Business Irish

Thursday 29 September 2016

Providence shareholders approve plans to raise €65m

Published 14/07/2016 | 11:22

Tony O’Reilly Jnr is facing down a small group of shareholders seeking his removal from the firm. Photo: Finbarr O'Rourke
Tony O’Reilly Jnr is facing down a small group of shareholders seeking his removal from the firm. Photo: Finbarr O'Rourke

Several “supermajors”– the world’s largest public oil and gas companies – have shown interest in investing in Providence Resource’s Druid off-shore oil prospect, the company’s chief executive Tony O’Reilly Junior said at an extraordinary general meeting held in Dublin.

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The successful development of Druid would be “transformative” for Providence, O’Reilly said – “Cobh-like, or Tullow-like”.

The drilling of an exploration well at Druid only recently become viable thanks to a decline in the cost of exploration, as a result of the falling price of oil, he added. The cost of drilling an exploration well at Druid has fallen from around $150m to $50m, he said.

At the EGM, shareholders approved Providence’s plans to raise $73.4m (€65m) through a sale of shares to new and existing investors. All resolutions were passed with at least 98pc of votes in favour, chairman James McCarthy said.

Over 25 institutional investors took part with the largest investment in the region of $15m.

Share purchases by the company’s directors accounted for 20pc of the open offer of €5m.

Providence will use the funds to pay a court-ordered bill to contractor Transocean, repay debt to lender Melody Finance and develop Druid, among other things.

O’Reilly said that thanks to the fundraising exercise, a number of parties have reengaged in talks for a farm-out deal for the company’s most important asset, Barryroe. Those companies are smaller than the ones interested in Druid.

He added that recent staff pay cuts would be reinstated following the share sale  – excluding himself.

Providence’s 14 staff members all agreed to reductions to their salaries earlier this year, with O’Reilly taking a 20pc cut. Directors’ fees were reduced by 50pc, he said.

Those cuts to staff pay and directors fees will be reversed, but his own salary will not increase until a deal is done to secure investment for Barryroe.

 

 

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