Providence confident as first-half losses narrow
OIL and gas explorer Providence Resources narrowed losses for the first half of the year as it looked to expand operations off shore of Ireland.
For the six months to the end of June, Providence reported a loss after tax of €1.22m, compared to a loss of €6.85m for the same period last year. That came on the back of revenue that increased 8.3pc year-on-year to €11.34m. Those figures translated to a 3.7c loss per share, significantly better than the 26.26c loss incurred last year, despite the average price of oil falling some $7 to $78.
The company said that it managed to increase oil production by 19pc over the first half of 2010 while gas production increased by more than a fifth.
The increase in oil production was driven by Providence's Singleton field in central England, which produced nearly 10pc more oil than last year.
The company said it expects to double production at Singleton to 1,500 barrels of oil per day (BOPD) over the next two years.
Providence chief executive Tony O'Reilly said that the first half of the year had been a busy one, but that the company was delighted to have finally "turned the drill bit" on its offshore Ireland projects.
"Our main focus as a company is in the offshore Ireland space and much of our portfolio is now maturing into the 'ready to drill' phase. We are the only firm that is an Irish-centric drilling company, so it is very important to us," he said.
"We have assembled a balanced portfolio of drillable prospects whilst also ensuring that we have the appropriate partners for the specific assets," he added.
Mr O'Reilly refused to be drawn on whether he expected the company to swing to profit in the second half of this year but said he was "optimistic" about the year ahead, while the doubling of production at the Singleton field was "good husbandry".
Looking ahead, the chief executive said the company had so far "only turned the drill bit in the Celtic Sea so we will be further developing our interests off the west and east coasts".
He added: "There is an auction for licences off the east coast coming up so we hope to be involved in that. We believe Ireland has great untapped natural resources so while our raison d'etre is to deliver shareholder value, we hope that our interests can help the Irish economy recover as well."
Job Langbroek, an analyst with Davy stockbrokers, said Providence's drilling could have "material upside".
"Providence is by far the most active operator around Ireland so is particularly well positioned to benefit if drilling offshore Ireland is successful," he said.
The share price closed flat at €2.10.