Deal or no deal for Providence Resources?
Cantillon: Beijing-headquartered partner APEC keeps delaying transfer of $10m
Barryroe well: The Chinese agreed to fund much of the drilling and to loan $10 million to Providence, in return for a half stake in the oil project. Photograph: Finbarr O’Rourke
Just how many times can one company cry wolf?
The latest attempts by Providence Resources to procure $10 million (€8.9 million) of funding for Ireland’s first commercial oilfield from its Beijing-headquartered partner APEC have taken on a farcical edge.
The whole process has become something akin to Chinese water torture for long-suffering Providence investors. How much longer must they wait?
After a long search, Providence announced it had reached an agreement with APEC in 2018 for funding for the Barryroe project. The Chinese agreed to fund much of the drilling and also to loan $10 million to Providence, in return for a half stake in the oil project.
The loan was supposed to have been wired over last year, with investors only receiving the first unexpected inkling last month that there might be a delay. The deadline has now been extended five times, with Monday’s latest payment hold-up blamed on a “banking processing delay”.
Scraping the barrel
In terms of flimsy excuses, the most recent effort is scraping the wrong sort of barrel for a supposedly ambitious oil company. The delays are making Providence investors fret. Will APEC fulfil its side of the bargain or will the dog keep feasting on its homework? Is the whole deal still safe?
The deadline for the cash to be delivered has now been extended until Friday. If APEC and Providence have not yet sorted out the “banking processing delay” by then, then investors really should start to worry.
With just a couple of gas fields to show for decades of exploration and more than 160 wells drilled, the Irish hydrocarbons industry hasn’t exactly been doused in the perfume of delivery.
If Providence’s long hoped-for APEC deal for Barryroe hits the buffers now, at a minute to midnight, then the entire sector’s credibility here will take a hit.