Providence Resources Share Discussion Threads

[panadin] 24/2/2021 19:38

Rts: Phoenix magazine hits the newsstands in Dublin each Thursday. Annual subscribers have access online from Tuesday.

[amran01] 24/2/2021 19:22

Steve Boldy mentioned by Q1.. another 5 weeks to go. Let's see if these funds actually arrive. As for the merger etc - let's wait and see if they can fund it first before Alan and SpotOn have more ambitious plans. Share price and volume will be a good indicator to when the news will land. Right now it seems the funding news is not imminent. I do believe the funding will come. The oil price also makes it a compelling case for the project to go ahead.

[raisethestake1] 24/2/2021 18:35

Possible 5 Billion in profit with possible upside maybe X3 times this if exploration of deeper targets works out. Can we rerate so to €7 a share so I can be a multi millionaire ....if only Carlsberg did rerates. Where did the timeline of end of next month come from.I would like to hear it from Alan Linn's mouth. I still can't get my head around how a merger would work. We don't want the liability of the bond and bank loans. Who is going to underwrite the bond. That is SpotOns job.They are the Farminee with nothing in the coffers.The consortium seem to becoming a group of minority investors according to the Phoenix article. Where is this article published or is it a leaked pre published view we are getting a peak of.

[contrarymary] 24/2/2021 18:19

Nice to see a realistic valuation of the monster that is Barryroe, but I am getting awfully tired of hearing definitely next month.

[roadster750] 24/2/2021 17:05

Thanks to JODO
Providence shareholders prepare for bond boost
IT WAS reported in the Business Post recently that Providence Resources’ farm-out partner, SpotOn Energy, had approached the Irish exploration company about a potential merger. This was not too surprising as Providence’s chairman, Pat Plunkett, and CEO Alan Linn had previously outsourced the job of finding farm-in partners to SpotOn rather than doing it themselves. The good news for investors is that the expected €50m bond placement at the end of next month could set a fire under the shares. This would not be surprising given that the company is currently valued at about 1% of its potential €5bn share of the profit from any successful development of the Barryroe oilfield.
SpotOn injected £0.5m into Providence last year courtesy of two placings and, in response to press speculation about a merger, Linn issued something of a nondenial denial earlier this month: “We are not currently involved in any merger discussions with any party.” He went on to add, however, that “we will continue to work closely with SpotOn Energy to deliver the necessary funding to develop the world-class Barryroe asset”. Linn did not say Providence has not been approached by SpotOn, simply that he is not involved in any merger discussions. Reading between the lines, if SpotOn can deliver the “necessary funding” for the agreed early development programme (EDP), then it might see little purpose in having Providence just sitting there as a sleeping partner. Rather, it would make sense to merge with Providence and run the whole show. At that stage, Linn would have no obvious central role to play despite being on a generous salary. Linn finds himself tied into SpotOn, much like Tony O’Reilly Jnr and John O’Sullivan were to Apec three years ago, which was supposed to come up with $200m funding for a five-well drilling programme, instead failing to pay even the initial $5m. Plunkett eventually pulled the plug. Why Plunkett chose Alan Linn as the new CEO remains something of a mystery. He is a chemical engineer by training, rather than a geologist or geophysicist. While he did work for major operators like Exxon, Lasmo and Cairn, it was not at a really senior level. In 2008, Linn joined Roc Oil as COO and rose to CEO in 2010 but in 2014 Roc Oil lost €31m and was subsequently suspended from the Australian Stock Exchange.
Linn then opted to jump ship and became CEO of the distressed African oil and gas company, Afren, which went into administration in July 2015 and was delisted from the London Stock Exchange. In 2017, Linn moved to Third Energy as COO but “following a strategic review of the business, the decision was made to divest the offshore business and focus on the onshore”. Linn ended up as CEO of the offshore business in July 2019 but exited six months later to join Providence in January 2020.
Providence has one significant asset – its now 40% stake in the Barryroe oilfield, which has 350 million barrels recoverable and has flowed on oil on test the five times that it was drilled, most recently in 2012. While Linn is right to focus on Barryroe, it is hard to justify the dumping of all Providence’s deep water Atlantic margin licences simply in order to save money. Linn has no experience or background in the Irish offshore resource sector and as a chemical engineer does not have the academic training to fully understand the rather complex Barryroe field. This helps explain the decision to farm out the development of this field to a third party with more knowledge and experience. It was, of course, Plunkett who was in situ as chairman when Providence raised €70m in a share placing back in June 2016 at a price of 16c and then signed off on the disastrous farm-out agreement with the Chinese Apec consortium. A more obvious choice for Plunkett to have picked as CEO is Steve Boldy, the current CEO of Lansdowne Oil & Gas, Providence’s 10% minority partner in the Barryroe consortium. Boldy worked as a petroleum geologist in the Department of Energy and then spent 19 years with Amerada Hess (now Hess Corporation) as its UK and international explorations manager. In 2013 Boldy joined Ramco, which developed the Seven Heads gas field off Co Cork, just above Barryroe, before moving to Lansdowne in 2006 where, for the last 14 years, he has been studying the Barryroe oilfield. Presumably he could have been poached from Lansdowne, where he is on a salary of only €70,000. SpotOn’s own website asks if you are “looking to sell or farmout your off-shore oil and gas field for development?”. The Norwegian entity claims to have “a new approach to cost-effective offshore oil and gas field development”, whatever that means. CONSORTIUM SpotOn boasts of working with “a consortium of world leading service providers”. One of them we now know to be Schlumberger, an American oil service company that works with an array of operators so the tie-in is far from interesting. SpotOn also claims to be working with the Norwegian oil services investment company, Akastor.
OTHER PLAYERS
SpotOn does have interests in providing well design and drilling project management, reservoir and field management services, as well as having an interest in the Odfjell Drilling company and Awilco Drilling, which owns some semisubmersible rigs. These are all minority investments. SpotOn also notes an association with the Norwegian engineering firm, Aker Solutions, which specialises in low-carbon emission designs, but again works with a lot of other players. The agreement Linn drew up with SpotOn in April last year offered it “exclusivity until October 31, 2020” to assess the potential of the Barryroe field and agree farm-out terms. The key to this, obviously, was funding, which would make it easy to find a service company and drillers to do the job. By the end of October, however, SpotOn had failed to deliver so Linn allowed a further one-month extension but even by then thegoods had not been delivered. Despite this, Linn went ahead and agreed a 50% farm-out deal with SpotOn, which presumably provided evidence that it was close to securing funding. This reduces Providence’s stake in the field from 80% to 40%. What is understood is that Pareto Securities, a Norwegian investment bank, has agreed to lead but not underwrite the raising of a $50m 10-year bond to partfund the project. On foot of this, the big French bank, Société Générale, is considering a $35m 10-year loan and the Norwegian government will provide a $45m export credit guarantee on the basis of using Norwegian drilling and service companies.

