Providence sells UK assets for €50m
The assets sold include the Singleton oil field, Baxter’s Copse development project, and the Burton Down exploration prospect in the UK.
Providence plans to use the proceeds of the sale to repay $44m to Deutsche Bank, leaving it with $22m to invest in planned drilling projects in Ireland.
Providence chief executive Tony O’Reilly said: “We are very pleased to have closed this transaction, which means that the company is now totally debt free. We will now continue to concentrate on our extensive Irish portfolio of appraisal projects and exploration prospects, which are the subject of a major multi-basin drilling programme.”
The company recently scrapped plans to drill in Dublin Bay, citing a “lack of clarity” regarding the permission granted, which it said could have resulted in legal challenges and “undue delays”.
Providence said it had become clear that certain elements of the EU’s Environmental Impact Assessment Directive were not transposed correctly into Irish law by the government in 1999. The company will now wait on the current administration to amend planning and environment regulations before reapplying for a foreshore licence.
However, it still has one of the most promising oil prospects of recent years in Barryroe, Co Cork.
Davy’s analyst Job Langbroek said the sale of the UK assets was a sensible move that would allow Providence to begin its Irish development debt free.
“The sale of the Singleton and Baxter’s Copse assets for a gross consideration of $66m has concluded. Post the deal, which provided the group with a net cash injection of $22m [after the Deutsche facility had been paid down], Providence is now completely debt free,” he said.
“While the UK assets provided cash income, they were involving increasing amounts of management time and investment. In the context of the group’s efforts to drill offshore Ireland, the deal was completely sensible.”
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