EXPLORATION COMPANY Providence Resources has acquired a portfolio of producing and development assets in the US Gulf of Mexico from Triangle Oil and Gas Inc for $67.5 million (€43.5 million).
The company, listed on the Alternative Investment Market and IEX, said the deal (which is subject to regulatory approval) would treble its daily production to 2,000 barrels of oil per day.
As well as eight producing fields, there are two development assets and a substantial number of exploration opportunities within the portfolio. "Not only does this deal allow Providence to generate significant cash flow from the existing production . . . there are substantial additional proven resources to be developed within the portfolio," said Providence chief executive Tony O'Reilly jnr.
"These operations will also build on and complement our existing production from High Island A-268 and future production from Galveston Island A-155. We look forward to growing our presence in the US Gulf of Mexico and see this acquisition as a springboard for future opportunities."
The transaction is being fully financed through Macquarie Bank Limited, with which Providence has a $250 million revolving credit facility. Macquarie will receive 10 million ordinary shares and 30 million warrants for ordinary shares.
Davy Stockbrokers said the acquisition, along with last year's acquisition of the Singleton Oil Field in the UK, showed Providence's intention to diversify its asset base and grow out of the small-cap space. "We see this deal as an ambitious statement of intent," said analyst James McCullough in a note.
"It has used its access to debt to fund an acquisition that is material to its current portfolio, and the cashflow generated by these assets will be used to evaluate exploration prospects at minimum cost to shareholders."
