Providence in talks to extend debt facility, reports wider losses

Pretax losses at Irish-based oil and gas exploration company Providence Resources widened in the six months ending June 30th as the group said it was in talks with its lender to extend its debt facility.

Providence reported a first-half pretax loss of €8.42 million as against €3.37 million for the same period a year earlier with a loss per share of 7.94 cents versus 5.22 cents in the first six months of 2014.

The Tony O’Reilly-headed group said that as with other explorers, Providence has been hit by the fall in oil prices but said it remained focused on its core Irish-centric strategy.

“Providence remains fully committed to offshore Ireland, an area with both exceptional prospectivity and internationally competitive cost and operating dynamics. The potential of the area has been further enhanced by the post well analysis of our Dunquin North exploration well combined with the major oil discoveries in the Flemish Pass Basin, offshore eastern Canada,” said Mr O’Reilly.

“We believe that first gas from Corrib, together with the record high level of applications for the 2015 Irish Atlantic Margin Licensing Round, are defining moments for the Irish offshore, only serving to further enhance the value of our exploration and appraisal portfolio,” he added.

The group said it is ongoing discussions with its debt provider Melody Finance regarding a "possible extension of the terms and maturity of the facility."

In addition, the board has initiated a cost reduction programme in order to remove non-essential costs from the business.

This is forecast to reduce general and administrative costs by 12 per cent this year and by 20 per cent next year. It is also forecasting a 40 per cent reduction in its capital expenditure programme.

Providence said farm out discussions continue with a number of potential partners on the Barryroe Oil project. It added that while the industry backdrop remains “very challenging,” recent market developments have signalled some positive changes.

“With our extensive and mature portfolio, we remain well-placed to deliver on our plans and continue to be optimistic about the prospects both for Providence and the overall Irish oil and gas sector. We are both determined and uniquely positioned to lead the industry in identifying and realising the significant potential that exist offshore Ireland,” said Mr O’Reilly.