Providence posts €41m loss on lower oil prices

EXPLORATION COMPANY Providence Resources Production has reported a net loss of more than €41 million in 2010, as falling oil prices and a loss on the sale of its US operations hit results.

The company reported revenue on continuing operations of €11.1 million, broadly similar to the previous year’s €11.7 million. Providence said there was a slight fall in UK production volumes, which it attributed to drilling operations interrupting production rates in the final quarter.

Lower oil prices during the year were offset somewhat by a stronger dollar.

The company also recorded a loss from discontinued operations of €31.795 million.

Chief executive Tony O’Reilly said the net loss was mainly due to the sale of its US operations. Providence sold its Gulf of Mexico oil and gas production portfolio in a deal worth up to $22 million, which included a cash payment of $15 million and $7 million in deferred payments subject to performance. The original cost of the portfolio was $65.5 million, with Davy analysts blaming lower gas pricing for the loss.

Mr O’Reilly said there was a huge increase in activity at Providence in 2010, including expanding its production base onshore UK and the announcement of the largest drilling programme to be carried out offshore Ireland.

“We took a strategic decision to divest our portfolio of non-operated assets in the Gulf of Mexico, which was the main reason for the significant loss for the year,” said Mr O’Reilly.

“Additionally, we took the decision not to proceed with the Kinsale Head option for gas storage. However, we still see significant potential in gas storage and are therefore continuing to examine the feasibility of the Ulysses project in the Irish Sea.”

The company raised £41 million from a share placing in March 2011.