Wednesday 18 September 2019

Providence to cut staff amid funding crunch

Tony O'Reilly, Chief Executive pictured at the Providence Resources AGM in Dublin,
Tony O'Reilly, Chief Executive pictured at the Providence Resources AGM in Dublin,

Shawn Pogatchnik

IRISH energy company Providence Resources announced job cuts and other immediate cost-saving measures yesterday to address a cash crisis, with no sign of promised finance arriving from China.

Providence's shares slumped more than 30pc to below 7.5 pence in London as the firm revealed that its cash reserves had fallen to $1.45m (€1.3m), less than 20pc what it had on deposit in December.

Please log in or register with Independent.ie for free access to this article.

Log In

The company warned that, unless its Chinese exploration partner APEC came through with promised funds soon, it would need to secure "alternative financing arrangements" for working capital, to pay existing creditors and keep Providence running beyond the end of this month.

Providence confirmed it has yet to receive $10m due from Beijing-based APEC to fund their joint Barryroe well drilling project some 50km off the coast of Cork. Providence gave APEC a 50pc share of the project in 2018 and had expected to receive its first cash injection from the firm in mid-June. Since then, it has repeatedly extended what it calls the "backstop date" for APEC's money to appear.

Yesterday, Providence said APEC had offered "further assurances" that the finance was coming and extended this date once again to August 12.

Providence said it would leave its Donnybrook headquarters for a smaller office once its lease expires this autumn, reduce spending on service providers and advisers, and lay off support and technical staff, to slash its annual cost base from $5.3m to $1.9m.

Providence declined to specify how many staff posts would be eliminated. The company's most recent annual report said it employed 14 people last year.

While CEO Tony O'Reilly Jnr would remain, Providence said its board would be pruned from seven to three over the coming year.

Technical director John O'Sullivan was stepping down immediately, it said.

Providence said it had generated income since 2017 "solely through the completion of farm-out deals to third parties" and faced an "inability to pursue international expansion".

Irish Independent

Also in Business