The Government has rubber-stamped the transfer by Providence Resources of 30 per cent of an exploration licence off the southwest of Ireland to Scottish company, Cairn Energy.

Providence announced in March that it had reached agreement with Cairn, via its Irish subsidiary Capricorn, to transfer the stake in the so-called Fel2/14 licence. The licence includes two drilling prospects more than 200 miles off the coast in the Porcupine Basin, at Druid and Drombeg.

Drilling costs

Under the terms of the agreement, Cairn will stump up for 45 per cent of the drilling costs, up to a cap of $42 million. It is expected that Drombeg and Druid will both be drilled this summer. The licence also includes another prospect, known as Diablo.

Providence, which is led by Tony O’Reilly junior, will retain a 56 per cent stake in the licence, which it will continue to operate. British explorer Sosina holds the remaining 14 per cent.