The chief executive of Providence Resources has said he fundamentally believes that a $9m loan from its Chinese backers will be delivered.
Tony O’Reilly jr told shareholders at the company’s AGM in Dublin that he has staked his reputation on the issue.
Mr O’Reilly said he understood it seemed incredulous that the money had been delayed in the international banking system for so long.
But he added that when the company entered the deal with Chinese company APEC, it did not appreciate the difficulties involved in moving money from Chinese entities through banking systems to here.
Speaking at the AGM today, Mr O’Reilly said that while such a scenario was slightly incredulous for us in the west, these type of delays are common in the east.
He added that APEC is strongly representing to the Irish oil exploration firm that the funds will be received by the new backstop date of September 30.
The Providence Resources boss said his company has seen evidence of the funds from APEC’s own financiers flowing towards its bank account and it is in a bank en route to here.
Mr O’Reilly added that even if APEC had provided the cash last autumn it would not have been used before now because of the delay the company had experienced in securing state consent for a site survey of the Barryroe site off the Cork coast.
He said the company has already explored a number of legal remedies that might be open to it if the funds do not arrive as promised by the end of the month.
But the APEC farmout deal on the Barryroe field still represents the best option, he claimed, adding that he was not pouring cold water on it and remains confident that Chinese partner will deliver on its obligations.
He also revealed that approaches have been received from North Sea players in the oil and gas exploration business.
Providence Resources has not engaged with them yet as it has an exclusivity arrangement with APEC, but the option is there if it wants to, he said.
But it said that in terms of guidance on drilling, it is not in a position to provide guidance on the timeline as this is subject to the receipt of APEC funds and the consenting process, which in turn, was held up by the delayed consenting for the site survey.
“Notwithstanding this current timing uncertainty, the magnitude and value of our portfolio of assets offshore Ireland continues to grow and reflects the significant investment made by Providence and others over the past two decades,” it said.
“The board remains singularly focused on developing and monetising this value for all of our shareholders,” it added.
The site survey, which is currently underway at Barryroe, would give the company a marketable prospect that would be ready for drilling, subject to the required consent, possibly with new partners, the company CEO stated.
In relation to the future of his own position in the event the APEC deal does not come through, Mr O’Reilly said everything will be discussed.
He said that would be a matter for shareholders and the board to decide.
Asked by a shareholder why he had not taken a pay cut as part of a recent re-engineering of the business that saw most of the firm’s staff made redundant, Mr O’Reilly said the company’s immediate focus was getting through the impact of the current situation on the business, and after that all options are on the table.
Another shareholder, Ian Lumley, who is also heritage officer with An Taisce, objected to the directors report and financial statements as he said they do not identify the risks facing the company because of national climate targets, which he claimed would require oil and gas that is in the ground to stay in the ground.
He added that the time has come for Providence to meet the global climate and biodiversity challenge and he called for a new outside chair to take the business in a complete redirection.
Mr O’Reilly also voiced frustrations at the fact it had taken the company six months to get a site survey licence for Barryroe from the state.
In the past, he said, the process had taken just a month and this extended time frame around the consent process had been the real cause of delay in relation to Barryroe, not the difficulty in receiving the funds from the Chinese backers.
Earlier, the company Providence Resources reported a loss before tax of €5.543m for the half year to the end of June after what it described as a “very difficult period” for the company.
This compares to a loss before tax of €2.371m the same time last year.
It said that as at June 30 it had total cash and cash equivalents of €1.788m, while it had no debts.
Providence also today announced a conditional placing to raise about $3.762m through the issue of 59.77 million ordinary shares at £0.051 per share.
It said the need for the placing is because of the ongoing delays in receiving a $9m loan advance from China’s APEC to cover the exploration costs at the firm’s Barryroe site off the Cork coast.
Earlier this week the company yet again extended the deadline for the funds to be paid to the end of September. The funding was originally due on June 14 but the company has extended the deadline on several occasions since then.
As well as the APEC issue during the period, Providence said it also had to deal with significant delays for key operational related consents at Barryroe and manage the increasingly negative political climate action agenda.
In June, Providence said that after a strategic review of its operations it concluded there was an immediate requirement to re-engineer its business model to reflect the changes evident in its operating environment.
This resulted in a significant decline in the company’s staffing requirements and a reduction in the size of the board.
The company is also leaving its current Dublin office later this year to move to a smaller serviced facility in the city.
In the results statement, Tony O’Reilly, Providence CEO, said that the first half of 2019 was a very difficult period for the company.
“We had (to) endure significant delays for key operational related consents at Barryroe, manage the increasingly negative political climate action agenda and, post period-end, continue to deal with the delays in the payment of the funds due from APEC Energy Enterprises in respect of the Barryroe farm-out, implement a major corporate re-engineering process and execute a placing to provide essential working capital for our business,” the CEO said.
But he said that despite the significant political and commercial headwinds that the company has faced, the materiality of both its portfolio and investment in offshore Ireland remains.
“The board remain focused on realising value for all of its shareholders,” he added.
Looking ahead, the company said its key immediate focus remains on receiving the $9m loan advance from APEC and the receipt of required consents to be able to progress the future drilling programme at Barryroe.
But it said that in terms of guidance on drilling, it is not in a position to provide guidance on the timeline as this is subject to the receipt of APEC funds and the consenting process, which in turn, was held up by the delayed consenting for the site survey.
“Notwithstanding this current timing uncertainty, the magnitude and value of our portfolio of assets offshore Ireland continues to grow and reflects the significant investment made by Providence and others over the past two decades,” it said.
“The board remains singularly focused on developing and monetising this value for all of our shareholders,” it added.
Image: Providence Resources CEO Tony O’Reilly said he understood it seems incredulous that the money from APEC had been delayed in the international banking system for so long
Source Link www.rte.ie/news/business/2019/0912/1075416-providence-resources-results
