Providence shares slump after Druid drill disappoints
Shares in oil and gas explorer Providence Resources fell as much as 46pc in Dublin yesterday after negative results from its drilling campaign off the southwest coast.
The company said a well drilled at its Druid prospect had shown it was filled with water.
Shares in the exploration company closed down 38.4pc at 10.9c after it reported the disappointing well-drilling results.
The company will now move on to drill the Drombeg prospect, which is about 1,000m deeper.
Edinburgh-based Cairn Energy also has an interest in the prospect, while French giant Total has paid Providence for an option to take a stake.
"The drilling results mark another setback for the company. We feel focus needs to be placed on management's ability to create value from the company's other assets, notably Barryroe," Merrion Capital analysts said in a note circulated yesterday.
"The financial arrangements with Total still leaves Providence with roughly €30m of cash on their balance sheet which should ensure Providence remains capitalised into 2018," Merrion added.
"Recent news flow has been more constructive but significant efforts need to be made to realise value for shareholders which have ultimately been extremely accommodative up to this point."
Should the well at Drombeg prove unsuccessful, market attention will likely return to the Barryroe prospect off the Cork coast.
The company has been seeking a partner for the asset for some time. Last month Providence CEO Tony O'Reilly Jr said the company was "in dialogue with a number of parties regarding advancing the appraisal of Barryroe through to first oil".