Tony O'Reilly jnr, the boss of oil and gas explorer Providence Resources, has said his role as chief executive will be come up for discussion if funds promised by Chinese investors don't materialise before September 30th.
Speaking to journalists after Providence's annual general meeting, Mr O'Reilly noted that he had confidence that the backers – Apec – had transferred the $9 million (€8.14 billion) but that it was stuck in transfer with HSBC. As such, Providence has set September 30th as the date for receipt of the funds.
Asked whether he’ll consider his position after September 30th, Mr O’Reilly said: “Everything will be discussed. I’m not going to put up flags and say exactly what I’m going to do. We’ll just see.”
Providence’s agm followed an announcement to the stock exchange on Thursday morning in which it said it had raised $3.76 million through the proposed issue of more than 59 million new ordinary shares at a price of £0.051 (€0.057) per share. They were forced to do so as a result of persistent delays to receipt of the $9 million loan from their Chinese backers, which has led the company’s shares 45 per cent lower in the past three months.
The company warned that its ability to continue in business without the share placing, which has to be approved by shareholders at the end of this month, will be “compromised”.
Providence said last week it was actively exploring alternative financing arrangements as the funds from their Chinese backers had yet to land in its bank account. The company agreed in March last year to give Chinese company Apec a 50 per cent stake in its Barryroe project off the Cork coast, which is estimated to have 311 million barrels of recoverable oil, in exchange for the Beijing-based company covering half of the cost of an associated $200 million five-well drilling programme.
Costs
The deal also covered Apec lending Providence and Lansdowne Oil & Gas – which has a 10 per cent stake in the field – money to cover their costs.
However, Providence revealed in early June that it had not received the initial payment from Apec. A series of subsequent deadlines for receipt of the funds have been missed, with the latest running out on September 9th. The final deadline has been set as September 30th.
Asked whether the company has been messed around by Apec, Mr O’Reilly said: “I don’t think we have. Ask me that in two weeks.”
Providence told shareholders it needs to use money from the placing to cover the costs of a restructuring of the company, to pay the balance of costs associated with a site survey at the Barryroe site and to fund general working capital up to February 2020.
Because the funds will only cover general costs up until February, the board is in the process of undertaking a strategic review of the options available to the company on future financing alternatives.
As of August 5th, Providence had cash of about $1.45 million and, since then, it has had to review its working capital position to reflect the fact that Apec’s loan had not landed in its account.
Changes it has had to make include the farming-out of the majority of its portfolio while it has also announced its intention to vacate its current Dublin office by the end of this year to relocate to a smaller, serviced facility.
Mr O’Reilly said the first half was a “very difficult period for the company”. In addition to the more recent issues caused the loan from its Chinese partners, Providence also flagged that the Climate Emergency Measures Bill had caused “significant damage to sentiment and investment interest in offshore Ireland”.
In half year results also released on Thursday morning, Providence said it made a pretax loss of €5.5 million compared with €2.3 million the previous year.