DEFERRED FEES
On top of this, SpotOn says that its consortium partners will defer part of their fees to the tune of $35m. This appears to bring the total inferred funding to the $165m that SpotOn signed up to. What investors need to ensure is that the key initial $50m bond is in place at the end of next month. With oil prices recovering to $60 a barrel, prompted by the rollout of vaccines worldwide and the predicted economic recovery expected to follow, the odds of this bond being put in place have decreased. What is exciting about this is that according to SpotOn’s feasibility study, the estimated breakeven point for Barryroe is $25 a barrel. This means that with 350 million barrels recoverable, the profit on the field could be of the order of $12bn, leaving the value of Providence’s potential profit share here at close to $5bn. Providence shares are currently trading at 7c, which is 99% off the €7 they traded at back in 2012 when the exploration company had just completed its last successful drilling. The current price values Providence at €50m, which is about 1% of its potential profit share from a successful development on Barryroe. This makes Providence shares look like the most underrated share on the market and they are likely to fly on the back of any confirmation that the $50m bond is actually in place.

[1cagney] 24/2/2021 16:03

Phoenix magazine article posted in 3 parts on the other board. A darned good read.

[roadster750] 24/2/2021 15:35

Brent hits $66, AL was wrong, he predicted $60-65.lol

[steelwatch] 24/2/2021 15:14

Well, another of my laggards is on the hoof after aeons in the long grass, so there's hope for us yet! Keep the faith lads!

[raisethestake1] 24/2/2021 14:07

I think at this stage we will have to see the whole bundled financing package in one go to convince the market that we are going fully ahead with the production plan. You sure are right that this share could turn one contancourous,contrary.

[contrarymary] 24/2/2021 12:32

Holding this share could definitely make a person very contrary!

[p5tvr] 24/2/2021 07:59

hermana..What happened to your BIG DAY yesterday!!!

[amran01] 24/2/2021 07:15

Or an extension..

[hermana3] 24/2/2021 06:47

APEC invented a timeline but never committed a dime. Spoton have invested and are familiar to Alan Linn. 5 weeks left to produce the cash.

[raisethestake1] 24/2/2021 06:42

Deep pockets for a shallow water drill. The consortium members may be in no rush to drill Barryroe. With shareprice dropping they begin to see an opportunity to go for the other 50% of the project on the cheap.Even APEC had a timeline.Time for a update from the company if this bond news doesn't arrive by Friday. 3 months after Farmout announcement. The deal a year in the making and us diluted more since SpotOn came sniffing around.We need clarity as to what is happening in the background.We have been taken for mugs before. We should be getting the name of drilling rigs to be used and ordering the services and equipment by now. What is the hold up.

[toolpusher1] 24/2/2021 00:00

Bond or no bond why cant the consortium with their deep pockets put in there fair share and get on with the project after all thay are getting a very good return from there investment also thay have all the equipment at their disposal to do the job from A to.Z this project is after all relly a stroll in the park to them.

[amran01] 23/2/2021 23:30

https://media.heanet.ie/page/9c4060de18f64c71843d1c7f3e7c3734 20210209 Joint Committee on Climate Action

[hermana3] 23/2/2021 23:16

Agree it would have been helpful but we are where we are and we better be quids up by April Fool's Day....

[amran01] 23/2/2021 23:04

He could have agreed on the timeline before announcing the farm out to the world. He could have then put the timeline in the RNS back in November.

[hermana3] 23/2/2021 22:48

How can he be specific on another company's fundraising? The Bond market is subject to the vagaries of markets in general.

[amran01] 23/2/2021 22:42

People can't blame sleepy Ryan anymore. It seems like sleepy SpotOn are the ones to blame. I honestly don't think the bond news is coming this week. Maybe early March in the first few weeks. No timeline means lack of clarity and accountability. Alan should have given a specific timeline on the funding news. The killer drop was because of lack of funding, timeline, 80% to SpotOn and co on first oil, 50% of the deal to them and then the Q4 2022 drilling.

[contrarymary] 23/2/2021 22:29

No formal timelines for completion of the bond were published by PVR, LOGP, or Spoton that I know of. There have of course been suggestions in interviews and unsubstantiated press articles.

[amran01] 23/2/2021 22:21

Did the farm out agreement put any timelines on SpotOn?

[hermana3] 23/2/2021 22:16

Spoton are the bosses and it is the dough from the Bond which is the live blood of Barryroe project. Linn and Boldy like the rest of us can only hope and pray that Spoton deliver.