Business Irish

Monday 19 August 2019

Losses decline at Providence as it plans to 're-engineer business model'

Providence Resources’ Barryroe operation, 50km off the coast of Cork
Providence Resources’ Barryroe operation, 50km off the coast of Cork
Ellie Donnelly

Ellie Donnelly

Irish oil and gas explorer Providence Resources has reported a loss of €4.8m in respect of 2018.

This is down from the loss of €20.4m reported in 2017.

At December 31, 2018 total cash and cash equivalents were €7.6m, a decline on the €19.6m in the prior year, according to annual results from the group.

The company had no debt at December 31, 2018.

Tony O’Reilly, CEO of Providence, said: “Despite encountering increased regulatory and political headwinds,  we continued to progress our portfolio and in doing so, have further advanced assets that will help Ireland to meet its future energy needs.”

“The key commercial milestone in 2018 was the negotiation and signing of the Barryroe Farm-Out Agreement with Apec.” 

“Barryroe is singularly the most important asset in our portfolio and, with a planned investment programme of c. $200m (€176m) for a 5-well drilling programme, it is potentially transformational for Providence,” Mr O’Reilly added.

Meanwhile, following a review, the company said there was an “immediate requirement to re-engineer [its] business model” to reflect changes in its operating environment.

This will “significantly impact” the requirement for both technical and support staff at its Dublin-headquarters, the group said. Adding that it will now enter into a consultation process with staff affected by this decision.

On the matter of the Climate Action Bill, Providence said that if it is enacted in its current form, the company would not be able to progress any issued licensing authorisation to the next stage and "this would adversely impact any current planned operations and would thus pose a significant risk to the company as a going concern."

"Should this Bill be enacted, we would rightly seek financial redress from the State in respect of our very significant historical investment to date on behalf of our shareholders," Mr O'Reilly said.

In relation to the current delay in receiving a $9m (€8m) loan from Chinese backer APEC Energy Enterprises to fund a survey of the explorer's Barryroe prospect off the Cork coast, the group said it remains “confident” that the loan will be received shortly.

The funding had initially been expected late last year, and was then due to be paid over on June 14. It is now due to be received on July 5.

“As of today’s date, this payment has yet to be received,” Providence said.

Drilling operations at the Barryroe site, 50km off the Cork coast, are expected to take place in the fourth quarter of 2019, a date that has been pushed back because of the delay to the planned survey at the site.

The group now expects the survey to be carried out in the third quarter of this year.

Under the terms of the updated farm-out agreement with Apec, a total of $24m (previously $19.5m) has been allocated to fund the forward costs of Exola, which is the operator of the Barryroe project. These costs include the well-site survey operations and other project related expenditure.

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