Providence debt deal in focus on costly legal ruling

A costly court ruling yesterday put the spotlight on the terms of the debt deal that Providence Resources struck with Melody Finance late last year, as the Barryroe oil and gas explorer led by Tony O’Reilly Jnr unexpectedly lost a multi-million euro legal dispute with an international drilling company over delays in the Celtic Sea.

Providence shares were “temporarily” suspended yesterday in Dublin and London ahead of the announcement of the UK Court of Appeal’s judgement, which found in favour of driller Transocean.

Providence now faces a bill of at least $5.6m (€4.9m) — which could be the minimum of its share of a $7m bill, after the ruling found in favour of Transocean.

Providence owns an 80% stake, and Lansdowne Oil and Gas the remaining 20%, in Barryroe. The bill does not include other legal costs that Providence might face.

It was unclear yesterday when the suspension of the shares would be lifted, but the timing of that decision depends on talks taking place between Providence and Melody on the financial impact of the ruling.

Providence said that last December it had agreed with Melody to extend a loans accord to May 2018, if the explorer needed to do so.

In the ruling, Justice Moore-Bick, Justice McFarlane and Justice Briggs found in favour of an appeal brought by Transocean Drilling UK in the dispute.

It involved whether Transocean was liable for the overhead delays when drilling of an appraisal well was suspended for about six weeks in December 2011.

Providence is in talks to ensure it “has the appropriate financial resources to satisfy its obligations to Transocean”, a spokeswoman said.