Tony O'Reilly, Chief Executive Officer commented:
'To date in 2015, we have further consolidated our leading position in the Irish offshore sector with a diversified portfolio of assets consisting of net audited 2C resources of 358 MMBOE and net un-risked prospective resources of 3,020 MMBOE. In addition to continuing the data room process for Barryroe, we also commenced the evaluation of recently acquired seismic data over a number of our key exploration prospects along the Atlantic Margin. We also recently announced a strategic exploration collaboration agreement with Schlumberger which is designed to unlock the potential of the Southern Porcupine and Goban Spur Basins.
Similar to other junior E&P companies, Providence has been impacted by the fall in oil prices which has led to a significant divergence between our market capitalisation and the underlying value of our substantial resource base. Despite market turbulence, we have remained focused on our core Irish-centric strategy and, with the continued support of our existing shareholders and new institutional investors following our successful fundraising in the first quarter, we continue to prudently invest across our portfolio.
In view of the current challenging global industry environment, the board continues to actively review Providence's corporate strategy and longer term financing options. In this regard, discussions are also ongoing with Melody Finance LLC, the company's debt provider, regarding the possible extension of the terms and maturity of the facility. In addition, the board has initiated a cost reduction programme in order to remove any and all non-essential costs from the business which will deliver meaningful savings going forward.
Providence remains fully committed to offshore Ireland, an area with both exceptional prospectivity and internationally competitive cost and operating dynamics. The potential of the area has been further enhanced by the post well analysis of our Dunquin North exploration well combined with the major oil discoveries in the Flemish Pass Basin, offshore eastern Canada. We believe that first gas from Corrib, together with the record high level of applications for the 2015 Irish Atlantic Margin Licensing Round, are defining moments for the Irish offshore, only serving to further enhance the value of our exploration and appraisal portfolio.'
H1 2015 OPERATIONAL HIGHLIGHTS
-
Barryroe Oil Field, North Celtic Sea Basin
Farm out discussions continue with a number of counterparties
Successfully defended Transocean litigation case
-
Spanish Point Gas Condensate Field, Northern Porcupine Basin
Acquisition of Chrysaor E&P Ireland Limited ('CEPIL') increased the Company's equity in Spanish Point licence from 32% to 58% which delivers a major cost benefit in terms of a promoted partial carry on 2 wells
Operator estimated a revised HIIP of c. 730 MMBOE (2,034 BCF & 391 MMBC) and combined contingent plus prospective recoverable resources of up to 337 MMBOE (1,322 BCF & 117 MMBC)
Updated well modelling indicated original 35/8-2 vertical well had an undamaged flow potential of c. 10,700 BOEPD (c. 500% flow rate increase over original 1981 well test, which had significant skin factor damage)
-
Drombeg Oil Prospect, Southern Porcupine Basin
3D seismic morphologies consistent with a large Lower Cretaceous deep-water fan system
Potential sediment input systems from the nearby Porcupine Bank
Class II AVO response evident on initial seismic gather inspection
-
Other Atlantic Margin Prospects, Southern Porcupine and Goban Spur Basins
Following the acquisition and evaluation of 3D and 2D seismic in 2014, technical updates were provided on:
Druid Oil Prospect, Southern Porcupine Basin
Ruadhan 3D Survey (Spanish Point South), Northern Porcupine Basin
Newgrange Gas Prospect, Goban Spur Basin
-
Silverback Oil Prospect, South Celtic Sea Basin
Initial work indicated un-risked oil in place of 1,360 MMBOE
H1 2015 FINANCIAL HIGHLIGHTS
Operating loss for the period of €3.787 million (€3.016 million in H1 2014)
Loss for the period of €8.425 million (€3.374 million in H1 2014)
Loss per share of 7.94 cents (5.22 cents in H1 2014)
At June 30, 2015, cash & cash equivalents were €11.289 million
At June 30, 2015, debt was €15.610 million
