Providence Resources announces its intention to conditionally raise approximately $3.0 million through the issue of Placing Securities and Subscription Securities (each of which shall comprise one New Ordinary Share, one 3p Warrant and one 9p Warrant) at a price of 1.5p each. The Fundraising comprises a placing to institutional and other investors to raise approximately £2.15 million (equivalent to approximately US$2.63 million), before expenses, and a subscription by SpotOn Energy to raise £0.30 million (equivalent to approximately US$0.37 million).

The Issue Price represents a discount of 13 per cent. to the closing price of 1.73p on 3 April 2020, being the latest practicable date on which the Company’s shares traded on AIM and Euronext Growth ahead of this announcement.

Term Sheet with SpotOn Energy in relation to Barryroe

The Company has agreed a non-binding and non-exclusive heads of terms with SpotOn Energy in relation to the farm out of Standard Exploration Licence (“SEL”) 1/11 which contains the Barryroe oil and gas field. SEL 1/11 is operated by EXOLA DAC ("EXOLA", 80%), a wholly-owned subsidiary of Providence, on behalf of its partner, Lansdowne Celtic Sea Limited (20%).

Pursuant to the Term Sheet, the Company has granted SpotOn Energy a period of exclusivity until October 31, 2020 during which time SpotOn Energy will, working in collaboration with Providence, seek to agree an appraisal work programme for the Barryroe field and develop commercial terms with the aim of concluding a binding farm out agreement within that period. 

SpotOn Energy is a Norwegian company, registered in the UK, which takes a progressive approach to cost effective offshore oil and gas field development, working with a consortium of world leading services providers to deliver development projects. The SpotOn Energy team has extensive experience designing and constructing semi-submersible drilling rigs for North Sea deployment and also in the design, development and asset integrity management of offshore facilities.

SpotOn Energy has agreed to invest an initial £300,000 into the Company by subscribing directly with the Company for Subscription Securities pursuant to the Subscription and that it intends to make a further investment of £200,000 within six weeks of this announcement through a subscription for new Ordinary Shares at the prevailing market price. A further update will be issued in due course.

Use of Proceeds

It is anticipated that the proceeds of the Fundraising will be used principally to provide general working capital for the business to cover general administration, licencing and Placing costs, until April 2021. In the event that the amount raised pursuant to the Fundraising is increased as a result of excess demand, this will provide the Company with additional working capital which will take it beyond this date and ensure greater financial flexibility. 

Business Re-Structuring and Prospects

The Company recently completed a detailed business re-structuring which included the appointment of a new CEO, Alan Linn, and the implementation of a significant reduction in the Company’s ongoing cost base.

Since his appointment, Mr Linn has also completed a review of the Company's asset base and intends to concentrate business activity and resources on building the value of the Barryroe project by implementing an appraisal work programme targeting the eastern and central locations within the Barryroe field.

As outlined above, pursuant to the Term Sheet agreed with SpotOn Energy, the Company has granted SpotOn Energy a period of exclusivity until October 31, 2020 during which time SpotOn Energy will, working in collaboration with the Company, seek to agree an appraisal work programme for the Barryroe field and develop commercial terms with the aim of concluding a binding farm out agreement within that period. 

Barryroe site survey

On 9 August 2019, the Company announced that the Barryroe Partners had received permission from the Minister of State at the Department of Communications, Climate Action and Environment to undertake a seabed debris clearance, environmental baseline and habitat assessment site survey over the area of the Barryroe field within SEL 1/11. The survey was completed successfully within budget on 16 September 2019.

Barryroe location (Image source: KeyFacts Energy)

With the Company reverting to its original appraisal programme it is important to commence the planning preparation work and submit the necessary application required in order to provide timing certainty for the commencement of the appraisal work programme. To this end, the Company recently submitted a planning application to undertake a site survey on a third Barryroe field appraisal location.

Importance of the Fundraising

Providence has stressed that, if the Company does not receive the proceeds of the Fundraising, the Company’s ability to continue as a going concern will be materially compromised. 

KeyFacts Energy: Spot on Energy Ireland country profile   l   KeyFacts Energy: Providence Resources Ireland country profile