Providence reports pre-tax profit of €43,000 as Irish drilling is planned

OIL and gas explorer Providence Resources is confident of further growth in the second half of this year, ahead of what management is referring to as a seminal couple of years, during which it is likely to begin drilling on around 12 prospects off the coast.

The company yesterday reported a pre-tax profit of €43,000 for the first six months of this year; a turnaround from a pre-tax loss of €5.6m at the corresponding point last year.

Operating profit was up from €1.7m to just over €2m, while revenue rose by nearly €1m to €11.33m.

Significantly, the company slashed its first-half after-tax losses from under €6.6m to €1.2m.

Chief executive Tony O’Reilly Jnr said the first six months of this year saw “a huge amount of activity across our portfolio and a solid financial performance”.

A continuation in oil price rises and favourable exchange rate movements should result in a positive second half for the firm, Mr O’Reilly added.

Providence is also now gearing up for a sizeable round of drilling activity; taking in its Singleton field in the south of England and more than 12 of its prospects in various locations off the coast. Drilling activity is likely to cover 2011 and 2012 and the full schedule is set to be finalised by the end of this year.

“In outline, we expect that this would be the largest concerted drilling programme in Providence’s history and would also be the largest co-ordinated multi-basin drilling programme carried out offshore Ireland,” Mr O’Reilly added.

Providence is also expected to enter more farm-out agreements, on certain assets, in the coming months as it continues to look to keep operational costs down. The company has also lowered its mid-term production expectations from 5,000 barrels of oil equivalent per day to between 2,000 and 3,000 boepd by the end of 2012. Production rose by 19% in the first half of this year.

Meanwhile, reports suggest another high profile Irish exploration company – Tullow Oil – could well invest more than the €1.17bn that it originally forecast, this year, as it increases production levels in its main assets in Ghana and Uganda.

Still, up to 85% of the company’s capital spend will be on its African operations – which number 93 licences in 15 countries.