Providence narrows losses in 2011

Exploration firm Providence Resources narrowed its losses last year, reported a pre-tax loss of €5.2 million.

The group said 2011 had been its most important year as it began its $500 million multi-basin, multi-year drilling campaign, and the Barryroe well exceeded expectations.

Revenue from continuing operations rose to €13.8 million, compared with €11.1 million in 2010. Operating profit fell as Providence incurred a large impairment charge of €6.6 million related to unfinished drilling at its Singleton well and write downs in the Celtic Sea.

During the period, the group also had a successful share placing of 16.1 million new ordinary shares, and sold its Gulf of Mexico portfolio, raising $15 million. Its Nigerian subsidiary was sold for $16 million, with $10 million received at the end of December, and the balance last month.

Providence also repaid some of its bonds early, reducing debt by €18.5 million, and restructured some of its debt.

After tax charges and write-downs related to discontinued operations, the retained loss was €13.9 million for the year, compared with €41.6 million in 2010.

However, Davy Stockbrokers said the financial performance did not reflect the fact that “the group is for the most part an exploration business which generates value through the drill bit and oil and gas discovery”.

“The results confirm the group's improvement over the last year. Much work has been done to reduce debt and what remains is reserve-based,” Davy said. “Consequently, Providence is now funded for its ongoing activities. The Barryroe well was a significant success and work continues to develop a commercial development proposition. Shareholders have the results of this work to look forward to by the end of the year and then up to five wells in 2013 with two very important wells along the Atlantic margin.”

Chief executive Tony O’Reilly said the company had a “very clear strategy”, and the necessary financial resources to “play a significant and defining role in developing the Irish offshore”.

“The focus for 2012 and beyond is to continue to turn the drill bit on our extensive portfolio of production, appraisal and exploration assets in Ireland and the United Kingdom,” he said. “The aim is to advance proven discoveries to project sanction whilst proving up new exploration opportunities – both in terms of individual assets and entire new basins. As our recent success at Barryroe demonstrates, advances in technology, infrastructure and commodity pricing have combined to present a truly unique opportunity to test the commercial potential of a number of these Irish assets.”