Providence shares slide on latest Barryroe funding snag

Providence Resources and its international funding and development partners are aiming to begin commercial drilling work at Barryroe by the end of next year.

Shares in Irish exploration company Providence Resources plummeted 14% on fresh complications surrounding the funding of the development of its Barryroe gas field off the Cork coast.

Providence completed a deal, last November, to bring in a consortium headed by Norwegian company SpotOn Energy to finance and develop Barryroe.

In return for a 50% share of the field, the consortium agreed to provide a minimum of $166m (€137m) to cover the costs of commercially developing Barryroe.

Plans for drilling

The partners plan to begin a commercial drilling campaign, at Barryroe, towards the end of next year.

However, Providence has now extended its farm-out agreement, by two months to the end of April, to allow SpotOn time to sort out the financing. One of SpotOn’s financiers — the Norwegian Export Credit Agency — is not in a position to invest.

SpotOn is currently negotiating a restructuring of the funding components, and Providence said the extension is designed to provide time to complete the funding.

"The extension will allow SpotOn sufficient time to complete funding commitments," Providence stated.

"Discussions to secure this increased commitment are well advanced," the company said.

Alternative funding structure

An alternative funding structure has been proposed by SpotOn. This involves an increased contribution to the financing by the consortium and raising more money from investors on the bond market.

SpotOn has told Providence and the other partners that it is confident of raising the necessary funding as set out in the farm-out agreement.

The original commitment by the Norwegian Export Credit Agency — or GIEK as it is better known — was for approximately 20% of the overall funding.

Providence tentatively named SpotOn as its new Barryroe partner last April and almost immediately hit a funding snag, with its new partner delaying part of its introductory funding. However, that glitch was overcome.

Providence had to hunt for a new partner for Barryroe after funding from previous partner Chinese consortium APEC Energy continuously failed to materialise during 2019.

Providence’s chief executive Alan Linn has called Barryroe “a project of national importance”.