In March, gross proceeds of c. €25.8 million (c. $28 million) raised via a Placing Offer and Open Offer
Fund raise supported by both existing shareholders and new institutional investors
Significant increase in depth and diversity of institutional shareholder base
POST JUNE 30 EVENTS
-
Barryroe Oil Field, North Celtic Sea Basin
Farm out discussions ongoing with a number of counterparties
-
Dunquin Oil Prospect, Southern Porcupine Basin
Acquisition of 4% stake in Dunquin from Atlantic Petroleum increasing our equity stake to 20%
-
Spanish Point Gas Condensate Field, Northern Porcupine Basin
Work continues on pre-drill activities
-
Silverback Oil Prospect, South Celtic Sea Basin
Licensing Option extended to November 2016
-
Diablo Ridge, Southern Porcupine Basin
A technical update was provided on the new Diablo Ridge contained within the Drombeg Licence
-
Exploration Collaboration Agreement with Schlumberger, Southern Porcupine & Goban Spur Basins
Exclusive basin modelling studies to be carried out by Schlumberger
-
Cost reduction programme initiated
BOARD ACTIONS
Whilst the company continues to execute on its strategy, general market conditions continue to impact investment sentiment. As a result of this ongoing uncertainty, and to ensure that the Company continues to have in place the necessary resources to meet this dynamic business environment, the board continuously reviews the company's strategy, cost base and financing structures to ensure it is well positioned and appropriately capitalised to take advantage of any improvement in market conditions. In this regard, the Company has already commenced discussions with Melody Finance LLC, its debt provider, with the objective to amend the terms and the maturity of the existing facility, as appropriate.
Furthermore, since June 30, the board has initiated a cost review exercise to see what non-essential expenditure can be reduced or removed from the business and this is currently forecast to reduce G&A costs by 12% in 2015 (versus 2014) and by 20% in 2016 (versus 2014). Additionally, the company has looked at its sustaining capital expenditure programme and is now forecasting a reduction of c. 40% in 2015 (versus 2014). The Board anticipates further capital expenditure savings will be achieved in 2016 as final operator budgets are prepared.
ASSET/RESOURCE BASE
-
APPRAISAL ASSETS
-
Barryroe Oil Project, North Celtic Sea Basin (PVR-80%)
Field Size (2C): 346 MMBOE REC Net to PVR: 277 MMBOE REC
-
Spanish Point Gas Condensate Project, Northern Porcupine Basin (PVR-58%)
Field Size (2C): 97 MMBOE REC Net to PVR: 56 MMBOE REC
-
Hook Head Oil Project, North Celtic Sea Basin (PVR-72.5%)
Field Size (2C): 35 MMBOE REC Net to PVR: 25 MMBOE REC
Gross 2C Resources of 478 MMBOE REC Net to PVR: 358 MMBOE REC
-
Barryroe Oil Project, North Celtic Sea Basin (PVR-80%)
- EXPLORATION ASSETS
-
APPRAISAL ASSETS
-
Dunquin South Oil Prospect, Southern Porcupine Basin (PVR-20%)
Prospect Size (Pmean): 1,389 MMBOE REC Net to PVR: 278 MMBOE REC
-
Newgrange Gas Prospect, Goban Spur Basin (PVR-80%)
Prospect Size (P50): 1,126 MMBOE REC Net to PVR: 900 MMBOE REC
Newgrange Ridge (P50): TBC
-
Drombeg Oil Prospect, Southern Porcupine Basin (PVR-80%)
Prospect Size (P50): 1,090 MMBOE REC Net to PVR: 872 MMBOE REC
Druid prospect size (P50): TBC Diablo Ridge size (P50): TBC
-
Spanish Point Exploration Prospects, Northern Porcupine Basin (PVR-58%)
Prospect sizes (P50): 749 MMBOE REC Net to PVR: 434 MMBOE REC
-
Kish Oil Prospect, Kish Bank Basin (PVR-50%)
Prospect Size (P50): 210 MMBO REC Net to PVR: 105 MMBOE REC
-
Polaris Oil Prospect, Rathlin Basin (PVR-100%)
Prospect Size (P50): 159 MMBO REC Net to PVR: 159 MMBOE REC
- Silverback Oil Prospect, South Celtic Sea Basin (PVR-100%)
Prospect Size: 1,360 MMBO STOIIP
REC estimated @ 20% = 272 MMBOE REC Net to PVR: 272 MMBOE REC
Gross Un-Risked Prospective Resources of 4,995 MMBOE REC Net to PVR: 3,020 MMBOE RECBOARD
Having acted as Chairman since 1997, Dr. Brian Hillery retired from the Board in May with Mr. James S.D. McCarthy accepting the Board's invitation to take up the role of Chairman. The Board also established a Nomination Committee and Dr. Phil Nolan was appointed Senior Independent Director.
