Under the terms of the agreement, Providence will farm out 20% of its Celtic Sea interests held off the south coast of Ireland to Challenger Minerals (CMI), a wholly owned subsidiary of GlobalSantaFe Corporation.

In return for the interests, CMI will pay 26.7% of the costs of the seismic program in 2006, and will be responsible for 20% of all future license, drilling and development costs. As a result of this farm-out, Providence will retain a stake of 75% in the Celtic Sea interests with its partner, Midmar Energy Limited, retaining a 5% stake.

Commenting on the agreement, Tony O’Reilly, chief executive of Providence, said: We are extremely pleased to have CMI and GlobalSantaFe involved with us on our Celtic Sea licenses. A great deal of work has been carried out on these assets over the past two years and the involvement of CMI validates our view of the real development potential of a number of the assets in this area.

The deal is subject to approval from the Irish Minister for Communications, Marine and Natural Resources and the Petroleum Affairs Division.