Tony O’Reilly staked it all on a Chinese mirage
What happens now at Providence?
Tony O’Reilly Junior, CEO of Providence Resources, has extracted more than €7 million in remuneration from the company , mainly by way of basic salary.
Providence Resource’s Tony O’Reilly jnr, who’d taken to calling China before brushing his teeth in recent months to get the whereabouts of promised funds to develop Ireland’s first oil commercial field, staked his reputation before shareholders last month on his backers finally coming good.
It would prove to be just another bad call from the oil and gas explorer’s chief executive since 2005.
This week, more than 18 months after announcing that Beijing-based APEC had agreed to take a 50 per cent stake in the Barryroe field off the Cork coast - and after three months of regular deadline extensions being granted to the Chinese to wire across an initial $9 million (€8 million) – Providence finally stopped the charade.
The company said on Tuesday it will now look for a new partner to develop the oil field. The Chinese mirage – following months of claims that it was going through checks at HSBC – had forced the company to raise $3.76 million in recent weeks through an emergency share placing.
If only it were the first time O’Reilly had hitched Barryroe to a suitor with commitment issues.
Following decades of drilling by explorers in Irish waters, Barryroe was found in 2012 to be the first field that could deliver a drop of the black stuff – with 311 million barrels of recoverable oil.
O’Reilly picked London-based Sequa Petroleum in 2015 as a joint venture partner on the project, following an exhaustive search. However, that deal fell through after Sequa failed to raise the necessary money – amid declining oil prices at the time – to participate.
Winners among those involved in Providence have been rarer than hydrocarbon finds off the Irish coast.
The company’s stock has delivered a negative 99 per cent return under O’Reilly, amid a number of cash calls, including another rescued share sale in 2016 that hauled in $70 million, according to Bloomberg data.
The businessman, however, has extracted more than €7 million in remuneration, mainly by way of basic salary, over the period.
“Some questions question whether I should still be at the business,” O’Reilly said at an annual general meeting (agm) on September 13th. “But for the here and now, to protect the company, to protect the asset, I need to do the business and deliver the placing.”
Others, in O’Reilly’s world, are expendable. Part of the reason for the latest cash call was to secure funds to cover a redundancy programme to cull 10 of its 13 staff. It’s all part of a package to cut annual costs by 65 per cent to $5.3 million. But it effectively clears the place of the technical and science people capable of reading seismic survey.
O’Reilly has said that other would-be Barryroe partners have been making “overtures” to replace APEC.
But can investors rely on him to secure a deal that will finally allow Barryroe to deliver on its promise?