Providence Resources feels ‘renewed optimism’ as losses narrow

Exploration company Providence Resources said it has entered the second half of the year with “renewed optimism” after seeing a near halving of its first-half losses and carrying out a company-saving funding round.

Providence Resources feels ‘renewed optimism’ as losses narrow

The well-documented $70m raise, via a share sale, earlier this year helped the company clear its debts, pay off legacy legal costs and gave it the means to drill, next year, at part of its west of Ireland asset base with or without a development partner.

Chief executive Tony O’Reilly Jr yesterday said the company’s solidified balance sheet, “significantly enhanced” financial strength and planned drilling activity “have the potential to create significant shareholder value”.

He didn’t give much update on Providence’s ongoing farm-out discussions – including at its biggest two assets at Barryroe in the Celtic Sea and Spanish Point off the west coast – other than to reiterate a number of so-called ‘super-majors’ and mid-cap oil firms and private equity parties are showing interest.

He added the company is “exactly where we want to be regarding commercial things we’re working on”.

Providence’s first-half results yesterday showed a near halving of pre-tax losses to €4.44m. Meanwhile, Goldman Sachs yesterday said the deal reached by OPEC crude producers to curb output should add $7-$10 to oil prices in the first half of next year.

OPEC members yesterday agreed to modest oil output cuts in the first such deal since 2008, with group leader Saudi Arabia softening its stance on Iran amid mounting pressure from low oil prices.

“Strict implementation of today’s deal in 2017 would represent 480,000 to 980,000 barrels per day less output,” Goldman analysts said in a note yesterday.

“Longer term, we remain sceptical on the implementation of the proposed quotas, if ratified,” the analysts said.

Still, the bank reiterated its year-end and 2017 oil price forecasts, given the uncertainty of the OPEC proposal. Goldman kept its end-2016 forecast for US West Texas Intermediate crude (WTI) at $43 per barrel and its 2017 forecast at $53 per barrel.

Oil prices jumped more than 5% to trade above $48 per barrel after Wednesday’s deal.

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