KEYFACT Energy
Barryroe Update
- Non-receipt of funds from APEC
- No further extension granted and exclusivity removed
Corporate Update
- Implementation of Redundancy Programme
- Changes to Composition of Providence’s Board
Licence Update
- Voluntary Surrender of Frontier Exploration Licence 2/14 - Diablo
Providence Resources today provides the following corporate update which includes a commercial update in relation to Standard Exploration Licence (“SEL”) 1/11, which contains the Barryroe oil accumulation (the “Barryroe Project”) and a licence update in relation to Frontier Exploration Licence (“FEL”) 2/14, which contains the Diablo prospect.
SEL 1/11 is operated by EXOLA DAC (“EXOLA” or the “Operator”, 40%), a wholly-owned Providence subsidiary, on behalf of its partners, APEC Energy Enterprises Limited (“APEC”) and Lansdowne Celtic Sea Limited (“Lansdowne”, 10%), collectively the “Barryroe Partners”. The area lies in c. 100-metre water depth in the North Celtic Sea Basin and is located c. 50 km off the south coast of Ireland.
FEL 2/14 is operated by TOTAL E&P Ireland B.V. (35.0%), a wholly owned subsidiary of TOTAL S.A., on behalf of its partners, Capricorn (30%), a wholly owned subsidiary of Cairn Energy PLC, Providence Resources P.l.c. (28%) and Sosina Exploration Limited (7%), collectively referred to as the “JV Partners”. The area lies c. 1,300-metre water depth in the southern Porcupine Basin and is located c. 150 km off the west coast of Ireland.
BARRYROE UPDATE
Background
On June 5, 2019, the Company announced that it had agreed certain amendments to the Farm-Out Agreement for the Barryroe Project with APEC Energy Enterprises Limited (“APEC”) and, together with EXOLA and Lansdowne, the “Barryroe Partners”, including a revised backstop date with APEC for receipt of the US$ 9 million loan advance to June 14, 2019, which was subsequently extended through various extensions to September 30, 2019.
Non-Receipt of Funds
As at close of business on September 30, 2019, no funds had been received in the Company’s account. Noting this specific contractual non-performance to the amended terms to the Updated FOA, the Company has not agreed any further extension with APEC to the Updated FOA. Without prejudice to any other legal remedies that the Company may have, the Company has now advised APEC that it will commence with the licence reversion process of APEC’s 50% working interest in SEL 1/11 to EXOLA and Lansdowne on a 40% and 10% basis, respectively. Additionally, APEC have been advised that APEC no longer retains exclusivity and that the Company is now free to open up commercial discussions with third parties on the Barryroe asset.
BUSINESS RE-ENGINEERING
Implementation of Redundancy Programme
Following the approval at the Extraordinary General Meeting held yesterday of the resolution to effect the Placing to raise gross proceeds of US$ 3.76 million, the Company is now moving forward with the implementation of the redundancy programme, where technical and support staff will be made redundant as part of the re-engineering of the Company’s business model.
Changes to Composition of Providence’s Board
Mr. Lex Gamble and Mr. Philip O’Quigley, both Non-Executive Directors, have stepped down from the Board of Directors effective September 30, 2019. The Board of Directors of Providence now comprises Mr. Pat Plunkett (Chairman), Dr. Angus McCoss (Senior Independent Director) and Mr. Tony O’Reilly (Chief Executive Officer).
The Company projects that the above restructuring measures, plus other measures outlined in the Circular issued to shareholders on September 12, 2019, will reduce the Company’s annual cost base (excluding CAPEX) from US$ 5.3 million currently to US$ 1.9 million, representing an approximate 65% reduction in annualised costs.
LICENCE UPDATE
Voluntary Surrender of FEL 2/14 - Diablo
Following further detailed technical assessment of FEL 2/14, the JV partners could not recommend any further prospect maturation and accordingly, TOTAL, on behalf of the JV partners, has now confirmed that it has written to the Department of Communications, Climate Action and Environment confirming that the JV partners will voluntarily surrender the licence with effect from December 31, 2019.