Providence Resources cleans its balance sheet

The exploration company has repaid its $20m debt...

Providence Resources cleans its balance sheet

Providence Resources has announced that it has repaid the full $20m in borrowings and accrued interest to its major source of debt finance, Melody Business Finance.

The Irish oil and gas exploration company also confirmed that it has discharged the balance of what it calls “uncontested” sums owing to Transocean Drilling UK.

A UK court order last April, requiring Providence to pay millions in disputed drilling fees to Transocean, threatened the exploration company’s survival over the following weeks when it was dependent on Melody’s support.

Providence shareholders recently approved the raising of up to $73m through the placing of shares with existing and new shareholders, including Melody Business Finance.

Davy stockbrokers said in a note:

In a note, Davy stockbrokers said:

"While the group is funded to drill the Druid element of the Druid/Drombeg structure, it will require a farm-in partner to deepen the well to drill Drombeg.

"All these negotiations can now conclude with no immediate financial pressure on Providence.

"This should lead to an improved outcome with respect to farm-in deals and consequently a better outcome for shareholders."