Providence investors back placing to fund Cork drilling

SHAREHOLDERS IN oil and gas explorer Providence Resources yesterday approved a share placing to fund ongoing drilling at the Barryroe prospect off the coast of Co Cork. The site is expected to become Ireland’s first commercially viable oil field, and its potential was yesterday likened to a “North Sea in the making”.

The $100 million (€ 75.6 million) was raised through the issue of more than 13 million shares which were placed at a price of 480p, a premium of 5 per cent on the pre-closing price. More than 30 institutions, including Irish Life, HSBC and JP Morgan, participated in the placing by the Dublin and London-listed firm.

The proceeds will be used to repay the balance of a € 42 million convertible bond which matures in July of this year, and to fund the Barryroe drilling programme at a cost of $30 million.

In December Providence increased its equity participation in the programme from 50 to 80 per cent, with partner Lansdowne holding the balance.

The rest of the funds will be used to fund other drilling opportunities in offshore Ireland and onshore UK.

Speaking to a packed room at the egm yesterday, chief executive Tony O’Reilly jnr said the take-up of the shares was a “really positive endorsement” of the company.

“Importantly, we did it at a premium, which is unheard of in the City of London,” he told shareholders, going on to describe the potential for Providence’s Irish oil fields as being akin to a “North Sea in the making”.

He reiterated Providence’s objective of commercialising Ireland’s first oil fields, noting that Barryroe was going to be “bigger than pre-drill expectations”. For shareholders the next few years would be “very exciting”.

“The data is giving more every day for this field,” he said, adding that the decisions would now lie in how to extract the oil, how it was going to be sold and to whom.

In a broader update, Mr O’Reilly indicated that the macro- operating environment remained positive for Providence, but that costs were on the rise.

Apart from Barryroe, Providence will also remain focused on its fields onshore in the UK, as well as other Irish offshore sites including Dragon; Dunquin; the Rathlin Basin; Dalkey; and Spanish Point off Co Clare.

Finance director Philip O’Quigley will shortly step down from his role at Providence to take up a role as chief executive of Canadian-listed oil and gas exploration business Falcon Oil and Gas. He will stay on as a non-executive director with Providence.