Under the terms of the Heads of Agreement, IGas has agreed to acquire Providence's 100% interest in the Singleton oil field, located in UK Production Licence (PL) 240, as well as its 50% operated interest in Petroleum Exploration and Development Licence (PEDL) 233, which includes the Baxter's Copse oil discovery and Burton Down exploration prospect. Both of these licences are located in West Sussex, onshore United Kingdom.
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The total consideration amounts to US$66 million and on completion, the funds will be applied by Providence to paying down all outstanding debt to Deutsche Bank AG, approximately US$44 million, with the balance available for general working capital purposes.
The divestment of these UK onshore assets further facilitates Providence in its primary corporate objective of completing the largest ever concerted drilling programme offshore Ireland.
Tony O'Reilly, Chief Executive of Providence said: "We are pleased to announce this transaction with IGas which comes at an opportune time for Providence given our recent success with the Barryroe well offshore Ireland. Providence has held an interest in the Singleton field since the inception of the Company. Whilst the asset has performed well for us over the years, it has become less of a focus following our recent Irish drilling
success, together with the significant exploration and appraisal drilling activities, which are planned for 2013 and beyond. The cash received will allow us to be debt free and will provide incremental working capital for drilling and overheads."
