Ireland Operations

OFFSHORE WEST OF IRELAND

FRONTIER EXPLORATION LICENCE 2/04 & 4/08 (56% interest)

SPANISH POINT/BURREN - FEL 2/04
SPANISH POINT NORTH - FEL 4/08

The 56%-owned Spanish Point gas condensate discovery is located in FEL 2/04 in the Main Porcupine Basin some 200km off the west coast of Ireland. The licence authorisation which covers blocks 35/8 & 9 lies in c. 400m water depths and was granted in November 2004 for a 15 year term. The discovery well (35/8-2) was drilled by a consortium led by Phillips Petroleum (and included Atlantic Resources, the predecessor company to Providence) in 1981 and flowed c. 1,000 BOPD and c. 5 MMSCFGD from one of four logged payzones of Upper Jurassic age. Post-drill analysis by Phillips suggested that while the discovery could contain resources of up to 1.1 TSCFG and 112 MMBO, it was deemed uneconomic due to a combination of low commodity prices, high production costs and lack of gas infrastructure in Ireland at the time. Providence has recently commissioned a series of independent reports which suggest that the field contains estimated contingent resources (2C) of 1.4 TSCFG and 160 MMBO with significant upside potential both within the field and as in adjacent prospects.

In March 2008, the Company was awarded additional acreage adjacent to the Spanish Point discovery under the Irish government’s 2007 Porcupine Licensing Round. This area may contain extensions to the Spanish Point and Burren hydrocarbon systems.

In August 2008, following an extensive farm-out process, the Company confirmed that, together with its partner Sosina Exploration Ltd, it had signed a staged farm-out agreement with Chrysaor Holdings Limited, a privately owned development-focused company, on its Spanish Point discovery. The farm out agreement covers Spanish Point, Burren and the recently acquired FEL 4/08 licence.

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 3D seismic programme on Spanish Point as consideration for the initial 30% interest.

This 3D seismic programme will take place in summer 2009.