Providence shares suffer biggest fall in almost four years
PROVIDENCE Resources shares fell the most in almost four years in London trading as plans to drill an appraisal well were postponed.
The Irish oil and gas exploration company said the Spanish Point appraisal well drill in the northern porcupine basin had been put off due to rigging difficulties.
Analysts branded the announcement a disappointment coming on the back of a challenging year for shareholders.
Shares fell as much as 12.2pc to £1.23 in London yesterday, the biggest drop since November 2010, wiping about £9m off the value of the company.
By mid-morning, the stock had recovered to £1.27. The stock is down about 43pc in London trading in the year-to-date.
"Providence's share price has significantly underperformed over the past 12 months, as investors took profits and lost confidence in any near-term farm-out of the company's flagship Barryroe prospect," said stockbrokers Cantor Fitzgerald.
Extensive delays in the refurbishment of the Blackford Dolphin drilling rig, which had been scheduled to drill the well, meant operations would not be able to kick off until October, the operators said.
This would push the operations into the winter.
"Accordingly, the operator has advised that the contract with Dolphin for the Blackford Dolphin has been terminated and tendering for another rig to carry out the planned well operations in 2015 has commenced," Providence said.
Capricorn Ireland Limited, a subsidiary of Cairn Energy, operates licences in the northern porcupine basin on behalf of its partners, Providence Resources, Chrysaor E&P Ireland and Sosina Exploration.
The licences, which cover an area of about 2,000 km2, are located around 175 km off the west coast in water depths of about 400 metres.
Providence chief executive Tony O'Reilly said the postponement was regrettable.
"As the rig refurbishment delays became apparent, the operator evaluated various options to re-schedule the Blackford Dolphin rig and/or to secure another drilling unit for 2014, but this proved unsuccessful," Mr O'Reilly said.
"Our ability to commence drilling in the autumn was further constrained by the rig's operational capabilities at the Spanish Point location during winter and thus the decision was taken to terminate the contract and seek a new drilling unit for 2015."
Mr O'Reilly said the procurement process had begun.
He added that subject to regulatory approval, the planned 3D seismic surveying programme over Spanish Point South would go ahead as originally scheduled.
Davy analyst Job Langbroek said that while the delay was widely expected, it remained a disappointment.
"The well will now be drilled next year. On the other hand, this provides an opportunity to build a drilling programme around the entry of a rig into Irish waters," he said.
(Additional reporting Bloomberg)