Providence to go it alone on Barryroe as third partnership collapses

Providence Resources said on Thursday it will proceed alone to bring its Barryroe oil and gas field, south of the Cork coastline, to production as a third planned development partnership has fallen through.

The company, led by chief executive Alan Linn, said it has 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 deal with SpotOn, which had been in the works since early last year but was agreed in November, ran into problems in recent months when the Norwegian export credit guarantee agency, GIEK, which was due to contribute 20 per cent of the funding, was unable to do so due to the structure of the deal. It had also become apparent that SpotOn’s original pitch that it would be able to raise non-recourse finance for the deal was not possible, according to Mr Linn.

Providence said it now plans to raise $5 million, covering an initial sum that was due from SpotOn to cover preparatory work before drilling. One of its main investors, Pageant Holdings, has agreed to underwrite a $2.5 million share sale portion of the fundraise, with the remainder coming from the issue of warrants that give buyers the right to buy shares for up to a year.

Milestone reached in wind power as SSE submits plan for Arklow

---

Onshore wind key to climate targets and jobs, says KPMG report

---

Former Irish energy group to demand $1bn from Algeria as gas project seized

---

Irish-led tidal energy project awarded €3m from European Commission

---

Pageant and its founder Nick Furlong own about 15 per cent of the company. Shares in the Dublin-listed explorer fell as much as 14.3 per cent on Thursday to as low as 3.6 cent, a level last seen in May 2020.

Providence also plans to raise about $80 million through a bond issue in the Nordic markets and lower its up-front costs by agreeing payment deferrals with individual service providers that had come on board as part of a broader consortium with SpotOn last year, according to the chief executive.

‘Destiny’

“We are taking control of our destiny. I am not relying on others to lead the project. We got a lot from our work with SpotOn and we’re going to use that,” he said. “We’re very convinced that we can actually do this ourselves. And that means it’s going to get done.”

The original deal with SpotOn would have seen Providence’s and Lansdowne Oil & Gas’s respective 80 per cent and 20 per cent stakes in Barryroe falling by half.

Providence has stated that Barryroe could yield 350 million barrels of oil, enough to supply all the Republic’s needs for almost a decade at current consumption, along with a significant amount of natural gas.

Internal modelling forecasts for an early-development scheme in the field puts a net present valuation of $560 million upon recovering 48 million barrels of oil, equivalent to 16 per cent of the estimated recoverable resource in the Barryroe licence area. That’s based on an oil price of $60 per barrel.

“Having actively supported SpotOn over the past year, it is disappointing that it’s become necessary to terminate the farm-out process with them. However, we are looking forward and actively building a revised development partnership with key service providers and a financing package designed to meet the needs of the project,” said Mr Linn.

“We have been encouraged by the support we are receiving from service providers and banks and the commitments being offered to work with us in progressing the project.”

An initial farm-out agreement with a firm called Sequoia Petroleum fell through in 2015 after the chosen partner failed to raise the necessary funds to participate. A subsequent agreement with a Chinese group, APEC Energy, was abandoned in 2019 after that partner missed a series of deadlines to put up the agreed cash.