International law firm Ashurst is advising Providence Resources plc ('Resources'), the Irish based oil & gas exploration company, and Lansdowne Oil and Gas plc on a farm-out agreement ('FOA') with APEC Energy Enterprises Limited ('APEC') relating to standard exploration licence ('SEL') 1/11, containing the Barryroe Field. SEL 1/11 is owned by EXOLA DAC ('EXOLA') (80%), a wholly-owned Providence subsidiary, and Lansdowne Celtic Sea Limited (20%), collectively the 'Barryroe Partners'.

APEC is a privately owned Chinese company which has a strategic partnership with China Oilfield Services Co., Ltd and JIC Capital Management Limited for the investment and development of offshore oil and gas opportunities worldwide utilising Chinese drilling units, services and equipment.

Under the terms of the FOA, in consideration for APEC being assigned a 50% working interest in SEL 1/11 by the Barryroe Partners, APEC will be directly responsible for paying 50% of all the cost obligations associated with the drilling of three vertical wells and associated side-tracks. The remaining 50% of all costs will be financed by way of a non-recourse loan facility set against future cashflow from the prospect.

EXOLA will act as operator for the drilling programme with technical assistance being provided by the APEC consortium and, after completion of drilling, APEC will become the operator for the development and production phase.

The Ashurst team was led by co-head of oil and gas and partner Michael Burns, assisted by senior associate Grace Rackham and associate James Prescott in London and partner Josh Cole and associate Lucy Spencer in Hong Kong.

Commenting on the transaction, Michael Burns said:

'It has been great to work with the Providence and Lansdowne teams on this transaction. It is a further example of Chinese investment in the European energy sector – a trend that we see continuing in the future – and, on the back of the OMV transaction in New Zealand that was announced last week, shows the truly global nature of the energy practice at Ashurst. We now look forward to helping the teams reach completion.'

Commenting on the transaction and the support provided by the Ashurst team, Tony O'Reilly, Chief Executive of Providence said:

'We have a longstanding relationship with Ashurst and Michael, Grace and James and the rest of the Ashurst team have worked efficiently and effectively to get this deal to signing on a tight timetable. Their industry knowledge, exceptional level of responsiveness and international network of offices enabled the deal to be put together in a very collaborative manner.'