Providence shares see bounce on Tony O’Reilly exit
Shares in Irish exploration company Providence Resources jumped by as much as 12% after it announced that Tony O’Reilly - its chief executive since 2005 - has left the company; stepping down as CEO and resigning from the board with immediate effect.
Providence has started the search for a new CEO and remains on the look-out for a development partner for its flagship Barryroe oil and gas field off the Cork coast.
Mr O’Reilly remains available to work with Providence’s board - “to ensure an orderly transfer of responsibilities” - until the end of January.
Pending the appointment of a new CEO, Providence’s chairman Pat Plunkett will take on Mr O’Reilly’s executive functions and lead the company on a day-to-day basis.
This year has been a disastrous one for Providence. Chances of a long-awaited multi-well drilling campaign at Barryroe disappeared due to regulatory and funding frustrations. Its shares have tanked by more than 70%. Its first half losses more than doubled to €5.5m and it was forced into doing what Mr O’Reilly referred to as “the unthinkable” in tapping shareholders for €3.4m in funds to basically keep the company afloat into the new year.
That became a necessity ahead of Providence ditching Chinese consortium APEC Energy as its Barryroe partner after the Chinese group’s continued failure to produce €8m in promised project funding.
On top of that, two of Providence’s prospects in the Porcupine Basin, off the south-west coast, have been relinquished and French oil giant Total has pulled out of another of Providence’s assets, leaving it looking for new partners on more than one front.
“For now, we think the best way to think about Providence is to see it as a Barryroe/Celtic Sea play,” said Davy analyst Job Langbroek, who described Mr O’Reilly’s exit as “a milestone event” for Providence.
“Its work in the Porucpine - where it was responsible for much of the drilling and activity in recent years - looks to be compromised by the recent shifts in political thinking with respect to offshore activity,” he said.
“The new CEO’s primary task will be to steer Providence through the Barryroe appraisal programme and maximise the value of the asset to shareholders. The difficulty and twists and turns surrounding the efforts to put this appraisal programme in place conceal the fact that Barryroe is a substantial target , where oil has been identified in numerous wells. It needs further appraisal, but its potential rivals - and is larger than - most mature late-stage North Sea projects,” Mr Langbroek said.
There has been no hint from Providence as to when it expects to unveil Mr O’Reilly’s successor. Nor has there been any hint of it making progress on landing a fresh development partner for the Barryroe project.
When Providence formally began looking beyond APEC for help on Barryroe, back in early October, Mr O’Reilly suggested that the company had already attracted interest from several North Sea oil and gas players apparently interested in coming on board the project.
Mr Plunkett said that Mr O’Reilly leaves the company “by mutual and amicable agreement”.
Mr O’Reilly said that after more than two decades with the company “it is time for me to pursue new opportunities”.
