Providence raises €75m in share sale to pay off debt and fund drilling costs
The move — which sees the Irish oil and gas exploration company issuing over 13 million shares on London’s AIM and Dublin’s ESM markets — also funds to the tune of around $30m Providence’s outstanding debt related to it upping its stake in the Barryroe well from 50% to 80%. Another $30m or so will go towards funding the company’s ongoing multi-well drilling programme off the coast of Ireland.
In the space of a week last month, Providence found oil and gas at its Barryroe asset off the Cork coast.
This placing and fundraising round — which was managed by Cork-born Joe Nally of Cenkos Securities in London — vindicates the results Providence found at Barryroe, in the eyes of the investor community, according to company chief executive Tony O’Reilly Jnr.
“It was heavily over-subscribed and represents a 5% premium to the pre-placing closing share price. Not many companies can say that. This placing not only further broadens our already strong institutional shareholder base, but also simplifies our balance sheet and capital structure. It will also release cash flow,” Mr O’Reilly said.
Not surprisingly analyst reaction was positive but Job Langbroek of Davy Stockbrokers also suggested that Providence could look to farm-out part of the ownership of the asset, down the line.
He said: “The funding is an important step in Providence’s efforts to pursue its Irish drilling and development plans. The presence of cash should also ensure that farm-out and joint venture deals are maximised. The 80% equity position is large and is unlikely to be the final equity position in the Barryroe project. We think it’s reasonable to expect that a farm-out process will now ensue. Clearly, this is high value equity and Providence will be looking for as much value as it can extract from potential farm-in partners.”
The news boosted Providence’s share price by nearly 9% to just under €6.
CONNECT WITH US TODAY
Be the first to know the latest news and updates
