Providence tells egm of plan to increase activity in Gulf of Mexico

PROVIDENCE RESOURCES, the oil and gas exploration company, said yesterday it would look to increase production in the Gulf of Mexico in an "aggressive manner" over the coming year, with the first gas for its Galveston Island site expected to be produced during the first quarter of 2009.

Speaking at the firm's extraordinary general meeting (egm) in Dublin yesterday, chief executive Tony O'Reilly said Providence would continue with its multi-well drilling programme over the next 12 months, with a lot of activity planned in the Gulf of Mexico.

He added that, with a lot of companies stressed due to the credit crisis, it was an exciting time for the firm to be out looking for opportunities for acquisition and investments in production.

Earlier this year, the firm "plugged and abandoned" its drilling operations at Hook Head in the Celtic Sea due to a lack of oil. Mr O'Reilly said it was very disappointed with this outcome.

At the egm, the firm passed a special resolution to reduce capital, which will provide greater financial flexibility by enabling the firm reduce the deficit of some €42 million on its profit and loss account.

This now allows Providence to buy back shares, or pay dividends, if it so wishes. However, Mr O'Reilly stressed that, while it remains an aspiration to pay dividends at some point in the future, it is not on the agenda for now.

A disapplication of pre-emption rights was also approved at the meeting.

Mr O'Reilly also said at the meeting that he was "very upset and disappointed" with the firm's share price, which has fallen by two-thirds since July, and finished unchanged at four cent in Dublin yesterday.

Earlier this week, the firm announced that a third-party study of its Singleton field in the UK suggested the volume of oil available was 107 million barrels, 50 per cent higher than previous estimates.

Since production of the field started in 1986, the field has produced 3.7 million barrels of oil, representing a recovery rate of 3.5 per cent.