Monday 26 February 2018

Sequa's $300m fund raiser pushes Providence Resources deal closer

OIL MAN: Providence Resources CEO Tony O’Reilly
OIL MAN: Providence Resources CEO Tony O’Reilly
Gavin McLoughlin

Gavin McLoughlin

Providence Resources, the Irish oil and gas explorer run by Tony O'Reilly Jnr, may be set to finally complete a deal that will enable it to get oil out of the ground at its flagship asset.

London-based Sequa Petroleum, Providence's touted farm-out partner for the Barryroe field off the Cork coast, has raised $300m in a bond offering. A Providence spokesperson declined to comment on the news.

In February, Providence announced it had found a partner for Barryroe, but said the deal depended on "closing conditions, most specifically the proposed development partner raising the required level of financing".

Providence has not revealed the identity of the farm-out partner, but companies registration office filings show Sequa has set up an entity called Sequa Petroleum (Barryroe).

Completing a deal would be a major boost to Providence, which has had a difficult year amid falling oil prices and a series of hiccups relating to its assets. Its share price has slumped more than 80pc in the last 12 months.

Earlier this year the company was forced to raise €26m, saying that there could be a risk to its viability if it didn't raise enough cash.

At an EGM that approved the fundraising Mr O'Reilly told shareholders that the market may have perceived that Providence would go out of business.

"I think with the support we're able now to face back to the market and say that's not going to happen," he added.

"I'm not trying to escape from the fact that our share price has been decimated, but to think that is specific to just Providence is naive.

"Everyone in the E&P (exploration & production) space has suffered massively".

He said that even if the Barryroe deal is not completed with the current partner, that would not be a risk to Providence's survival.

"We've got a portfolio of assets, there's lots of ways to skin a cat."

"We're working on a farm out process and we've agreed a deal - but there are lots of other ways you could look at, doing different types of asset deals, sales".

"It's amazing to think this company was worth $700m, and today it's worth $45m, and yet the asset portfolio is the same. It's just that people are perceiving the value in the industry as lower".

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