Providence will resume trading and drilling

The company is hoping to overcome its recent financial difficulties

Providence will resume trading and drilling

The Irish oil and gas exploration company, Providence Resources, has been given a new lifeline and the opportunity to resume exploration activities off the Irish South Coast, through the raising of €65m through a share placing with existing and new shareholders.

The new shares will be issued at 12p per share a discount of 13% on their price when shares were suspended in April due to the company’s financial position.

That crisis had been triggered by a court order that Providence had to pay the drilling company, Transocean, up to $7m in dispute costs, funds it didn’t have at the time. Share trading can now commence again.

"People thought we were going to go bankrupt, but we have now successfully recapitalised with support from London and Dublin and can extinguish our debts," chief executive Tony O'Reilly told the Irish Independent.

One of the key investors in this funding round is Melody Finance, $20m of whose debts will be repaid by the new capital.

According to Providence chief executive, Tony O’ Reilly Junior, Providence is now on a much more secure financial footing, has a broader shareholder base particularly in the UK and can benefit from renewed drilling programmes at substantially lower costs.

This is subject to approval at an emergency shareholder meeting on July 14th.