Explorer Providence cuts jobs and warns on climate change Bill
No bonuses for executives but O’Reilly package rises 18% to €470,000
Providence’s “key commercial milestone” was the negotiation and signing of the Barryroe farm-out agreement.
Providence Resources has said it is cutting jobs in Dublin and has threatened to seek financial redress from the State in the event that the Government’s climate emergency Bill becomes law.
The news comes as figures reveal the oil explorer’s chief executive, Tony O’Reilly, received an 18 per cent, or €73,000, jump in salary and other benefits to €470,000 last year – although, in line with other executives, he received no bonus. Mr O’Reilly had been paid a bonus of €247,000 in 2017 as part of an overall pay package of €644,000.
The company’s annual report states that the bill for staff wages and expenses at the company fell by more than 23 per cent to €2.32 million, from €3.02 million, including pension contributions and share-based payments.
Announcing full year results for 2018, Providence said it had embarked upon a “complete realignment” of its operating model during the year, which, when fully implemented, could result in a “significant reduction in its staffing requirements” going forward.
“We are commencing a period of consultation with all members of staff in relation to this realignment process which we believe is necessary to ensure Providence’s continued progress with its portfolio and to enable the underlying value of its assets to be realised,” it said.
Following a strategic review, Providence said there was an “immediate requirement” to re-engineer its business model to reflect “the changes that are evident in its operating environment”.
“It is expected that this corporate re-engineering will significantly impact the requirement for both technical and support staff based at our Dublin headquarters, and the company will now enter into a consultation process with staff affected by this decision.”
The company said it would vacate its current Dublin office location early in the fourth quarter of 2019. A spokeswoman for the company said it intended to source alternative Dublin accommodation but on a smaller scale.
Providence trimmed its losses by more than 75 per cent last year to €4.4 million from €21.4 million the year before. Losses per share for investors amounted 0.8 cent, compared with 3.42 cent in 2017.
Total cash and cash equivalents at the explorer amounted to €7.6 million, compared with €19.6 million the year before. The company said it had no debt at year-end.
Mr O’Reilly rejected the suggestion that the Government’s Climate Emergency Measures Bill would lower the Republic’s CO2 emissions .
“Recently, reason has begun to prevail and, whilst the Bill is currently in legislative limbo, we cannot state strongly enough how it is damaging sentiment and, as a result, investment interest in offshore Ireland,” he said.
“To be clear, this Bill, if enacted as currently drafted, will do nothing to reduce Ireland’s CO2 footprint and it will, in fact, substantially increase the risk of an energy supply shock as Ireland will become even more reliant on imported oil and gas from places like Russia and the Middle East,” he said.
“The Sustainable Energy Authority of Ireland has stated that Ireland will require oil and gas for decades to come regardless of any measures that are implemented to try to reduce our needs in the meantime.
“The key to delivering meaningful changes to Ireland’s CO2 emissions are wholesale changes in consumer lifestyles, behaviour and consumption, which the oil and gas industry encourages as part of a transition to a lower-carbon Ireland.”
Mr O’Reilly added that the company would seek financial redress from the State should the Bill pass all stages of the Oireachtas and become law.
“We can see no logical reason why the Government or any other political party would not avail of the secure and cost-effective opportunity to source the required oil and gas needs locally, as opposed to increasing our already significant reliance on imported energy with the resultant increase in Ireland’s global CO2 footprint,” he said.
“Should this Bill be enacted, we would rightly seek financial redress from the Irish State in respect of our very significant historical investment to date on behalf of our shareholders.”
Separately, Mr O’Reilly said the company’s “key commercial milestone” in 2018 had been the negotiation and signing of the Barryroe farm-out agreement with Chinese company Apec.
“Barryroe is singularly the most important asset in our portfolio and, with a planned investment programme of $200 million for a five-well drilling programme, it is potentially transformational for Providence,” he said.
“The company has had to deal with a delay in the receipt of the initial site survey and the well-consenting loan from Apec, as well as ongoing regulatory consenting delays.
“We remain confident that both the loan advance and consents will be received shortly which will allow us to progress operations.”