Lansdowne Oil & Gas (LON:LOGP) said this morning it is raising £6.13 million via a share placing, which will fund its portion of the drilling costs of the Barryroe Field off the coast of Ireland. The company said it has the option to raise a further £1 million from the LC Master Fund and Sea Energy to participate in the possible side-track of the well, which is expected to cost Lansdowne around £2million in total. The group issued almost 41 million shares at 15 pence each, a modest discount to last night’s closing price of 16 pence. Lansdowne owns 20 per cent of Barryroe, which is in the North Celtic Basin, while operator Providence Resources has 50 per cent. The remainder is held by San Leon Energy (LON:SLE). After a comprehensive 3D seismic survey of the area the trio have lined up the GSF Arctic III rig, which will begin drilling in September. The cost of participating in the initial programme will be £5 million, Lansdowne revealed today. In March it raised £5 million, which it has used to fund its part of seismic survey on Barryroe as well as acquiring seismic on its other prospects in the North Celtic Sea - Amergin, Rosscarbery and Midleton. Lansdowne chief executive Stephen Boldy said: “The drilling of an appraisal well on the Barryroe oilfield is a major step towards the company's goal of delivering value from our Celtic Sea portfolio and we are delighted at the support investors have shown for Lansdowne's strategy.” Barryroe is a development story that could make a huge impact to the prospects of each of the companies involved. The field was first discovered in 1974 by Exxon, but just didn’t have the sex appeal of some of the bigger projects in the North Sea in the early 1970s. But in this era of US$100 oil, the market has moved decisively in favour of exploiting Barryroe. Technology and improvements to Ireland’s oil and gas handling infrastructure have also enhanced its potential. It means there is almost certainly a market for the slightly waxy light sweet crude contained at Barryroe. Exxon drilled two holes with a third being drilled by Marathon. All flowed at 1,400 to 1,600 barrels of oil a day. And importantly, the last well drilled was tested using only a half-inch choke and without modern-day innovations such as snake well drilling and surfactants that could be used to enhance flow rates. A flow above 1,800 barrels a day makes Barryroe economic, according to an independent report compiled by RPS, which also estimates there is 60 million barrels of crude recoverable from 373 million barrels in place. The P50 reserves figure gives a net present value for Barryroe of just over US$800 million based on a 10 per cent discount rate. As well as the Barryroe stake, Lansdowne owns the Amergin, Rosscarbery and Middleton licence areas and is targeting 118 million barrels of oil equivalent of prospective resources from the three areas. Amergin is an oil target, while Rosscarbery is thought to have potential for both crude and gas. Middleton, meanwhile, is a “direct analogue” to Ballycotton, a 60 billion cubic feet field, according to Emmet Brown, Lansdowne’s corporate development director, and a Celtic Sea veteran. He refers to the single well Ballycotton as “little cash machine”, and in doing so hints at the potential significance of Middleton if it lives up to its billing. Lansdowne owns Amergin, Rosscarbery and Middleton outright, but will farm down once it has acquired 3D seismic data on each field. Like Providence, Lansdowne’s efforts have been greatly aided by a massive improvement in the technology. “The sea bottom is covered by chalk and that has been a technical challenge for the industry,” Brown told Proactive Investors recently. “The hard sea-bed causes problems for the seismic and much of the data from the 1970s, 80s and 90s seismic was poor quality. Therefore your understanding and definition was poor. “What’s happened has been a major improvement in the quality (of the data) both from better acquisition and improved data processing – things have moved on enormously. “Lansdowne acquired new 2D seismic data in 2008 that was a step-change improvement in data quality and we anticipate 3D seismic will result in a further uplift.”

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