Providence oil find beats forecast

Shares in Providence Resources surged this afternoon after the exploration firm said testing had revealed more oil than expected at its Barryroe well off the southern coast of Ireland.

Testing showed flow rates at Barryroe, which is 50km off the Cork coast, are 3,514 barrels of oil per day, almost double its pre-drill target of 1,800. Gas flow rates were 4,000 barrels of oil equivalent per day.

The reservoir needed to have flow rates of at least 1,800 barrels a day and it would need to produce at least 59 million barrels to be commercial.

"The well has also confirmed that the basal sands are laterally continuous, highly productive and that the oils are of a very high quality," said chief executive Tony O'Reilly.

Minister of State at the Department of Communications, Energy and Natural Resources Fergus O'Dowd welcomed the test results.

"My Department is actively promoting exploration for oil and gas both for security of energy supply and as a potentially valuable source of revenue," he said. "The results of the Barryroe well further demonstrate the hydrocarbon potential present offshore Ireland and this good news should be of considerable interest to the oil industry."

In a note today, Davy Stockbrokers said the well has important implications for Providence, its partners and the Irish offshore in general.

"There are a number of legacy discoveries offshore Ireland – unconventional and straightforward – that may now be taken much more seriously," Job Langbroek and Caren Crowley wrote.

"Providence is particularly well poised to avail of this opportunity with the foremost licence position offshore Ireland."

The exploration company is preparing to test upper gas bearing zones of the drill zone.

Providence took over as operators of Barryroe in late 2010. It owns an 80 per cent stake in the operation, with the remaining 20 per cent held by Lansdowne Oil & Gas.