Providence reports €50m pretax loss

Providence Resources, the Irish oil and gas exploration firm, has reported a pretax loss of €50 million for 2008 on the back of a €49.7 million asset impairment charge.

The impairment was primarily due to a revaluation of its Irish Celtic Sea assets after last summer’s drilling programme there failed to meet expectations, coupled with the fall in oil and gas prices towards the end of last year.

This non-cash charge of €49.7 million contributed to an exceptional loss of €51.2 million. If this was stripped out, the company would have reported an operating profit of €7.53 million.

Revenues rose from €4.3 million to €24.8 million in the 12 months to the end of December. The company benefited from an average oil price per barrel of $111 last year compared with $80 in 2007, assisted by hedges. Ebita rose by twenty times to €14.9 million.

The loss per share was 2.06 cent and the company had €9.7 million in cash at the end of the year.

Providence also said it had raised €42 million in a convertible bond which was mainly employed to fund drilling of its Celtic Sea interests off Hook Head in Co Wexford and Dunmore off the Co Waterford coast.

The company said it was on course to achieve production of 3,000 barrels of oil equivalent per day by the end of this year.

Job Langbroek, Davy analyst said Providence had achieved its production target of 2,000 barrels per day for 2008 and participated in a successful Gulf of Mexico gas discovery and an AJE Field (offshore Nigeria) appraisal well.

“Results offshore Ireland were mixed, with positive Porcupine project developments offset by a disappointing two-well drilling campaign in the Celtic sea,” he said.

Providence chief executive Tony O’Reilly said the company had signed a partnership agreement with Chrysaor for the Spanish Point project and had secured a licensing option in the Kish Bank Basin off Dublin with Malaysian oil giant Petronas.

Mr O’Reilly said the company had entered this year with a lower cost base and was concentrating on maximising production from the SNX-10 UK onshore Singleton oil field.

At 3.30pm shares Providence shares were up over 5 per cent at .04 cent giving the company a market capitalisation of €101 million. The stock has fallen by 62 per cent over the last year.