Providence says its redundancy packages rely on Chinese funds
Irish oil and gas explorer Providence Resources says it cannot meet the terms of a redundancy scheme announced earlier this month until it receives a cheque from a Chinese investor that has already been delayed nine times, or gets other financing.
The company, headed by Tony O’Reilly Jr, initially said it was making the bulk of its staff redundant after the cheque had failed to arrive.
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Employees that have been made redundant are no longer reporting to work.
However, redundancy packages with the impacted staff will not be implemented until the funding from China’s APEC or “alternative finances” have been received.
“Subject to the receipt of the loan advance or alternative financing arrangements being put in place, final settlement agreements agreed between the company and the staff will be signed and the redundancies will be implemented,” Providence said.
It declined to comment further on what this will mean for those affected. The company estimates that its cost-cutting measures, including moving to a smaller office, will reduce annual outgoings from $5.3m (€4.8m) to $1.9m. As of August 5, Providence had cash of approximately $1.45m.
The deadline to obtain the money from APEC has been extended several times, most recently to close of business on August 19.
Providence said no funds had been received in the company’s account on Monday, but it has “again received assurances that the $9m loan advance due under the updated FOA [farm-out agreement] is in the process of being paid”.
The funds are now due on or before August 26. If the money is not transferred, Providence will have to obtain other sources of finance to provide it with sufficient ongoing working capital by the third week of September.
Shares in the oil and gas explorer have fallen around 37pc since the start of the year, as the date for receipt of the funds continues to be pushed back.
Elsewhere, earlier this month, Providence was granted permission from the Minister of State at the Department of Communications, Climate Action and Environment to undertake a survey over the Barryroe field 50km off the coast of Cork.
While this cannot proceed without the APEC funds, or alternative financing, Providence has agreed to pay for a survey vessel to be moved from its current location in the North Sea to the Barryroe area.
The ship is expected to move to Ireland later this week, with the survey expected to start “prior to month-end”, the company said.
Under the agreement with APEC, agreed last March, the Chinese group will have a 50pc interest in Barryroe – which has a predicted 311 million barrels of recoverable oil – in exchange for it covering half of the estimated $200m in costs associated with the drilling programme.