Providence Resources will seek a new partner to develop its Barryroe oil fields following the latest failure of Chinese backer Apec to loan it $9 million. The company has also announced plans to slash costs.
The beleaguered Irish oil and gas explorer said on Tuesday that it was laying off technical and support staff to cut running costs by two-thirds to $1.9 million a year from $5.3 million.
The redundancies come after Apec Energy Enterprises missed a final deadline to transfer an agreed $9 million loan to Providence by close of business on Monday. The cash was originally due in June under a deal between the pair to develop the Barryroe oil discovery.
Providence maintains that it is now free to open talks with third parties on developing Barryroe, as Apec’s latest failure to deliver the cash meant the two no longer had an exclusive agreement.
The Irish company has calculated that the reservoir, 50km from the Cork coast, could produce 346 million barrels of oil, worth more than $20 billion at today’s prices. Apec’s loan was to cover the cost of further assessment of the asset.
Chief executive Tony O’Reilly jnr said earlier this week that “other companies would be interested in talking to us” should Providence end its exclusive deal with Apec.
The company has told Apec it would begin returning the Chinese player's 50 per cent working interest in Barryroe to Providence subsidiary Exola and another explorer, Lansdowne, which originally held those shares in the project.
Providence also tapped shareholders for $3.75 million this week to provide it with cash should the Apec loan not materialise.
In a note, Job Langbroek, analyst with Dublin stockbroker Davy, said that money would keep Providence going until February. He acknowledged its bid to save more than $3 million.
Providence and partners, including French giant Total, are returning a licence for an area 1,300m under the Atlantic in the Porcupine Basin, 150km southwest of the Republic.
Mr Langbroek suggested that this was partly related to the "current climate action background". Taoiseach Leo Varadkar has said the Government will ban oil exploration off the Republic's Atlantic coast.
"While Barryroe is the most advanced and appraised oil project offshore Ireland, it still needs to be appraised by additional drilling before major capital commitment to its development will be made," added Mr Langbroek.
Providence also said that non-executive directors Lex Gamble and Philip O'Quigley have stepped down from its board, leaving Mr O'Reilly, chairman Pat Plunkett and senior independent director Dr Angus McCoss.