Providence's Barryroe approval turns spotlight back on funding
Irish exploration company Providence Resources is set to commence a long-awaited site survey of its flagship Barryroe field later this month after finally receiving formal approval from the Government.
The important development work is necessary in order to pave the way for a full drilling round, which is scheduled to start in the final quarter of the year.
Providence previously held a site survey licence for Barryroe, but relinquished the right and reapplied after environmental agency An Taisce brought a legal challenge against the Government's initial granting of the licence.
The upcoming work will cover a seabed debris clearance, environmental baseline and habitat assessment. The resulting data will be used to determine the location of the planned drilling programme.
Earlier this week analysts suggested the delay in approval to proceed with work at Barryroe - which lies around 50km off the Cork coast - will probably push the planned multi-well drilling campaign at the site back until the early part of next year.
Now that the approval announcement has been made the immediate Providence-related focus moves back onto its funding issues. Numerous deadlines for receipt of a promised $10m (€8.9m) loan - from Chinese Barryroe development partner APEC - to Providence and junior partner Lansdowne Oil and Gas have come and gone. The next deadline is set for Monday.
Providence flagged, earlier this week, that it may need to seek alternative financing sources in order to maintain sufficient working capital levels into September if there is still no sign of APEC's loan arriving in its bank account next week.
The Irish explorer's UK-based broker Cenkos Securities said Providence may need to start considering raising fresh debt or selling shares to fund development work at Barryroe.
"While funding arrangements still have to be completed, the fact that the first step to drilling the field next year is in place should be welcomed by the market," said Davy analyst Job Langbroek.
However, that investor welcome was thin on the ground. Providence's share price has taken a battering over the confusion around its Barryroe project funding. The stock - down around 20% in the past 12 months - fell a further 10% despite the government approval notice.
Providence recently announced sweeping moves to reduce its annual costs by 65%, including the laying off of nearly 70% of its entire workforce and a significant slimming down of its board of directors, as well as the closure of its Dublin headquarters.
