Providence Resources is remaining positive despite not finding oil at the first of two prospects in the Porcupine basin off the Irish coast

Oil prospectors positive despite empty Irish test well

Prospectors have failed to find oil at an exploration well in deep water off the southwestern coast of Ireland.

Providence Resources said it found water, not oil, at the Dunquin North well, drilled by its partner Exxon Mobil, sending its shares down on Monday to their lowest level in over a year.

But analysis of the well still found indications of the potential for oil to be found nearby, keeping alive hopes of big offshore discoveries in the area and allowing Providence to remain positive for its second prospect there, Dunquin South.

"While the lack of a discovery at Dunquin will be a disappointment, the presence of a working hydrocarbon system is the next best result," Merrion analyst Muna Muleya said.

The Dunquin well, located in what is known as the south Porcupine basin, was seen as a significant test of the area because it was the first well to be drilled in the basin proper.

The last well in the southern area was drilled on the flanks of the basin in the 1980s. Drilling took place in the northern Porcupine basin in the 1970s.

Interest in Ireland's potential for oil has risen in the past few years, and it is already on track to become an oil producer, with the development of Providence's Barryroe field nearer its south coast.

But it is the large potential of yet-to-be-discovered fields in the Atlantic that are seen as the real prize.

"We expect the levels of interest in the Irish western offshore to increase, especially as the presence of oil and the massive size of the carbonate reservoir indicate potential for very large quantities of oil," Davy analysts said, following the Dunquin disappointment.

Dublin-based explorer, Fastnet Oil & Gas, is in the process of trying to secure a partner for its Irish licences, while other small explorers in the area such as Petrel Resources and Europa have already secured larger partners to help them fund drilling.

Providence, meanwhile, is looking to sign a partner to help cover the up to $1.7bn (£1.1bn) cost of developing Barryroe, Ireland's first commercially viable oil field.

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