Providence Resources halves operating losses

Irish oil and gas explorer Providence Resources more than halved its annual losses last year, its annual report shows.

Losses for year amounted to €10.4 million, which was down significantly on the €26.9 million lost in 2019.

Providence’s results show it suffered an operating loss of €2.4 million last year, as against a loss of €25.9 million in 2019.

The cut in losses can be attributed to costs associated with the impairment of exploration and evaluation assets which were €272,000 last year as against €21.1 million in 2019.

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There was a loss per share of 1.31 cents versus 4.39 cents in 2019. At December 31st, 2020, total cash and cash equivalents were €2.1 million versus €710,000 million in 2019. The company had no debt as at December 31st, 2020.

The board raised €3 million in May 2020 through the issue of 177,973,004 ordinary shares. The total proceeds raised in 2020 by the equity raise and conversion of warrants was about €4.8 million gross.

Earlier this year, Providence announced that it was to proceed alone to bring its Barryroe oil and gas field, south of the Cork coastline, to production as a third planned development partnership fell through.

The company, led by chief executive Alan Linn, said it terminated a so-called farm-out agreement with Norway's SpotOn, which was supposed to ultimately receive a 50 per cent stake in the project subject to completing a $166 million (€138 million) fundraising to develop the field.

“The decision by the board to take control of the Barryroe development is an important strategic moment for Providence,” said Mr Linn on Monday.

“We are convinced it is the best way to deliver the full value potential from our Celtic Sea acreage for shareholders whose ongoing support is recognised and appreciated.”

Opportunity

In the annual report, the company said a board review of the Barryroe project following termination of the farmout concluded that a “significant opportunity exists” to progress the Barryroe appraisal and development by taking direct control of all elements of the project.

“Providence is building upon existing in-house project and technical competencies and has established the team required to fully resource the project design and development,” it said.

“Given the phased nature of the field appraisal and development this is a pragmatic and practical decision for Providence ensuring that project development expenditure is carefully managed and the reservoir development optimised.

“The commercial relationships with service providers, established during the farm-out process, have been refreshed and continue to present an opportunity for Providence to work in partnership to optimise overall project development.

“Providence is also progressing discussions with several Norwegian banks proposing to raise a conventional bond to contribute a material portion of the Early Development Scheme capital requirement.”

Separately, Providence announced that Pat Plunkett, non-executive chairman, is stepping down from the board following the annual general meeting to be held on July 22nd. He is to pursue other business interests.

James Menton, currently senior independent non-executive director, will assume the role of chair following the AGM.