Five firms circling Providence over Barryroe

Five companies are currently circling Providence Resources as potential development partners for its headline asset, the Barryroe oil and gas field in the Celtic Sea.

The Dublin-based company has been trying to get a farm-in partner on board, at Barryroe, for some time. It said earlier this year that a deal has tentatively been reached, with completion dependent on said firm raising the necessary finance to cover its investment.

While Providence has never formally named the frontrunner, it is believed to be Dutch-listed oil finance company Sequa Petroleum.

On the back of its annual results yesterday, Providence said the closing conditions with the prospective partner “have yet to be satisfied” and that it is seeking clarification on the proposed farminee’s position.

Despite that, chief executive Tony O’Reilly Jr said the company remains hopeful of concluding a deal, as Barryroe is “a real asset, with real potential”.

“We’re pleased with the level of interest in the prospect,” he said. This refers to the fact that outside of the proposed farminee, there are four other interested parties in the Barryroe data room, who — it is understood — have the requisite financing in place should they want to executive a partnership deal.

Regarding speculation that institutional investors have suggested a preference for Providence to not select the proposed frontrunner as its partner at Barryroe, Mr O’Reilly said the board has received no such direct requests from any shareholder.

Providence does not have an exclusivity agreement in place with its initially proposed farm-in partner. As a result, the company has continued commercial discussions “with various counterparties”.

Regarding a desire to get a deal done before next month’s AGM, Mr O’Reilly said: “We’re under pressure in a sense, to get a deal done and are moving as quickly as possible.”

Mr O’Reilly said it is “hard to say” whether a deal will be done with the original likely party, or with one of the other parties currently in the data room. He said the main focus remains on doing a deal which is right for shareholders.

Providence’s 2014 results showed a leap in pre-tax losses from €7.8m to €11.5m, mainly due to costs arising from what it needed to pay out from its successful legal case with Swiss-based drilling contractor, Transocean; and adverse movement — namely, the strengthening in the US dollar — in foreign exchange rates.

Losses per share grew from 4.33c to 17.77c, but operating losses marginally reduced from €7.23m to €6.46m.

Mr O’Reilly said 2014 was a year of “significant progress” for the company, “despite a very challenging backdrop” for the industry. He added that improved debt facilities and recent additional financing will allow the company to continue executing its strategy.

Mr O’Reilly also said yesterday that Providence still hopes to drill at Spanish Point, off the south-west coast, next year and farm out part of its near-60% stake in that asset.

Providence’s share price was down by nearly 10%, in Dublin and London, at 35c and 24.3p, respectively. That of Lansdowne Oil & Gas — the junior partner at Barryroe, and which is basically up for sale — tumbled by nearly twice that percentage, to just over 6p, in London.

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