"That was the first time Ireland tested out the state – corporate nexus. What they were doing was very simple. They were sorting out their template here in Rossport. The line is: 'go in hard',"
EXPLORATION GROUP Providence lost €5.2 million before tax last year as the company began a major drilling campaign off the Irish coast.
In results published yesterday Providence reported a 25 per cent rise in revenues to €13.75 million in 2011 from €11 million.
However, operating profit shrank to €31,000 from €1.4 million, largely as a result of a €6.6 million writedown in the value of some oil exploration and production assets.
The company said the writedown related to an unfinished well at Singleton in the south of England and €1.73 million writedowns in interests in the Celtic Sea.
Almost €5.4 million in finance costs left it with a pretax loss of €5.2 million, an improvement of more than 13 per cent on the €6 million pretax loss it made in 2010.
Providence acquired a series of exploration licences off the Irish coast and last year began a major drilling programme to establish how much oil and gas these areas contain.
The group recently reported drilling in its Barryroe prospect, off the south coast, produced high-quality crude oil at rates of more than 3,500 barrels a day, and natural gas at the equivalent of 4,000 barrels a day.
Early last year Providence signed a memorandum of understanding with multinational group Shell which commits them to complete an oil offtake and sale agreement for both Barryroe and Hook Head.
Providence has increased its stake in Barryroe to 80 per cent from 50 per cent, and is the operator of the well.
Last month the company issued 13 million new shares, mainly to institutional investors, raising £63 million sterling.
It intends using the money to repay the balance of a convertible bond issued in 2008, which is due for final repayment in July.
Providence will also use the proceeds to fund further drilling at Barryroe – increasing its stake in the licence means it also faces extra costs – and to fund its general drilling programme.
The group will now analyse the data it has so far collected from Barryroe and will include this in an updated field development plan, which will be completed by the final quarter of this year.
Providence has exploration licences around the Irish coast. Along with Barryroe and the Celtic Sea, it has interests in St George’s Channel, the Porcupine Basin and the Kish Bank, which includes a 50 per cent holding in a Dalkey Island prospect off the Dublin coast. This is estimated to hold about 870 million barrels of oil.
During 2011 Providence sold its interests in the Gulf of Mexico for $15 million, and in a Nigerian subsidiary for $16 million, $10 million of which was paid by the year’s end.
Commenting on the results yesterday, Providence chief executive Tony O’Reilly jnr said the focus for this year would be to step up its drilling and exploration activities off the Irish coast.
He added that Providence had a clear strategy and the necessary cash financial resources to develop its Irish interests.