Energia
Providence Resources P.l.c. - 2017 Annual Results
- Providence Resources P.l.c. (PVR LN, PRP ID), the Irish based Oil & Gas Exploration Company, today announces Annual Results for the year ended December 31, 2017.
Commenting today, Tony O'Reilly, Chief Executive Officer said:
We remain very optimistic about the future prospects for Providence. We are both determined and uniquely positioned to continue to lead the industry in identifying and realising Ireland's significant offshore potential, whilst also scouting opportunities elsewhere that leverage our unique skillset and experience offshore Ireland. We continue to be by far the most active player offshore Ireland in terms of drilling activity, commercial deals and collaborations with world-class partners. Looking ahead, we have the portfolio, partners, people and financial resources in place to advance our portfolio through exploration & appraisal drilling for the benefit of all our shareholders.
Providence Resources is an Irish based Oil & Gas Exploration Company with a portfolio of appraisal and exploration assets located offshore Ireland. Providence's shares are quoted on the AIM in London and the ESM in Dublin. Further information on Providence can be found at providenceresources.com.
This announcement has been reviewed by Dr John O'Sullivan, Technical Director, Providence Resources P.l.c. John is a geology graduate of University College, Cork and holds a Masters in Applied Geophysics from the National University of Ireland, Galway. He also holds a Masters in Technology Management from the Smurfit Graduate School of Business at University College Dublin and a doctorate in Geology from Trinity College Dublin. John is a Chartered Geologist and a Fellow of the Geological Society of London. He is also a member of the Petroleum Exploration Society of Great Britain, the Society of Petroleum Engineers and the Geophysical Association of Ireland. John has more than 25 years of experience in the oil and gas exploration and production industry having previously worked with both Mobil and Marathon Oil. John is a qualified person as defined in the guidance note for Mining Oil & Gas Companies, March 2006 of the London Stock Exchange. Definitions in this press release are consistent with SPE guidelines. SPE/WPC/AAPG/SPEE Petroleum Resource Management System 2007 has been used in preparing this announcement.
* Subject to Farm-out announced on March 28, 2018 whereby APEC Energy Enterprise Limited will take a 50% working interest in return
for an agreed work programme. Subject to closing, Providence's stake (held through its wholly owned subsidiary, Exola DAC) will reduce to 40%.
BBO - Billion Barrels of Oil
BBOE - Billion Barrels of Oil Equivalent
BSCF - Billion Standard Cubic Feet of Gas
FEL - Frontier Exploration Licence
GIIP - Gas Initially in Place
LO - Licensing Option
LU - Lease Undertaking
MMBO - Millions of Barrels of Oil
MMBOE - Millions of Barrels of Oil Equivalent
Pmean - the expected average value or risk-weighted average of all possible outcomes
Rec - Recoverable
SEL - Standard Exploration Licence
STOIIP - Stock Tank of Oil Initially in Place
SCF - Trillion Standard Cubic Feet of Gas
* Held through wholly owned subsidiary, Exola DAC.
** Subject to Farm-out announced on March 28, 2018 whereby APEC Energy Enterprise Limited will take a 50%working interest in return for an agreed work programme. Subject to closing, Providence's stake (held through its wholly owned subsidiary, Exola DAC) will reduce to 40%.
Condensed consolidated income statement
The total loss for the year is entirely attributable to equity holders of the Company.
Condensed consolidated statement of comprehensive income
The total comprehensive expense for the period is entirely attributable to equity holders of the Company.
Condensed consolidated statement of financial position
Condensed consolidated statement of changes in Equity
Condensed consolidated statement of cash flows
The consolidated preliminary financial results announcement of the Company, for the year ended 31 December 2017 comprises of the Company and its subsidiaries (together referred to as the "Group").
The financial information included in this preliminary financial results announcement, has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (EU IFRS) which comprises standards and interpretations approved by the International Accounting Standards Board (IASB).
The consolidated preliminary financial information presented herein does not constitute the Company's statutory financial statements for the year ended 31 December 2017, with the meaning of Regulation 40(1) of the European Communities (Companies: Group Accounts) Regulations, 1992 of Ireland, insofar as such Group accounts would have to comply with disclosure and other requirements to those Regulations. The statutory financial statements for the year ended 31 December 2017, together with the independent auditor's report thereon, will be filed with the Irish Registrar of Companies following the Company's Annual General Meeting and will also be available on the Company's website www.providenceresources.com. The consolidated financial statements were approved by the Board of Directors on 9 May 2018.
The preparation of the condensed consolidated preliminary financial information requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results could differ materially from these estimates. In preparing this financial information, the significant judgements made by management in applying the Company's accounting policies and the key sources of estimation uncertainty are the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2016.
