Irish oil and gas explorer Providence Resources conditionally raised $1.8 million (€1.7 million) on Friday to tide the company over as it continues to chase the Government for a key lease on its Barryroe prospect off the Cork coastline.
The company said in a stock exchange statement that it placed shares and warrants, which could be converted into ordinary stock over a 12-month period, on the market. Part of the deal is conditional on shareholders approving resolutions surrounding the warrants at the company’s annual general meeting on July 27th.
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The price of the shares and strike price at which the warrants could be converted were set at 35 per cent discount to the 2.3p closing price of Providence’s shares on Thursday in London. Major shareholders Pagaent Holdings and Kite Lake Capital backed the fundraise.
“The fundraising is required to address the company’s near-term working capital requirements as well as to pursue its lease undertaking application for Barryroe,” the company said, adding that it is continuing to press the Department of the Environment to consent to the application.
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“In addition, some of the proceeds will be used to progress preparation for an appraisal well in 2023, subject to award of the lease undertaking,” it said.
A lease undertaking is a ministerial commitment to grant a petroleum lease at a future date on an oil or gas discovery that has not yet been declared as a “commercial” find.
Providence, led since last year by executive chairman James Menton, plans to proceed with an appraisal well at the field in 2023, subject to ministerial approval, which could pave the way for first production in 2026.
Recoverable oil
Investors in Providence have seen three Barryroe development partnership deals come to nothing in the decade since the field was found to have more than 300 million barrels of recoverable oil. The latest was abandoned in April last year.
The company said in February that it had written to Minister for the Environment Eamon Ryan twice at that stage since late December urging him to grant the lease undertaking. It said at the time that while it had held fresh preliminary discussions with potential industry partners on developing Barryroe, all were subject to the key ministerial consent.
A spokesman for the department said that it cannot comment while the application is under consideration.
Providence, which has an 80 per cent stake in the Barryroe licence, has estimated that it will cost $65 million to cover its share of envisaged appraisal well and associated technical studies. Brent crude oil is trading at about $114 a barrel, up more than 50 per cent on the year, fuelled by a reopening of economies from the worst of the Covid-19 crisis and the Russia-Ukraine war.
