OilVoice - Providence Secures Option to Enter Gas Storage and Trading Markets

Providence Secures Option to Enter Gas Storage and Trading Markets

Tuesday, June 16, 2009

• Providence's new subsidiary EIRGAS secures option to acquire 40% of Kinsale Head assets from Petronas
• Right to acquire 40% interest on same commercial terms
• Assets include producing gas fields and gas storage/ trading activities

Providence Resources P.l.c., the AIM and IEX listed exploration and production company, announces that its wholly owned subsidiary, EIRGAS Limited ('EIRGAS'), has been granted an Option (the "Option") to acquire a 40% of 100% operated interest in the Kinsale Head Area comprising Kinsale Head, South West Kinsale and the Ballycotton gas fields, as well as an 86.5 % interest in the gas producing Seven Heads field ("Kinsale Head"), located in the Celtic Sea, from Labuan Energy Corporation Limited, a wholly owned subsidiary of PETRONAS International Corporation Ltd. ('PICL') which is a wholly-owned overseas investment arm of Petroliam Nasional Berhad ('PETRONAS'), the national oil company of Malaysia. EIRGAS is a special purpose vehicle established by Providence to invest in gas production, storage and trading opportunities offshore Ireland and in the United Kingdom.

The grant of the Option follows PETRONAS' purchase of a 100% interest in the Kinsale Head gas fields from Marathon Petroleum Venus Ltd. ('Marathon'), as first announced on December 17th, 2008 and concluded on April 17th, 2009 (the 'Transaction'). The Transaction had a total value of US$ 180 million with an effective date of 1st January 2008.

Under the terms of the Option agreed between Providence and PETRONAS, (as negotiated and agreed with PICL's wholly-owned subsidiary, Labuan Energy Corporation Ltd.) EIRGAS has secured the right, exercisable at its discretion and subject to regulatory approval, to purchase a 40% stake in Kinsale Head within 3 months of June 15th, 2009

Commenting, Mr Tony O'Reilly, Chief Executive of Providence, said:
"We are delighted to have been able to agree this unique Option Agreement with PETRONAS. An investment in the Kinsale Head area not only allows us to combine our extensive operational experience offshore Ireland with their proven track record in gas production, storage and trading, but also gives us exposure to the technical resources of PETRONAS, one of the world's largest oil and gas companies.

"Assuming that EIRGAS exercises its Option and the transaction completes as planned, not only will Providence's attributable daily production double to over 4,000 BOEPD, but we will also gain exposure to existing and new gas storage and trading opportunities, which we see as a high potential future growth area. Additionally, the deal would also give EIRGAS an opportunity to potentially monetise gas from some of Providence's adjacent gas discoveries in the Celtic Sea, as well as from third party fields."

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