Business Irish

Sunday 23 July 2017

Providence Resources to resume trading after €65m deal

Barryroe drilling operation
Barryroe drilling operation
Donal O'Donovan

Donal O'Donovan

Providence Resources will be able to push ahead with development of its Druid off-shore oil prospect without seeking a new backer, using proceeds of a new capital raise.

The Irish oil and gas company announced last night that it is set to raise $73.4m (€65m) through a sale of shares to new and existing investors.

Investors include Melody Finance, previously a lender to Providence.

Melody Finance will be repaid $20m from proceeds of the deal, and reinvest $1.7m on the same terms as others participating in the share deal, according to Providence chief executive Tony O'Reilly.

"People thought we were going to go bankrupt, but we have now successfully recapitalised with support from London and Dublin and can extinguish our debts," he told the Irish Independent. The capital raise is three times the company's market capitalisation, and shares that have been suspended since April will be free to trade again in Dublin and London from today, he said.

Part of the new capital will be used to pay around $7m costs associated with the company's unsuccessful legal battle with offshore drilling services firm Transocean.

Cash will also go to repay Melody Finance and to fund running and exploration costs.

The deal means Providence will have the resources to fund the company's share of drilling costs for an exploration well at Druid, off the Irish coast, which have dropped from an estimated $200m to $50m as a result of the global oil slowdown, Mr O'Reilly said.

Tenders for equipment will be issued shortly and drilling is expected in May or June 2017, he said.

Talks on lining up partners for Barryroe and Spanish Point will now resume, with a view to drilling in 2017 and 2018.

The new shares will be issued at 12 pence a share, below the 13.75 pence level where shares traded before being suspended in April.

The deal is subject to shareholder approval at an emergency general meeting on July 14.

Irish Independent

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