Providence sees shares rise as losses fall 15%

Shares in Providence Resources jumped more than 7% yesterday on the back of the Dublin-based explorer reporting a near €4m narrowing of annual losses.

The Tony O’Reilly-led company reported a pre-tax loss of €20.5m for 2016 down nearly 15% on the €24.1m loss generated in the previous year. A bigger difference in the latest annual balance sheet was that Providence closed the year debt-free and with nearly €32m in available cash.

Mr O’Reilly hailed a “transformational” year in which Providence went from having its shares suspended upon entering emergency funding talks; to completing a successful share sale, paying off a €20m-plus debt mountain and lining up a fresh drilling campaign off the west coast and said 2017 should be another significant year for the company.

Providence confirmed that drilling at its Druid/ Drombeg prospects, in the Porcupine Basin, will begin in June. Having recently sold a 30% stake in the combined assets to Scottish explorer Cairn Energy, in return for a proportion of the drilling costs, Providence is open to selling a further tranche of its now 56% stake.

The company is also in ongoing discussions with potential development partners regarding a number of its other assets around the coast notably its Spanish Point licence off the west coast and its much-heralded Barryroe field off the Cork coast in the Celtic Sea.

“Farm-out negotiations are ongoing with various counterparties on a number of our assets,” said Mr O’Reilly.

Last month, when Providence announced its deal with Cairn Energy, Mr O’Reilly said that the Irish company’s management was happy with the level of interaction it is having with potential farm-in partners for other assets.

Providence is also set to run a fresh rule over its much-fancied Dunquin prospects off the west coast as joint venture partner Eni Ireland starts 3D seismic studies this summer.

Positive feedback could reopen a drilling avenue where a high-profile drill failed four years ago.

Meanwhile, oil prices turned negative yesterday, pulling back after eight straight sessions of gains after US crude inventory data suggested the market was still heavily supplied.

The report also showed stockpiles at the US crude hub at Cushing, Oklahoma rose 276,000 barrels in the week.

However, there was an unexpected drop in overall US crude inventories. Brent crude which had recovered nearly all last month’s losses, after Saudi Arabia was said to be pushing its fellow Opec members to prolong supply cuts beyond June fell 17c to $56.06 per barrel, with US West Texas Intermediate falling 13c to $53.27 a barrel.

The US data followed more bullish data from Opec nations, which said they had cut March oil output beyond the measures they had promised.

Opec countries cut oil output in March by more than they pledged, according to figures that the group published in a monthly report, as it sticks to an effort to clear a supply glut that has weighed on prices.

“What they’re losing in market share the US is looking to pick up. I don’t think there’s much room above $55.,” said Oliver Sloup, market analyst at iitrader.com.

Additional reporting Reuters