Barryroe drilling 'may be pushed into 2020' due to approval and funding delays

Approval and funding delays could push a long-awaited multi-well drilling campaign at the Barryroe oil and gas field, off the Cork coast, into 2020, a UK broker has said.

Drilling is still officially scheduled to begin in the fourth quarter of this year, but has already been delayed.

Providence Resources is likely to proceed with plans to ready its flagship Barryroe field for drilling, but may now have to finance that work by raising fresh debt or selling shares, its UK-based broker has said.

Providence is still awaiting two key ingredients to allow for the drilling campaign at Barryroe to start - government approval for a pre-drilling site survey, and a promised $9m (€8m) funding loan - to pay for that work - from Chinese project partner APEC.

Earlier this week, Providence yet again extended the deadline for APEC's elusive payment, this time to next Monday. Providence has been assured that the money will be paid, but has also begun to flag the potential need for alternative funding in order to give it sufficient working capital beyond the end of this month.

"Should these funds not be received by the revised backstop date, and taking into account creditors on the balance sheet and existing forward commitments...the company would need to put in place alternative financing arrangements in order to provide it with sufficient working capital beyond the end of August 2019," it said.

The Irish exploration company's UK broker Cenkos Securities said the realisation of the Chinese loan is "critical" to progress Providence's drilling plans off the Cork coast.

"Without the APEC funding, we believe Providence and [junior partner] Lansdowne Oil and Gas will still proceed with the Barryroe site survey so that Barryroe is 'drill ready'," said Cenkos analyst James McCormack.

"To finance this, the company will need to raise further funds either via debt or equity," he said.

Providence's share price - down nearly 40% in the last 12 months - fell a further 3.6%.

The company this week announced sweeping moves - including the laying off of nearly 70% of its staff - to reduce its annual costs by 65% to €1.7m.