Broadly speaking, there are two different types of oil hunters. There's the science ones, usually geologists or engineers. Then there's the money guys, like Tony O'Reilly jnr, chief executive of Providence Resources. He has an economics degree and a true blue-blooded family pedigree in business.
The science ones talk all day about rock formations and oil-bearing sands. Geeky stuff. The money ones prefer discussing the demand for crude or the price of rigs. The Geeks need the Money, and vice versa. They’re symbiotic.
Both types, in my experience, tend to have one thing in common – a wild-eyed enthusiasm for the thought of discovering black stuff under ocean floors and sucking it up to the surface. They’re obsessed with it. It’s like a benign madness.
As O’Reilly sits across the boardroom table at Providence’s Dublin headquarters, he excitedly discusses potentially popping the cap on what might be Ireland’s first ever commercial oilfield – Barryroe off the south coast – within five years. His eyes are ablaze at the prospect. You can tell he really wants this.
Is it for the thrill or the reward? It’s hard to conclude other than O’Reilly simply wants to finish what his father – with whom he shares his name – started.
“We’ve been involved in this – by we I mean my family – since 1981,” he says, enunciating in the same Hiberno-US drawl with which his father talked his way to the top table of Irish business before it all went wrong in the crash.
O’Reilly snr fronted Atlantic Resources, Providence’s ancestor, which in the early 1980s led an ill-fated black gold rush at Helvick off the Wexford coast. For a while, until the hype died down, Irish people were giddy at the thought that our then-impoverished State could morph into a blinging Saudi O’Rabia.
Long journey
“I was with my father last week, and we were talking about the long journey. Through so many of the years [with Atlantic, and later Providence], he was the funder of last resort. He stuck with it. He was one of the key people on the journey [towards developing an Irish oil industry].”
O’Reilly snr lost his Providence stake as part of his bankruptcy in recent years. Does he still retain that old oil hunter’s wide-eyed enthusiasm for the chase?
“Yeah. We had a lovely chat last week. Obviously he’s not involved anymore because the banks took everything. But he still has the intellectual belief in it.”
Barring a handful of gas finds in three decades, the Irish exploration industry hasn’t given its proponents much to believe in. There hasn’t been a single commercial oil discovery: for all the holes drilled not a drop has ever been drawn from Irish soil to be sold. The industry here has gushed hype, but never crude.
Yet O’Reilly still believes. This is not a Santa Claus story either. The black stuff is definitely there under the Celtic Sea. Barryroe may contain upwards of 300 million barrels of oil. But it remains to be seen whether it will flow from the ground fast enough to make it worth developing commercially.
In March, after years of trying to find a moneyed dance partner, O’Reilly finally struck a deal with the Chinese Apec consortium that will fund a Barryroe appraisal drilling programme in exchange for roughly half the equity in the field. Providence will end up with 40 per cent. Its partner, Lansdowne Oil & Gas, gets the remaining 10 per cent.
“It took a long time because we were operating in a broken market,” says O’Reilly. “Now everyone is effervescent about it. But it was tough. Apec will take it through appraisal to FID [final investment decision]. It’s what we always wanted.”
More appraisal
If the field is commercial, O’Reilly believes Barryroe could be pumping oil by 2022 or 2023. “It’s a big field and it needs more appraisal to get it to production. [But] we think [Apec] are the guys to do it. They have the finances and the technical know-how. We understand the Irish consenting process.”
The final deal with the Chinese will be signed in the third quarter, following which O’Reilly hopes to get State consent to drill – “we can’t take it for granted” – by next April or May. The planned appraisal drilling will then take six months.
While Barryroe accounts for the bulk of Providence’s roughly €75 million market value, O’Reilly is keen to highlight that the company “has more eggs and more baskets”. All of its exploration assets are located off the Irish coast.
“People want multiple events that can create value. We’ve got different plays. This is a portfolio game.”
To the west of Barryroe, at Dunquin off the Kerry coast, Providence has a share of another potentially high risk, high-return exploration asset.
It is also conducting survey work at Newgrange, in water about a kilometre deep, 260km off the southwest coast. And it has licences, or shares with others, in blocks off the west coast and on the east off Dublin.
“I’m very nationalistic about this. I’m proud that we’re a little Irish company punching above its weight. We physically operated last year the deepest well that’s ever been drilled in the north Atlantic.”
While Ireland is considered high risk by major oil companies, it is back on their radar. A series of finds off eastern Canada in recent years, where the geography is similar to Ireland’s west coast, has piqued interest.
Licence partnerships
O’Reilly argues that Providence, which has struck licence partnerships with several large multinationals, should take some of the credit.
"We secure acreage and then find partners. We brought in Exxon Mobil, Eni, Repsol, Cairn and some of the others. We brought in Total last year. We're working with some of the world's biggest companies in our own backyard.
“They could go anywhere with their capital, But they like working here, and they like working with us.”
Jnr doesn’t just look like his father. O’Reilly snr, the consummate salesman, was also never afraid to talk up his ventures.
