UK based Nautical Petroleum has entered into a farm-in agreement with Providence Resources, an Irish oil and gas exploration and production company, to acquire up to a 65% interest in the Nemo heavy oil discovery, offshore Ireland.

The Nemo heavy oil accumulation underlies the Ardmore gas accumulation in Standard Exploration License 2/07 and is situated approximately 60km offshore Ireland in the North Celtic Sea Basin in about 90m water depth.

Discovered in 1974, the approximately 16 degrees API heavy oil accumulation is estimated to have an in-place resource potential of up to 230mmbo.

Providence Resources and its partners have agreed to farm-out the equity interest in two stages to Nautical.

In return for an initial 25% stake, Nautical will fund and carry out a work program on the development feasibility of the Nemo discovery.

The company has a further option to increase its stake to 65% and assume operatorship given that it drills an appraisal well by the end of 2011.

Providence Resources currently holds an operated 72.5% interest in the Standard Exploration Licence 2/07 and its partners Atlantic Petroleum and Sosina Exploration hold 18.3% and 9.2% interests, respectively.

In the event that Nautical exercises its option and drills a well, Providence Resources will hold a 25.3% participating interest while Nautical, Atlantic Petroleum and Sosina Exploration will hold 65%, 6.4% and 3.2% interests, respectively.