Tony O’Reilly Jr, the entrepreneur and son of the former Independent owner Sir Anthony, is close to securing a $300m investment in his project to extract oil off the coast of Ireland.
Mr O’Reilly’s Providence Resources, whose shares are listed in the junior London Aim market, has been sounding out bigger industry partners to invest in the Barryroe oilfield in an arrangement known as a “farm-out” in the industry. Such deals are common for smaller explorers, who specialise in discovering the oil fields but lack the resources or engineering expertise to exploit what they find.
Having held negotiations with at least a dozen interested parties, Providence’s advisers at Rothschild have refined the talks down to one large American operator with whom talks are at an advanced stage, The Independent has learned.
Investors have been holding out for decades for a major Irish oil play. Exxon first found oil at Barryroe – 45 miles south of the Irish coast – in 1974 but deemed it uncommercial with that era’s technology. The Corrib field, 52 miles off the west coast could be enough to supply 60 per cent of Ireland’s gas needs, its operator Shell has claimed, although that field’s exploitation was delayed by environmental concerns.
However, with new engineering techniques, and a higher oil price, Mr O’Reilly has said Barryroe “could be the new North Sea”.
Providence shareholders include Sir Anthony with 15.4 per cent. Although he has kept quiet on the issue, others have clearly been losing patience, with the share price currently languishing at 182p compared with 710p in 2012. Ballyroe is by far the company’s biggest prospect. Brokers at Liberum Capital put a value on it of as much as 1730p a share, so if a deal is forthcoming, Providence’s share price could leap.
However, many oil assets are currently up for sale or have licensees seeking outside investors. Oil majors including BP and Shell have huge disposal programmes. This has made it hard for the likes of Providence to strike farm-out deals.
An independent report on the Ballyroe asset, in which Providence owns an 80 per cent stake, found that there were some 311 million barrels of recoverable oil there.