Cantillon: Providence’s new CEO must strike oil at Barryroe
Cantillon: Alan Linn gets share incentive to succeed where others failed with oil field
Providence Resources’ Barryroe well off the south coast of Ireland: It has been eight years since the full potential was uncovered. Photograph: Finbarr O’Rourke
Troubled Irish oil and gas exploration group Providence Resources has awarded its new chief executive, oil industry journeyman Alan Linn, 15 million new shares under an incentive scheme.
The fact the award price is 4 pence sterling per share is, in itself, an indication of the scale of the problematic situation into which he is walking.
Often, when a chief executive joins a company following a troubled period, that person will spend time trying to assess potential, formulate goals and come up with a vision for the business. Linn goal’s at Providence is clear -– get the Barryroe oil prospect off the coast of Cork over the line. Nothing else matters.
One billion barrels
Linn must succeed where his predecessor, Tony O’Reilly jnr, failed. He must find a partner to fund the development of the oilfield, which lies in shallow waters off the southern coast of Ireland with potentially up to one billion barrels of oil.
O’Reilly’s failure to do this was the reason behind his departure in December. The company is at a low ebb and, as investors turn to Linn, he essentially has a free hit. If he succeeds, he will be a hero. The problem is that his predecessor thought he had succeeded twice before at the same task.
In 2015, O’Reilly thought he had sealed a Barryroe farm-out deal with Sequa Petroleum, but that collapsed when the backing didn’t materialise. In 2018, he thought he had found a worthy replacement when Chinese group Apec agreed to fund a $200 million drilling plan. It signed on the dotted line and stumped up the first $9 million. Yet 18 months later, it hadn’t provided any more funding.
It has been eight years since the full potential of Barryroe was uncovered, and not a drop of the black stuff has been pumped commercially. For the international reputation of Ireland’s entire exploration industry, Barryroe simply must be delivered. Linn may be its last chance.