3
OUTLOOK
The industry backdrop remains very challenging both at a macro level and specifically within our peer group with oil price volatility continuing to delay investment within the sector. However, recent market developments have signalled some positive changes, and market commentary on the forward oil market, coupled with increased M&A activity and the significant industry interest shown in the Irish Atlantic Margin Licensing Round, are all encouraging signs. In such an environment, with our extensive and mature portfolio, we remain well-placed to deliver on our plans and continue to be optimistic about the prospects both for Providence and the overall Irish Oil and Gas sector. We are both determined and uniquely positioned to lead the industry in identifying and realising the significant potential that exist offshore Ireland.
INVESTOR ENQUIRIES
Providence Resources P.l.c. Tel: +353 1 219 4074 Tony O'Reilly, Chief Executive OfficerDr. John O'Sullivan, Technical Director
Neil McDonald/Derrick Lee
Eugenee Mulhern/Anthony Farrell
MEDIA ENQUIRIES
Powerscourt Tel: +44 207 250 1446Lisa Kavanagh/Rob Greening
Pauline McAlester
ABOUT PROVIDENCE RESOURCES
Providence Resources is an Irish based Oil and Gas Exploration Company with a portfolio of appraisal and exploration assets located offshore Ireland and the UK. Providence's shares are quoted on the AIM in London and the ESM in Dublin.
ANNOUNCEMENT
This announcement has been reviewed by Dr. John O'Sullivan, Technical Director, Providence Resources
P.l.c. John is a geology graduate of University College, Cork and holds a Masters in Applied Geophysics from the National University of Ireland, Galway. He also holds a Masters in Technology Management from the Smurfit Graduate School of Business at University College Dublin and a doctorate in Geology from Trinity College Dublin. John is a Chartered Geologist and a Fellow of the Geological Society of London. He is also a member of the Petroleum Exploration Society of Great Britain, the Society of Petroleum Engineers and the Geophysical Association of Ireland. John has more than 25 years of experience in the oil and gas exploration and production industry having previously worked with both Mobil and Marathon Oil. John is a qualified person as defined in the guidance note for Mining Oil & Gas Companies, March 2006 of the London Stock Exchange. Definitions in this press release are consistent with SPE guidelines.
SPE/WPC/AAPG/SPEE Petroleum Resource Management System 2007 has been used in preparing this announcement.
TERMS USED IN THIS ANNOUNCEMENT
MMBO - Million Barrels of Oil MMBOE - Million Barrels of Oil Equivalent
BCF - Billion Cubic Feet of Gas BOPD - Barrels of Oil Per Day
BOEPD - Barrels of Oil Equivalent per Day AVO - Amplitude Variation with Offset HIIP - Hydrocarbons Initially in Place REC - Recoverable
MMBC - Million Barrels of Condensate STOIIP - Stock Tank Oil Initially in Place
PROVIDENCE RESOURCES P.l.c.Condensed consolidated income statement
For the 6 months ended 30 June 2015
Notes | 6 months ended 30 June 2015 Unaudited €'000 | 6 months ended 30 June 2014 Unaudited €'000 | Year ended 31 December 2014 Audited €'000 | |
Continuing operations | ||||
Administration expenses | (3,250) | (2,672) | (6,119) | |
Pre-licence expenditure | (441) | (245) | (245) | |
Impairment of exploration and evaluation assets | (96) | (99) | (99) | |
Operating loss | 1 | (3,787) | (3,016) | (6,463) |
Finance income | 23 | 16 | 39 | |
Finance expense | 2 | (4,661) | (374) | (5,065) |
Loss before income tax | (8,425) | (3,374) | (11,489) | |
Income tax expense | - | - | - | |
Loss for the period | (8,425) | (3,374) | (11,489) | |
Loss per share (cent) - continuing operations | ||||
Basic and diluted loss per share | 6 | (7.94) | (5.22) | (17.77) |
Consolidated statement of comprehensive income
For the 6 months ended 30 June 2015
6 months ended 30 June 2015 Unaudited €'000 | 6 months ended 30 June 2014 Unaudited €'000 | Year ended 31 December 2014 Audited €'000 | |
Loss for the financial period | (8,425) | (3,374) | (11,489) |
Items that may be reclassified to profit or loss | |||
Foreign exchange translation differences | 6,076 | 83 | 2,257 |
Total income and expense recognised in other comprehensive income from continuing operations | 6,076 | 83 | 2,257 |
Total comprehensive expense for the period | (2,349) | (3,291) | (9,232) |
The total recognised expense for the period is entirely attributable to equity holders of the Company.
