Providence Resources P.l.c., the AIM and IEX listed production and development company, confirms that, together with the partner Sosina Exploration Ltd ("Sosina"), it has signed a staged farm-out agreement with Chrysaor Holdings Limited ("Chrysaor"), a privately owned development led company, on its Spanish Point discovery, in the Porcupine Basin, off the west coast of Ireland.
The terms of the farm-out agreement provide for Chrysaor to conduct a significant appraisal work programme on the Spanish Point discovery in return for a minimum 30% interest in Spanish Point. Chrysaor then has the option to earn up to a maximum 70% interest in the event that two wells are subsequently drilled on Spanish Point.
The agreement is subject to certain milestones being achieved with an initial commitment by Chrysaor to fund the budgeted cost of a 3-D seismic programme on Spanish Point as consideration for the initial 30% interest. Providence will retain a 56% interest in, and the Operatorship of, Spanish Point for the upcoming 3-D seismic programme, with Chrysaor taking a 30% interest. Sosina will retain a 14% interest.
Dependent on the results of the 3-D seismic programme, Chrysaor may then undertake to finance the drilling of up to two appraisal wells where it will commit not less than 60% cost share, whilst also capping the other partners' cost share, to earn an additional interest of up to 40%, thereby reducing the other partners' stakes pro rata.
The proposed assignment of the initial 30% interest to Chrysaor is subject to Irish governmental approval.
Tony O'Reilly, Chief Executive of Providence, said:
"We are delighted to have agreed this staged farm out deal with Chrysaor on the Spanish Point Project. Having carried out the necessary pre-development work, it is very exciting that the partnership has now been able to partner with Chrysaor to advance this large project to the next exciting stage. We look forward to working with Chrysaor on this project.
Phil Kirk, Chief Executive of Chrysaor said:
"We're very pleased to be joining the Providence led group and hope our own experience can help to create a successful development of the Spanish Point discovery. Providence and its partners have a good technical understanding of the potential of Spanish Point, which the group can now capitalise on through a step-by-step appraisal programme."
