Providence, partners farm out interest in Nemo heavy oil field offshore Ireland to Nautical

Source: Providence Resources

Irish producer Providence Resources (LON:PVR) and its license partners have agreed to farm down up to a 65% equity interest in the Nemo heavy oil discovery to Nautical Petroleum (LON:NPE).

The Nemo heavy oil accumulation underlies the Ardmore gas accumulation in Standard Exploration License 2/07 and is situated some 60 kilometers offshore Ireland in the North Celtic Sea Basin in 90 meters of water. Discovered in 1974, this 16-degree API heavy oil accumulation is estimated to have an in-place resource potential of up to 230 million barrels of oil.

In return for an initial 25% stake, Nautical will fund and carry out a focused work program on the development feasibility of the Nemo discovery.

Nautical has an option to increase its stake up to 65% and assume operatorship should it elect by the end of 2011 to drill an appraisal well on Nemo.

Providence currently holds an operated 72.5% interest in Nemo with partners Atlantic Petroleum (18.3%) and Sosina Exploration (9.2%). In the event that Nautical exercises its option and drills a well, the participating interests would be Nautical (65%), Providence (25.3%), Atlantic Petroleum (6.4%) and Sosina Exploration (3.2%). The farm-out transaction is subject to Irish governmental approval.

Nautical is currently involved in a number of similar heavy oil field developments in the UK North Sea including the Kraken discovery, which it operates, and Mariner, which is operated by Statoil. In April, Nautical farmed into the Baltimore heavy oil discovery, in the Celtic Sea, offshore Ireland where a development feasibility study is ongoing. Last week, Providence and Nautical announced that as part of the their ongoing Baltimore study, a new significant gas prospect, Marlin, had been identified in the area and that they had been granted an extension in the license option area by the Minister for Communications, Energy and Natural Resources.

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