1
PROVIDENCE RESOURCES P.l.c.Consolidated statement of financial position
As at 30 June 2015
Notes | 30 June 2015 Unaudited €'000 | 30 June 2014 Unaudited €'000 | 31 December 2014 Audited €'000 | |
Assets | ||||
Exploration and evaluation assets | 3 | 96,504 | 84,670 | 89,733 |
Property, plant and equipment | 35 | 40 | 31 | |
Total non-current assets | 96,539 | 84,710 | 89,764 | |
Trade and other receivables | 338 | 3,026 | 1,887 | |
Restricted cash | - | 2,928 | 3,296 | |
Cash and cash equivalents | 11,289 | 18,040 | 5,256 | |
Total current assets | 11,627 | 23,994 | 10,439 | |
Total assets | 108,166 | 108,704 | 100,203 | |
Equity | ||||
Share capital | 4 | 25,694 | 18,151 | 18,151 |
Capital conversion reserve fund | 623 | 623 | 623 | |
Share premium | 4 | 226,998 | 210,230 | 210,230 |
Foreign currency translation reserve | 10,719 | 2,469 | 4,643 | |
Share based payment reserve | 3,996 | 4,738 | 4,282 | |
Retained deficit | (184,478) | (168,680) | (176,339) | |
Total equity attributable to equity holders of the Company | 83,552 | 67,531 | 61,590 | |
Liabilities | ||||
Decommissioning provision | 6,875 | 5,361 | 6,034 | |
Total non-current liabilities | 6,875 | 5,361 | 6,034 | |
Trade and other payables | 2,129 | 18,959 | 13,231 | |
Loans and borrowings | 5 | 15,610 | 16,853 | 19,348 |
Total current liabilities | 17,739 | 35,812 | 32,579 | |
Total liabilities | 24,614 | 41,173 | 38,613 | |
Total equity and liabilities | 108,166 | 108,704 | 100,203 |
Consolidated statement of changes in Equity
For the 6 months ended 30 June 2015
Share Capital €'000 | Capital Conversion Reserve Fund €'000 | Share Premium €'000 | Foreign Currency Translation Reserve €'000 | Share Based Payment Reserve €'000 | Retained Deficit €'000 | Total €'000 | |
At 1 January 2014 | 18,151 | 623 | 210,230 | 2,386 | 5,382 | (165,950) | 70,822 |
Profit for financial period | - | - | - | - | - | (3,374) | (3,374) |
Currency translation | - | - | - | 83 | - | - | 83 |
Total comprehensive income | - | - | - | 83 | - | (3,374) | (3,291) |
Transactions with owners, recorded directly in equity | |||||||
Share options lapsed in period | - | - | - | - | (644) | 644 | - |
Transfer to P&L - Singleton sale | - | - | - | - | - | - | - |
At 30 June 2014 | 18,151 | 623 | 210,230 | 2,469 | 4,738 | (168,680) | 67,531 |
At 1 January 2015 | 18,151 | 623 | 210,230 | 4,643 | 4,282 | (176,339) | 61,590 |
Profit for financial period | - | - | - | - | - | (8,425) | (8,425) |
Currency translation | - | - | - | 6,076 | - | - | 6,076 |
Total comprehensive income | - | - | - | 6,076 | - | (8,425) | (2,349) |
Transactions with owners, recorded directly in equity | |||||||
Shares issued in period | 7,543 | - | 16,768 | - | - | - | 24,311 |
Share options lapsed in period | - | - | - | - | (286) | 286 | - |
At 30 June 2015 | 25,694 | 623 | 226,998 | 10,719 | 3,996 | (184,478) | 83,552 |
At 1 January 2014 | 18,151 | 623 | 210,230 | 2,386 | 5,382 | (165,950) | 70,822 |
Loss for financial year | - | - | - | - | - | (11,489) | (11,489) |
Currency translation | - | - | - | 2,257 | - | - | 2,257 |
