OIL AND gas exploration firm Providence Resources has raised $60 million (€42.4 million) in debt financing.

The funds will be used to repay its existing reserve base lending facility and to facilitate the development plan for its Singleton oilfield in the south of England, where it plans to increase production significantly.

The funds were raised through a prepaid oil swap transaction with Deutsche Bank, whereby Providence has agreed to sell to the bank a certain percentage of its production over the term of the transaction. This allows it to hedge at current oil prices.

The financing, with a 6½-year term, is secured on the Singleton property and allows Providence to better match the term of the debt to the increasing life of the oil field.

Providence chief executive Tony O’Reilly said the deal allowed the company to avail of “today’s higher pricing environment for the term of the facility.

“Importantly, it provides the operational and financial flexibility that will allow us to focus on increasing Singleton production rates,” he added.

Production at Singleton is about 750 barrels of oil equivalent a day, but a target of 1,500 has been set for 2012.

Davy analyst Job Longbroek said the deal was a “helpful change” to the firm’s debt structure, and would enable it to focus on its main business of drilling.