KEYFACT Energy
Providence Resources P.l.c., the Irish based Energy Company, today provides the following corporate update which includes a commercial and operational update in relation to Standard Exploration Licence (“SEL”) 1/11 which contains the Barryroe oil accumulation (the “Barryroe Project”). SEL 1/11 is operated by EXOLA DAC ("EXOLA" or the “Operator”, 40%), a wholly-owned Providence subsidiary, on behalf of its partners, APEC Energy Enterprises Limited (“APEC”) and Lansdowne Celtic Sea Limited ("Lansdowne", 10%), collectively the “Barryroe Partners”. The area lies in c. 100-metre water depth in the North Celtic Sea Basin and is located c. 50 km off the south coast of Ireland.
Providence assets offshore Ireland (Map source: KeyFacts Energy)
On June 5, 2019, the Company announced that it had agreed certain amendments to the Farm-Out Agreement (the "Updated FOA") for the Barryroe Project with APEC and Lansdowne, including a revised backstop date with APEC for receipt of the US$ 9 million loan advance (the “APEC Loan Amount”) to June 14, 2019, which was subsequently extended through various extensions to September 2, 2019.
Extension and Notice Given to APEC
As at close of business on September 2, 2019, no funds had been received in the Company’s account. Accordingly, in granting APEC a further week’s extension to September 9, 2019, the Company has also issued written notice to APEC that, should the APEC Loan Amount not be received by the close of business on that date, the Company reserves the right to end exclusivity, while also considering all legal remedies available to it against APEC for contract non-performance, including the re-assignment of equity in SEL 1/11.
Site Survey to Commence This Week
On August 9, 2019, the Barryroe Partners confirmed that they have received permission from the Minister of State at the Department of Communications, Climate Action and Environment to undertake a seabed debris clearance, environmental baseline and habitat assessment site survey (the “site survey”) over the area of the Barryroe field within SEL 1/11. Whilst the full implementation of the site survey is subject the receipt of the APEC Loan Amount, the Company announced on August 20, 2019 that it had agreed the payment of the contractual mobilization fee. Based on the prepayments made to the Contractor, the Company can now confirm that the vessel has mobilized to Ireland where operations are expected to commence later this week. The projected programme provides for a minimum of two locations to be surveyed at this time with the scope to increase the number of locations upon receipt of the APEC Loan Amount.
Working Capital
Noting the creditors on the balance sheet and existing forward commitments, including the costs associated with implementation of the site survey at Barryroe and the proposed business re-engineering, the Company will require to put in place alternative financing arrangements in order to provide it with sufficient working capital beyond the end of September 2019 in the event that the APEC Loan Amount is not received. Accordingly, and noting the time required to put in place alternate financing arrangements, the Company can confirm that it is now actively exploring these alternatives, and further announcements will be made in due course, if required.