Total comprehensive income | - | - | - | 2,257 | - | (11,489) | (9,232) |
Transactions with owners, recorded directly in equity | |||||||
Share options lapsed in year | - | - | - | - | (1,100) | 1,100 | - |
At 31 December 2014 | 18,151 | 623 | 210,230 | 4,643 | 4,282 | (176,339) | 61,590 |
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Consolidated statement of cash flows
For the 6 months ended 30 June 2015
6 months ended 30 June 2015 | 6 months ended 30 June 2014 | Year ended 31 December 2014 | |
Unaudited | Unaudited | Audited | |
€'000 | €'000 | €'000 | |
Cash flows from operating activities | |||
Loss before income tax for the period | (8,425) | (3,374) | (11,489) |
Adjustments for: | |||
Depletion and depreciation | 10 | 11 | 18 |
Impairment of exploration and evaluation assets | 96 | 99 | 99 |
Finance income | (23) | (16) | (39) |
Finance expense | 4,661 | 374 | 5,065 |
Foreign exchange | 1,326 | (137) | (441) |
Change in trade and other receivables | 1,549 | (135) | 1,004 |
Change in trade and other payables | (11,194) | 2,896 | (2,855) |
Interest paid | (1,512) | - | (1,350) |
Net cash (outflow) from operating activities | (13,512) | (282) | (9,988) |
Cash flows from investing activities | |||
Interest received | 23 | 16 | 39 |
Acquisition of exploration and evaluation assets | (2,190) | (4,680) | (8,221) |
Acquisition of property, plant and equipment | (15) | (15) | (14) |
Change in restricted cash | 3,296 | (2,928) | (3,296) |
Net cash from investing activities | 1,114 | (7,607) | (11,492) |
Cash flows from financing activities | |||
Proceeds from issue of share capital | 25,754 | - | - |
Share capital issue costs | (1,443) | - | - |
(Repayments) / proceeds from loans and borrowings | (6,252) | 16,823 | 16,699 |
Net cash from financing activities | 18,059 | 16,823 | 16,699 |
Net increase/(decrease) in cash and cash equivalents | 5,661 | 8,934 | (4,781) |
Cash and cash equivalents at beginning of period | 5,256 | 8,998 | 8,998 |
Effect of exchange rate fluctuations on cash and cash equivalents | 372 | 108 | 1,039 |
Cash and cash equivalents at end of period | 11,289 | 18,040 | 5,256 |
6 months ended 30 June 2015 | 6 months ended 30 June 2014 | Year ended 31 December 2014 | |
Unaudited | Unaudited | Audited | |
€'000 | €'000 | €'000 | |
Segment net (loss) for the period | |||
UK - exploration assets | - | (2) | - |
Republic of Ireland - exploration assets | (96) | (97) | (99) |
Corporate expenses | (3,691) | (2,917) | (6,364) |
Operating loss for the period | (3,787) | (3,016) | (6,463) |
Segment assets | |||
UK - exploration assets | 1,879 | 1,682 | 1,638 |
Republic of Ireland - exploration assets | 94,997 | 85,910 | 88,095 |
US | - | 27 | 30 |
Group assets | 11,290 | 21,085 | 10,440 |
Total assets | 108,166 | 108,704 | 100,203 |
Segment Liabilities | |||
UK - exploration | (57) | (159) | (37) |
Republic of Ireland - exploration | (8,882) | (23,437) | (16,176) |
US | - | (15) | - |
Group liabilities | (15,675) | (17,562) | (22,400) |
Total Liabilities | (24,614) | (41,173) | (38,613) |
Capital Expenditure | |||
