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Providence Resources unveils new US$76.6mln rescue funding

Published: 07:43 22 Jun 2016 BST

business man hands over cash
The new funding “will completely restructure” the balance sheet, Tony O'Reilly said.

Providence Resources PLC (LON:PVR) is raising up to US$76.6mln through a share placing and open offer that will secure the Irish oil firm’s financial future and allow it to drill in the increasingly high profile Atlantic margin.

A US$68.4mln share placing sees Providence issuing new shares to institutional and other investors at a price of 12p.

Separately, a €4.84mln open offer is intended to give existing shareholders the opportunity to participate in the funding on the same terms. They have the option to buy one new share for every 4.4 existing shares they own, at a price of 15.2 euro cents per share.

The share issue shores up Providence Resources’ finances, allows it to pay off US$20mln of debt and settle up with Transocean; thus the company is escaping its debt and liquidity problems.

Importantly, by providing enough funds to drill a new well the placing essentially enables a new focal point for investors that have been on hold, awaiting news of a partnership deal for the Barryroe oil field development.

Providence says the new well will target Druid, a large prospect in the Porcupine Basin, which is estimated to contain some 3bn barrels of potential resources. At the same time the company is still in talks over Barryroe as well as possible farm-outs of other interests offshore Ireland.

Tony O’Reilly, Providence chief executive, explained that the new funding “will completely restructure” the balance sheet and remove any financial instability.

He added:“this restructuring will allow for the payment of amounts owing to Transocean as well as the retirement of the Melody debt facility, thereby providing the balance sheet flexibility for us to progress various commercial negotiations on our assets, most notably Barryroe and Spanish Point.”

He described the substantial backing from institutional investors as a ‘very strong endorsement’ of the company’s long-term focus on the Porcupine Basin.

Moreover, he noted that the Porcupine has recently become an exploration arena of significant interest for international oil majors.

In recent months major oil firms such as Exxon, BP, Statoil, and CNOOC (via the Nexen vehicle) have taken new interests in exploration areas off Ireland’s west coast, via the country’s new licensing round, which saw record levels of oil industry interest.

The new funding requires approval from existing shareholders, and a general meeting is being called for July 15 for a vote.

Providence Resources CEO Alan Scott Linn presents at the Proactive One2One...

Providence Resources CEO Alan Scott Linn presents at the Proactive One2One Virtual Forum. Providence Resources is an Irish based Oil and Gas Exploration Company with a portfolio of appraisal and exploration assets located offshore Ireland. Providence’s shares are quoted on the AIM in...

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