Exploration company Providence Resources has announced a farm-out agreement with US oil firm ExxonMobil.
The deal covers Providence's Dunquin Prospect, in the Porcupine Basin off the west coast of Ireland.
Providence holds 80% of the prospect, with its partner Sosina Exploration having 20%.
Under the agreement, ExxonMobil will conduct 'a significant exploration programme' on Dunquin in return for an 80% stake. Providence will keep 16% and Sosina 4%.
The Dunquin field is thought to have up to 25 trillion cubic feet of natural gas and four billion barrels of oil.
The Minister for Communications, Marine & Natural Resources, Noel Dempsey has welcomed the signing of today's agreement.
'The Porcupine area is one of the most potentially promising areas off Ireland's coast and I am pleased that this agreement will lead to its further exploration', the Minister said.
'The discovery of either gas or oil, in this area would be of benefit to Ireland. If the recent crisis in Russia has shown us anything it is that security and access to indigenous sources of energy are vital for our national interests,' he added.
Providence shares closed a cent higher to 6.1 cent in Dublin this evening - a gain of 24.5%.
