Providence explores new funding as Chinese backers given another extension

Oil and gas explorer Providence Resources, whose shares have fallen by 45 per cent in the past three months by funding delays for its main oil prospect, said on Tuesday it was “actively exploring” alternative financing arrangements as a long-delayed $10 million from the Chinese backers of the project has so far failed to land in its bank account.

Providence agreed in March last year to give Chinese company APEC a 50 per cent stake in its Barryroe project off the Cork coast, which is estimated to have 311 million barrels of recoverable oil, in exchange for the Beijing-based company covering half of the cost of an associated $200 million five-well drilling programme.

The deal also covered APEC lending Providence and Lansdowne Oil & Gas, which has a 10 per cent stake in the field, money to cover their costs.

However, Providence revealed in early June that it had not received an initial $10 million (€8.9 million) payment from APEC. A series of subsequent deadlines for receipt of the funds have been missed, with the latest running out on Monday.

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Another extension

Providence has granted APEC another extension, until September 9th, to finalise the transfer of the funds. However, it has also issued written notice that if the money has not been received by that date it reserves the right to end exclusivity with the Chinese company “while also considering all legal remedies available to it against APEC for contract non-performance”.

Alternative funding will be needed from the end of September if the APEC loans do not materialise, it said.

Shares in Providence have slumped by 45 per cent to 6.15 cents over the past three months.

Meanwhile, Providence said a vessel had been hired and was moving towards the waters above the Barryroe field to begin a site survey ahead of the planned drilling programme. The Government granted the company permission to carry out this survey last month.

“Whilst the full implementation of the site survey is subject the receipt of the APEC loan amount, the company announced on August 20th, 2019, that it had agreed the payment of the contractual mobilisation fee,” Providence said.

"Based on the prepayments made to the contractor, the company can now confirm that the vessel has mobilised to Ireland where operations are expected to commence later this week," it said.