out the well site survey operations during Q4 2018, 
      subject to regulatory approval; 
 
   -- Rig procurement, based on a Q2 2019 mobilisation for the Drilling 
      Programme is also well advanced, as are contract discussions with various 
      oil field service providers; 
 
   -- At the completion of the Drilling Programme, APEC also has an option to 
      drill, test and complete two further additional horizontal wells to the 
      Basal Wealden reservoir interval ("Option Wells"); 
 
 
   Financing 
 
 
   -- APEC is directly responsible for paying 50% of all cost obligations 
      associated with the Drilling Programme, and the Option Wells (if 
      applicable); 
 
   -- APEC to finance, by way of a non-recourse loan facility (the "Loan"), the 
      remaining 50% of all cost obligations attributable to EXOLA and Lansdowne 
      in respect of the Drilling Programme as well as the Option Wells (if 
      applicable); 
 
   -- 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; 
 
   -- The 4.5% Net profits Interest, held by San Leon Plc, has not been 
      assigned to APEC and so remains the obligation of EXOLA. 
 
 
 
   Operations 
 
 
   -- EXOLA will remain as Operator of SEL 1/11 for the execution of the 
      Drilling Programme; 
 
   -- Following completion of the Drilling Programme, APEC will have the right 
      to become Operator for the development/production phase (subject to 
      Ministerial consent). 
 
 
 
 
   Working Interest 
 
 
   -- Following governmental approval for the assignment of equity to APEC, the 
      revised working interest will be APEC (50%), EXOLA (40%), and Lansdowne 
      (10%), with EXOLA retaining the role of Operator of SEL 1/11. 
 
 
   Warrants 
 
 
   -- Upon completion of the Drilling Programme, APEC will be able to subscribe 
      for warrants over 59.2 million shares in Providence at a strike price of 
      GBP0.12 per share (the "Warrants"). 
 
   -- The Warrants, representing circa 9.9% of the current issued share capital 
      of Providence, are exercisable for a period of 6 months following the 
      completion of the Drilling Programme 
 
 
 
 
INVESTOR ENQUIRIES 
Providence Resources P.l.c.              Tel: [phone] 
Tony O'Reilly, Chief Executive Officer 
Dr. John O'Sullivan, Technical Director 
 
Cenkos Securities plc                    Tel: [phone] 
Neil McDonald/Derrick Lee 
 
J&E Davy                                 Tel: [phone] 
Anthony Farrell 
 
Mirabaud Securities Limited              Tel: + 44 20 3167 7221 
Peter Krens 
 
MEDIA ENQUIRIES 
Powerscourt                              Tel: [phone] 
Peter Ogden 
 
Murray Consultants                       Tel: [phone] 
Pauline McAlester 
 
   ANNOUNCEMENT 
 
   This announcement has been reviewed by Dr John O'Sullivan, Technical 
Director, Providence Resources P.l.c.  John is a geology graduate of 
University College, Cork and holds a Masters in Applied Geophysics from 
the National University of Ireland, Galway. He also holds a Masters in 
Technology Management from the Smurfit Graduate School of Business at 
University College Dublin and a doctorate in Geology from Trinity 
College Dublin.  John is a Chartered Geologist and a Fellow of the 
Geological Society of London.  He is also a member of the Petroleum 
Exploration Society of Great Britain, the Society of Petroleum Engineers 
and the Geophysical Association of Ireland. John has more than 25 years 
of experience in the oil and gas exploration and production industry 
having previously worked with both Mobil and Marathon Oil.  John is a 
qualified person as defined in the guidance note for Mining Oil & Gas 
Companies, March 2006 of the London Stock Exchange. Definitions in this 
press release are consistent with SPE guidelines. SPE/WPC/AAPG/SPEE 
Petroleum Resource Management System 2007 has been used in preparing 
this announcement. 
 
   ABOUT PROVIDENCE RESOURCES 
 
   Providence Resources is an Irish based Oil & Gas Exploration Company 
with a portfolio of appraisal and exploration assets located offshore 
Ireland.  Providence's shares are quoted on the AIM in London and the 
ESM in Dublin. Further information on Providence can be found on 
www.providenceresources.com 
 
   ABOUT APEC 
 
   APEC Energy Enterprise Ltd. was established in 2014 as a Hong Kong 
registered company with headquarters in Beijing. In addition to its 
original focus on offshore oil & gas services, APEC provides upstream 
energy acquisition advice and management services in partnership with 
Chinese Oil Companies, offshore and onshore service providers, and SOE 
investment groups. www.apecenergy.com.  In 2017, APEC established a 
strategic partnership with COSL and JIC for the investment and 

development of offshore oil and gas opportunities worldwide, utilising 
Chinese infrastructure and equipment (most notably Chinese offshore 
drilling units/vessels) to earn equity positions in projects. 
 
   ABOUT LANSDOWNE 
 
   Lansdowne Oil & Gas (LOGP.LN) is a North Celtic Sea focussed oil and gas 
exploration company quoted on the AIM market and headquartered in 
Dublin. Lansdowne holds acreage in the north Celtic Sea Basin, Ireland. 
For more information on Lansdowne, please refer to 
www.lansdowneoilandgas.com 
 
   This announcement is distributed by Nasdaq Corporate Solutions on behalf 
of Nasdaq Corporate Solutions clients. 
 
   The issuer of this announcement warrants that they are solely 
responsible for the content, accuracy and originality of the information 
contained therein. 
 
   Source: Providence Resources plc via Globenewswire 
 
 
  http://www.providenceresources.com/html/ 
 

(END) Dow Jones Newswires

September 20, 2018 02:00 ET (06:00 GMT)

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