Operating losses at Providence Resources widen in 2017

Company incurred €14.6m writedown on exploration activities

An appraisal well at Barryroe, off the coast of Cork

An appraisal well at Barryroe, off the coast of Cork

 

Operating losses at exploration firm Providence Resources widened in 2017 as the company incurred a €14.6 million writedown in its exploration activities.

The company said operating losses rose to €21.4 million compared with €18.8 million in 2016. Overall losses were €20.4 million in 2017, compared with €20.5 million a year earlier. That translated to a loss per share of 3.42 cent, from 5.80 cent in 2016.

Providence had cash and equivalents of €19.6 million at the end of the year, down from €31.4 million a year earlier.

Chief executive Tony O’Reilly said 2017 had been a busy year for the firm, with three major exploration farm-out transactions. The main activity during the year was the drilling of an exploration well in the Porcupine Basin, which targeted the Druid and Drombeg exploration targets.

Both targets showed the reservoir contained water, which renders it useless for the purposes of exploration, but Mr O’Reilly said valuable regional geology, reservoir development and pressure regime data were obtained. This could be used for future planned drilling of the Diablo structure and other assets in the basin. The farm-out deals with Total and Cairn mitigated Providence’s cost exposure to this drilling programme.

Consortium

“In recent months we have signed a substantial appraisal farm-out transaction with a Chinese-led consortium which provides the financial and operational capacity for the appraisal and development of our flagship Barryroe Project in the Celtic Sea,” said Mr O’Reilly.

The farm-out is expected to close in the third quarter and provides for the drilling of three wells.

Providence also signed up Total as a new 50 per cent partner and operator of Avalon.

“We continue to be by far the most active player offshore Ireland in terms of drilling activity, commercial deals and collaborations with world-class partners,” said Mr O’Reilly. “Looking ahead we have the portfolio, partners, people and financial resources in place to advance our portfolio through exploration and appraisal drilling for the benefit of all our shareholders.”