“I grew up in a family that was more oriented towards marketing. You have a product and you sell it, and create a price. You have your margin. To suddenly be a price taker [in the oil market] is quite interesting.”
One of O'Reilly snr's six children, Tony jnr was born as a triplet with his brother, former Independent News & Media chief Gavin, and their sister Caroline.
Growing up an O'Reilly, he says, was "amazing" due to the fluidity between his father's business and social life, especially when he ran Heinz in the US.
“If I was staying in Castlemartin [his father’s former Kildare estate] I’d come down for breakfast and some Fortune 100 executive like Lee Lacocca [who ran Chrysler] would be there. There was no dividing line between business and family. Once you accepted that was the way it worked it was just fascinating.”
He admits he was a “rebel without a cause” as a teenager. He quit school at 15 and moved to London.
“I just didn’t want to go to school. Mom and Dad would put me in another school, and I’d say I didn’t want to go there, and the school wouldn’t want me. So I moved to London to find work. I never did my Inter Cert.”
Landscaping
He got a job on the tills at a supermarket, but left because he was “too slow”. O’Reilly then began landscaping.
As he tells the story, sitting at a boardroom table in a designer suit and sporting a ten-grand tan, he looks the unlikeliest gardener you could ever imagine.
“Now I go to people’s homes in London and have a déjà vu and think: God, I did the trellising here.”
O’Reilly eventually settled at a school – Clongowes in Kildare. He studied economics at Brown University in Providence, Rhode Island, in the United States (hence the company’s name) and at the London School of Economics.
He entered investment banking in New York, although he did not have an auspicious start. “I joined my first firm. A fortnight after they hired me, they fired my whole division. What a start on Wall Street. [But] I got six weeks’ severance for two weeks’ work. That wasn’t a bad deal.”
He worked his way up through the banking sector in the US, eventually focusing on mining. In his mid-20s, his father asked him to move back to Ireland to work at his mining company Arcon.
He worked there until 2000, followed by a tough period running Wedgwood, which was joined to his father's Waterford Crystal brand.
In 2005, Arcon was sold, out of which Providence was born. O’Reilly has been at its helm ever since. Before it retreated exclusively to its home turf in recent years Providence used to have assets in Nigeria, the Gulf of Mexico and Britain. Does O’Reilly harbour a desire to bring the company to foreign shores again?
Opportunities
“When Barryroe happened, it became such a big thing for us. We know more about Ireland than anywhere else. But you can’t rule out opportunities elsewhere in the world. We now work with some of the biggest exploration companies in the world. Opportunities might come up with them.
“Will we go to Outer Mongolia? No. But can I see more northwest Europe or Atlantic margin plays? Yes, that fits our model. The board is evolving a strategy.”
Providence, and O’Reilly, are also evolving in other ways. When I last interviewed him, more than a decade ago, he scoffed at investing in renewable energy and said “you can’t run Ireland on a windmill”.
Now he reveals Providence is actively considering opportunities in the renewable energy space. “There’s a lot of waffle that goes on about the true cost benefits of renewables. We are trying to understand if there are economic returns that can be generated for our shareholders. I don’t want to get into the space just because people think it is the right thing to do.”
It appears that Providence is considering offering its services as an offshore specialist to larger renewable energy companies – selling its expertise via partnerships. This suggests that it may be interested in Irish offshore wind projects.
“As an energy company it behoves us to look at new areas. It doesn’t necessarily mean we do wind. Maybe it’s geothermal. But we’re open to it. It is the way the industry is going. We’re not moving away from oil and gas – that’s our bread and butter – but we’re formulating strategy.”
Renewable energy
But while you can take the man out of the hydrocarbons, you can’t take the.... Shortly after revealing his aspirations for entering the renewable energy sector, O’Reilly is back criticising mooted new environmental legislation that could restrict future oil and gas exploration. He hopes Irish politicians “reflect on the hugely negative impact” any such restrictions could have on economic competitiveness.
“We can probably de-carbonise the world over time. I don’t have all the facts and figures in front of me – I’m reading into it. But it has to be evolutionary, not revolutionary. You can’t bite off your nose to spite your face.”
In the meantime his focus remains on Barryroe and Providence’s other Irish exploration assets. He has been running the company now for 13 years, some of those easier than others. Has he ever felt like jacking it in?
“No. My father used to say don’t give up. Just keep at it. Maybe, in a good way, I’ve got some of his stubbornness.”
And possibly a dash of his chutzpah too.
****************
C.V.
Name: Tony O'Reilly
Position: chief executive, Providence Resources
Age: 51
Lives: Malta – "people think it's for tax, but it's not. My wife is Maltese. I did for amoré"
Family: Married to Michele. He has two sons and one daughter, and two stepsons and one stepdaughter
Hobbies: Watching Ireland rugby "and being walked by my three dogs"
Something we might expect: "I sometimes get mistaken for being one of my brothers, which is fine, unless it is their round"
Something that might surprise: "I had my first real job at 15, when I refused to go to school . . . after working in London for six months I eventually returned to school (much to my parents relief)."