UK - exploration assets | 88 | 360 | 417 |
Republic of Ireland - exploration assets | 2,102 | 4,320 | 7,804 |
Republic of Ireland - property, plant and equipment | 15 | 15 | 14 |
Total Capital Expenditure | 2,205 | 4,695 | 8,235 |
Impairment charge | |||
Republic of Ireland - exploration assets | 96 | 97 | 97 |
UK - exploration assets | - | 2 | 2 |
96 | 99 | 99 |
6 months ended 30 June 2015 | 6 months ended 30 June 2014 | Year ended 31 December 2014 | |
Unaudited | Unaudited | Audited | |
€'000 | €'000 | €'000 | |
Interest expense | 1,399 | 118 | 1,467 |
Amortisation of arrangement fees and other amounts | 720 | - | 516 |
Unwinding of discount on decommissioning provision | 748 | 256 | 929 |
Foreign exchange loss on revaluation of loan | 1,794 | - | 2,153 |
Total finance expense recognised in income statement | 4,661 | 374 | 5,065 |
Recognised directly in equity | |||
Foreign currency differences on foreign operations | 6,076 | 83 | 2,257 |
Total finance expenses recognised in equity | 6,076 | 83 | 2,257 |
Republic of Ireland | UK | Total | |
€'000 | €'000 | €'000 | |
Cost and book value | |||
At 1 January 2014 | 78,948 | 1,141 | 80,089 |
Additions | 2,977 | 320 | 3,297 |
Administration expenses capitalised | 1,343 | 40 | 1,383 |
Impairment charge | (97) | (2) | (99) |
At 30 June 2014 | 83,171 | 1,499 | 84,670 |
At 1 January 2014 | 78,948 | 1,141 | 80,089 |
Additions | 6,815 | 367 | 7,182 |
Administration expenses capitalised | 1,739 | 50 | 1,789 |
Cash call received in year | (750) | - | (750) |
Impairment charge | (97) | (2) | (99) |
Foreign exchange translation | 1,440 | 82 | 1,522 |
At 31 December 2014 | 88,095 | 1,638 | 89,733 |
At 1 January 2015 | 88,095 | 1,638 | 89,733 |
Additions | 1,273 | 70 | 1,343 |
Administration expenses capitalised | 830 | 17 | 847 |
Impairment charge | (96) | - | (96) |
Foreign exchange translation | 4,523 | 154 | 4,677 |
At 30 June 2015 | 94,625 | 1,879 | 96,504 |
Number | |||
Authorised: | '000 | €'000 | |
At 1 January 2015 | |||
Deferred shares of €0.011 each | 1,062,442 | 11,687 | |
Ordinary shares of €0.10 each | 123,131 | 12,313 | |
At 30 June 2015 | |||
Deferred shares of €0.011 each | 1,062,442 | 11,687 | |
Ordinary shares of €0.10 each* | 223,131 | 22,313 | |
Number | Share Capital | Share Premium | |
Issued: | '000 | €'000 | €'000 |
Deferred shares of €0.011 each | 1,062,442 | 11,687 | 5,691 |
Ordinary share of €0.10 each | 64,649 | 6,464 | 204,539 |
At 1 January 2014 | 64,649 | 18,151 | 210,230 |
At 30 June 2014 | 64,649 | 18,151 | 210,230 |
At 31 December 2014 | 64,649 | 18,151 | 210,230 |
Share issued in period** | 75,427 | 7,543 | 18,211 |
Share issue costs | - | - | (1,443) |
At 30 June 2015 | 140,076 | 25,694 | 226,998 |
* On the 20th March 2015, an EGM was held which increased the authorised share capital of the company from 123,131,360 to 223,131,360 shares.
** On the 20th March 2015, the company raised through a placing and open offer approximately $28.0m or (c.€25.8m) before costs by issuing 75.4m shares at GBP £0.25 (€0.34).
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