Sunday 19 November 2017

Providence shares up on 'seminal' year's results

Providence announced losses of €20.5m for 2016, down from €24.1m a year earlier
Providence announced losses of €20.5m for 2016, down from €24.1m a year earlier
Ellie Donnelly

Ellie Donnelly

Shares in Irish-listed oil explorer Providence Resources shot up more than 7pc to 22 cent each yesterday, on the back of results showing losses narrowed in 2016.

Providence, headed by Tony O'Reilly junior, announced losses of €20.5m for 2016, down from €24.1m a year earlier.

Operating losses for the 2016 period were €18.8m, an increase of €5.7m from 2015.

More strikingly, the company said it had cash and cash equivalents of €31.4m at the end of December, up from €6.5m at the end of 2015.

It was debt-free at the end of last year, the company said. Net debt at the end of 2015 was €18.2m.

The change reflects a deal last June that saw Providence raise $70m (€65.9m) in a share sale.

In March 2017, Providence agreed a deal with Capricorn, a subsidiary of Cairn Energy, for Capricorn to become involved in its drilling programme for the company's Druid & Drombeg Oil Prospects.

Providence has said that the Druid prospect has the potential to deliver 3.2 billion barrels of oil, while Drombeg may yield a further 1.9 billion barrels.

The deal will see Capricorn taking a 30pc working interest in the project, in return Capricorn will pay 45pc of the cost of drilling as well as a cash payment of $2.82m.

Operations are scheduled to commence on this project in June 2017. "2016 was a year of significant operational and financial progress for Providence," CEO Tony O'Reilly said.

Analyst Job Langbroek of Davy said the June re-financing was the key financial metric for year.

"The results and commentary indicate that 2016 was a seminal year for the group. Apart from its re-financing during the year, Providence's historic efforts in the Irish Atlantic Margin began to bear fruit," he said.

Providence will have the largest share in the only well to be drilled in Irish offshore waters this year, he noted.

The company has the capacity to participate in a drilling programme commencing in June, he said.

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