Providence Resources inks farm-in deal on FEL 2/14

Shares in Providence Resources are up more than 9% after it inked a farm-in agreement on Frontier Exploration Licence 2/14 with Capricorn Ireland Ltd, a subsidiary of Cairn Energy.

FEL 2/14 lays at roughly 2250m water depth in the southern Porcupine Basin, and was about 220km off the southwest coast of Ireland.

The licence is operated by Providence on behalf of its partner, Sosina Exploration Ltd.

FEL 2/14 contained the Paleocene "Druid", Lower Cretaceous "Drombeg" and Jurassic "Diablo" exploration prospects.

In consideration for Capricorn taking a 30% working interest in FEL 2/14, Capricorn would pay
45% of the costs of drilling the 53/6-A exploration well in 2017, subject to a gross well cap of $42m.

It would also make a cash payment of $2.82m (being 30% of the total sunk costs of $9.4m incurred to June 30, 2016 by Providence and Sosina on FEL 2/14) on a pro rata basis.

At 13:23 GMT, shares in AIM-listed Providence were up 9.02% to 16.62p each.