Cash flow forecasts
The directors have considered carefully the financial position of the Group and, in that context, have prepared and reviewed cash flow forecasts for the period to 31 May 2019.
As set out further in the Chairman's and Chief Executive's statement the Group has sufficient funds to cover the levels of capital expenditure in 2018 and 2019, consistent with its strategy as an exploration company.
In this regard, the directors have considered both current and future expenditure commitments and also the options available to fund such commitments, including further farm out arrangements, disposal of assets, and both equity and debt funding alternatives. Having regard to current levels of funding in place, the recently announced farm out of Barryroe which reduces the Group's cost exposure, and the other options available, the directors are satisfied that the Group will be in a position to fund the capital expenditure programme as well as other planned exploration and operating activities. The Directors have considered the proposals put forward in the Climate Emergency Measures Bill 2018 and have noted that this will be considered further at committee level, though no set timetable has been confirmed. Whilst this is subject to further deliberation, the Board have considered the matter while preparing the cashflows and the potential impact that this might have on the business. The Directors concluded, taking all information that is currently available, that the Group has sufficient funds available over the next 12 months while the Bill is being further deliberated. On this basis, the directors are satisfied that it is appropriate to prepare the financial statements on a going concern basis.
The exploration and evaluation asset balance at 31 December 2017 primarily relates to the Barryroe (€57.3 million), Dunquin (€15.6 million) and Newgrange (€1.8 million) licenses. The remaining €0.1 million relates to other license areas held by the Group in the Republic of Ireland.
The directors have assessed the current activities ongoing within exploration and evaluation assets and have determined that an impairment charge of €14.6 million (2016: €15.1 million) is required at 31 December 2017.
The results of the 2017 drilling campaign on Druid/Drombeg resulted in the impairment of the licence as only trace hydrocarbons were found and the well was not commercially viable. The Kish Bank licence was impaired, as it is unlikely that further exploration and evaluation work will be undertaken.
The directors recognise that the future realisation of the remaining exploration and evaluation assets is dependent on future successful exploration and appraisal activities and the subsequent economic production of hydrocarbon reserves. They have reviewed current and prospective plans for each of the licence areas and are satisfied that future exploration and evaluation activities are appropriate in light of the carrying value of these assets.
On 14 July 2016, the Company issued 457,582,000 ordinary shares of nominal value €0.10 cent at €0.152 per share. The Company raised gross proceeds of c. €66.7 million. Share issue costs of €5.9 million were recorded as a charge against retained reserves.
Under the Facility, Melody had security over all of the Group's assets by way of the Floating Charge.
There is no difference between the loss per ordinary share and the diluted loss per ordinary share for the current period as all potentially dilutive ordinary shares outstanding are anti-dilutive.
Mr Tony O'Reilly has, through Kildare Consulting Limited, a company beneficially owned by him, a contract for the provision of service to the Company outside the Republic of Ireland effective April 2017. The amount paid under the contract in the year ended 31 December 2017 was €606,930 . The contract is of two years duration and is subject to one year's notice period.
The Group has capital commitments of approximately €6.8m to contribute to its share of costs of exploration and evaluation activities during 2018.
On 28 March 2018, the Group through its subsidiary, Exola DAC, signed a Farm Out Agreement on SEL 1/11 with APEC Energy Enterprise Limited (APEC). Under the terms of the Farm Out, APEC will take a 50% interest in the licence and pay 50% of the costs associated with the drilling programme. APEC will fund Exola's and Lansdowne's 50% interest by means of a non-recourse loan facility to cover their costs in the Barryroe drilling programme.
The Loan, drawable against the budget for the Drilling Programme, will incur an annual interest rate of LIBOR +5% and will be repayable from production cashflow from SEL 1/11 with APEC being entitled to 80% of production cashflow from SEL 1/11 until the Loan is repaid in full
Following repayment of the Loan, APEC will be entitled to 50% of production cashflow from SEL 1/11 with EXOLA and Lansdowne being entitled to 40% and 10% of production cashflow, respectively.
EXOLA will act as Operator for the Drilling Programme with technical assistance being provided by the APEC Consortium. After the completion of the Drilling Programme, APEC will have the right to become Operator for the development/production phase.
The Farm Out Agreement is conditional on completion of all ancillary legal documentation required to implement the terms of the FOA, and is subject to the approval of the Minister of Communications, Climate Action and Environment and the approval of the Chinese government. In addition, the details of and schedule for the Drilling Programme are subject to further ongoing technical discussions between the Consortium, Exola and Lansdowne. Subject to Closing, the revised equity in SEL 1/11 will be EXOLA (Operator, 40%), APEC (50%) & Lansdowne (10%).
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