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Providence Resources to cut costs and ‘re-engineer’ business model, further extends payment deadline

The Irish oiler told investors that the US$10mln Barryroe payment is still awaiting final processing by HSBC.

Providence Resources PLC - Providence Resources to cut costs and ‘re-engineer’ business model, further extends payment deadline
It also awaits consent for a well site survey

Providence Resources PLC (LON:PVR) has again extended the deadline for an outstanding payment of US$10mln related to the farm-out of the Barryroe oil field, in Ireland’s Celtic Sea.

The ‘backstop date’ has now moved to 12 August 2019, after the prior deadline of 2 August passed without payment. It told investors that the payment is still awaiting final processing by HSBC.

Additionally, Providence noted that it still awaits consent for a proposed site survey – a precursor to drilling that’s slated for later this year.

“The board believes that the carrying out of the site survey in the immediate term is essential to expedite the forward drilling plans for the Barryroe project which will be managed by a dedicated project management team,” the company said in a statement.

Providence this morning revealed a number of material corporate changes following the Barryroe transaction and a recent strategic review.

In the statement, the company told investors that there has been "an immediate requirement to re-engineer Providence’s business model".

It explained that the farm-out saw the company transfer operatorship of most of its key assets and has substantially reduced the technical role of the company in its projects. Additionally, it noted that it is not a revenue generating company and it has been unable to expand its operations into other international markets.

Providence now intends to relocate to a smaller office, technical staff will be made redundant and it is reducing the size of its board.

Technical director John O’Sullivan is stepping down with immediate effect, while non-executive directors James McCarthy, Lex Gamble and Philip O’Quigley won’t seek re-election at the company’s upcoming AGM – scheduled for 12 September in Dublin.

It is anticipated that the proposed changes will trigger a 65% reduction in annual costs down to around US$1.9mln from US$5.3mln.

Providence noted that as of 2 August it had around US$1.5mln of unaudited cash in the bank and it cautioned that it may need to seek alternative financing arrangements if the outstanding US$10mln payment is not received soon.

Specifically, it said that funds would be needed to provide sufficient working capital beyond the end of August 2019.

Quick facts: Providence Resources PLC

Price: 3.075 GBX

AIM:PVR
Market: AIM
Market Cap: £25.69 m
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