Wednesday 20 November 2019

Black gold proving nice little earner for Providence's loyal shareholders

Publicans, politicians, stockbrokers and sportsmen reap reward for sticking with tenacious oil explorer, writes Peter Flanagan

IT has been one of the few success stories in Irish business over the last 12 months, and the shareholders are now reaping the rewards.

Providence Resources was, for years, a small company pottering around offshore Ireland looking for oil when nearly every other exploration company had no interest here.

Big firms had searched for, and found, black gold around the island in the 1970s and 80s, but it was hard to get at, and apparently low quality. With oil prices so low, why bother?

That has all changed in the last year, however. In the words of company chief executive Tony O'Reilly, the "market has moved to Providence".

With oil prices remaining above $100 a barrel and an apparently worsening geopolitical situation in the Middle East, oil discoveries in benign political jurisdictions have become far more attractive than they were in the past.

From a little over €2 a year ago, Providence shares started to rise steadily earlier this year before exploding after the company announced a huge oil discovery at its "Barryroe" licence off the Cork coast.

A succession of positive company news has followed and last month the company said the Barryroe field was as much as four times bigger than had been previously thought with more than one billion barrels of oil in place.

The company is still some time away from actually producing oil, but the company is running an ambitious drilling programme at its licences around the country, and expectations of further finds are high.

That has moved the company share price, which has increased some 200pc in the past 12 months, netting huge gains for its shareholders.

The O'Reilly family owns a total stake of about 20pc, while big institutional investors such as JP Morgan and BlackRock Investment Managers have holdings of about 20pc between them. As you would expect, they are sitting on big gains.

But there are also a number of individual, retail investors, however, and they are looking at massive returns on their holdings.

A review of the company share register shows that a host of names from politics, sport and business have holdings in the company that is fast becoming one of the hottest stocks on the Irish market.

Justice Minister Alan Shatter is perhaps the marquee name on the Providence register.

At 500 shares, Mr Shatter's holding is relatively small, but it serves to reinforce his reputation as one of the canniest investors working in politics.

On August 27 last year -- the date when the register was last updated -- Providence shares were trading at €2.20 and Mr Shatter's shares were worth €1,100. A year later and at last Monday's closing price of €7.75, the value of his holding has now ballooned to €3,875.

The register from last August is particularly instructive, as it is essentially the last one to show the people who had invested in Providence before the company started to attract serious attention from major investors.

The majority of individual shareholders come from Ireland and the UK, along with a smattering of investors from continental Europe and the United States.

Many of them are thought to have originally invested in Atlantic Resources, the exploration firm set up by Sir Anthony O'Reilly in 1981 to explore offshore Ireland.

While that was a thankless task at the time, Providence Resources was eventually born out of that company.

Given Sir Anthony's rugby connections, it is perhaps no surprise that a host of players past and present appear on the shareholders list, although most have sold down their stakes.

Paddy Berkery was a contemporary with Sir Anthony in the Ireland team in the mid-1950s, while players of a more recent vintage including Munster prop Marcus Horan and former back row David Corkery are also named. They were shareholders at one point but they are all shown as holding "0" shares in Providence now, indicating they sold down their holdings in the past.

The rugby connection continues with Joseph Davy. Mr Davy is the son of the all-time great Eugene Davy and his work with Providence continues through his involvement with Davy Stockbrokers, which was founded by his father.

As house broker to Providence, Davy itself holds some shares in the company as an institutional investor, but Joseph Davy holds 520 shares in a personal capacity. The value of his shares has now risen from €1,144 a year ago to €4,040 today.

Mr Davy stepped down from the board of Independent News & Media in 2008 after more than 20 years as a director of the company.

Providence has attracted investment from beyond the rugby pitch, however.

Shane Reihill, the executive chairman of Dublin-based private equity firm TVC, holds some 470 shares in the company. TVC is best known for its 18pc shareholding in the media group UTV, and while it has not made any significant investments so far this year, Mr Reihill is one of the more respected investors in the country.

Tim Pat Coogan is one of the best known historians in the country, having penned the best-selling biographies of Michael Collins and Eamon de Valera as well as tomes on the IRA and the highly praised 'Ireland Since the Rising'.

Away from Irish history, however, Mr Coogan has bought 700 shares in Providence, which have earned him some €5,425 over the last year.

The Old Stand and Davy Byrne's are two of the more popular pubs in the south of Dublin city centre. Owned by the Doran brothers -- Redmond, Colclough and Michael -- both pubs have been landmarks in the immediate area around Grafton Street for decades, and are seen as "go to" spots, particularly on Six Nations rugby weekends and, more recently, on big Heineken Cup match days.

All three brothers are investors in Providence. Colclough has 1,060 shares and is sitting on a very healthy gain of €5,883 in the last year alone. Redmond and Michael have significantly smaller holdings at 540 shares between them but will still be happy with their profit of just under €3,000 in the last 12 months.

Former Meath footballer Colm O'Rourke also has a small holding in Providence, as does Paschal Taggart -- one of the highest profile businessmen in the country and a former head of the Irish Greyhound Board.

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