Saturday 24 March 2018

Furlong's Pageant Holdings ups stake in O'Reilly's Providence Resources

Providence Resources CEO Tony O'Reilly Jnr
Providence Resources CEO Tony O'Reilly Jnr
Gavin McLoughlin

Gavin McLoughlin

Nick Furlong's investment group Pageant Holdings has upped its stake in Tony O'Reilly Jr's oil and gas explorer Providence Resources.

Documents filed to the Irish Stock Exchange reveal Furlong's company holds a 4.22pc stake in the business as of Wednesday. In Dublin, Providence shares leapt around 20pc to 20c each.

A source familiar with Pageant said Furlong's company thinks Providence has significant upside.

The source said Pageant thinks that if Providence can find someone to write a cheque for another round of drilling at its flagship asset - the Barryroe field off the Cork coast - and that drilling is successful, Providence could be worth twenty to thirty times its current market capitalisation. Currently the company is valued at around €30.5m.

"Most exploration and production companies typically trade on a 2c value [based on the best estimate of technically recoverable resources] per barrel of oil of around $1 to $3 in the current environment. Providence is trading at around 5c a barrel which is unheard of. There's a good reason why the stock is trading down here, it's got this debt piece that needs to be refinanced in May next year. Pageant's view is that that will get refinanced," the source said.

"A lot of people give Tony O'Reilly Jr a bit of stick because they say the share price is down 98pc. I actually think he's done a decent enough job. I think he's been very unfortunate with how the events have played out," the source added.

Providence has had a difficult year. Losses more than doubled in the first half and in February the company was forced to tap shareholders for more funds.

Its share price has plummeted from around €1.10 in January, closing at 22c on Friday.

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