Providence Rescources shareholders back equity raising
Several of the world's largest 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 Jr, said yesterday.
A successful development of Druid would be "transformative" for Providence, Mr O'Reilly said, comparing it to the deals that saw Tullow Oil emerge as a big international player.
Drilling at Druid, off the west coast, has become viable thanks to falling costs linked to the low price of oil, he added.
The cost of drilling an exploration well at Druid has fallen from around $150m to $50m, he said at an extraordinary general meeting.
At the EGM, shareholders approved the company'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. Mr O'Reilly said that thanks to the fundraising exercise, a number of parties have re-engaged 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. Recent staff pay cuts will be reversed following the share sale - excluding for himself.
Providence's 14 staff had agreed to pay reductions, with Mr O'Reilly taking a 20pc cut. His own salary will not increase until a deal is done for Barryroe, he said.