Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
The continuation of 'the Currency' story:
If Goodman is buying Providence Shares, who’s selling? The rumour is that SpotOn, the Norwegian company that had acquired 2-3 per cent of Providence as part of the plan to develop the Barryroe field, is the seller. Given that the deal to develop Barryroe collapsed, SpotOn would have little reason to hold the shares. Ask by The Currency whether it had sold its Providence Stake, SpotOn didn’t reply.
Irish businessman Nick Furlong holds 14.93 per cent of the company in his own name and via his company Pageant Holdings, while M&G Investments has shrunk its stake from 11.8 per cent to 9.7 per cent.
Who else owns Providence? Former Glen Dimplex boss Sean O’Driscoll and his family own 4.1 per cent of the company. Other major shareholders include Kite Lake Capital Management (9.8 per cent) and the Merseyside Pension Fund (8.4 per cent). Goodman’s Vevan Unlimited is the fifth biggest shareholder.
A rough ride
Providence Resources is a junior oil company. This means it’s an explorer, with no producing assets. Its function is to navigate the risky process of finding oil, drilling it, and selling it on to a major producer.
Providence shares are thinly traded and volatile. Since the second week of January this year, they have dropped 50 per cent. From March to November of last year, they rose more than six hundred per cent. This is par for the course among junior oil explorers. Investors like Goodman buy in fully aware that their investment could be wiped out. Equally, if they get their timing right, it could multiply many times in value.
Providence’s performance since January is driven by the collapse of the SpotOn deal. It looks particularly bad when viewed in the context of the oil and gas industry, which is booming. The iShares U.S. Oil & Gas Exploration & Production ETF is up 127 per cent since November.
The problem for Providence this year has been the termination of yet another deal to develop Barryroe. Providence had engaged with the Norwegian consortium SpotOn for more than a year. But in the end, the deal collapsed, as had many such deals before.
Goodman’s net worth has been estimated at €3.25 billion. So his £950,000 investment in Providence won’t make him much richer. It makes his decision to invest publicly in the controversial oil and gas project all the more curious.
Funny . . . you would think that with such a sophisticated network of successful businesses in difficult regulated sectors and a phenomenal track record of creating success he might just - I don't know - pay the tax? Instead of investing in a business he thinks is going to create a tax loss?
It is an interesting angle. I recognise that Providence have talked about the opportunity to capture the CO2 output of burning gas from Barryroe in he cavity of the Kinsale field. This may or may not be practical and it is part of Providence's (entirely correct and valid) endeavour to change thinking and broaden perspectives about developing the Barryroe field at a time of climate action. Notwithstanding this, it seems the carbon removal and storage content of the Climate Action Bill is 99% about the agriculture sector, and how to square that circle. It does illustrate the impact of a powerful lobby.
Interesting that the Irish Offshore Operators Association does not seem to have said anything in recent days about the Maritime Area Planning Bill 2021 or the establishment of the Marine Area Regulatory Authority. It is a complicated piece of legislation and it replaces a substantial amount of existing legislation, so maybe they are considering it before making comment.
Jim Collins on Big Oil now . .
'ride the geopolitical wave'
I am writing this column somewhere over the Atlantic Ocean as I return from Brazil. What is amazing about this big blue marble on which we live is how much of it is uninhabited, which is amplified by the fact that nearly three-fourths of it is covered by water. There is gold under those seas, and Exxon Mobil's XOM announcement this week that it had made yet another productive discovery offshore Guyana -- the Longtail-3 prospect -- -shows that those seas are no barrier to progress.
That's right, progress. Exxon Mobil is moving forward in Guyana with partners Hess (HES) and China's state-run CNOOC. (XOM) management has made the Guyana/Suriname offshore block a priority for its oil business, just as Papua New Guinea is for its natural gas business.
As you reach for your World Atlas, let me assure you that years of following Big Oil -- and owning XOM for myself and my clients' accounts -- have imprinted the necessity of riding the geopolitical wave as one invests in this sector. Governments will come and go and state-owned oil companies -- NOCs -- will always have an advantage in local production of hydrocarbons.
We don't have an NOC in the U.S., but we have a force that is much less powerful and only amplified by the relentlessly misleading force that is the U.S. financial media. Only those dingbats could herald an outsider -- Engine No.1, which reportedly owns a whopping 0.02% of XOM's shares outstanding -- taking three seats of a 12-seat board as a "seismic shift." Hogwash.
Even if fellow self-styled activist Jeff Ubben is included, the "woke" contingent on XOM's board would be four out of 12. Thus the non-woke, management-friendly contingent on XOM's board still controls two-thirds of the votes. It would seem that the pro-management faction would win any boardroom showdown, wouldn't it?
But, in the spirit of reading the tea leaves, Exxon Mobil management wisely has chosen to shift its focus outside the U.S. and away from woke activists and their ridiculously unscientific, apocalyptic predictions. Exxon Mobil is still going to dominate Texas, but that is probably it for North America. That's just fine with me as a shareholder.
I see the world differently than most, but unlike those who pontificate about faux-Green agendas on left-wing-friendly cable networks, I actually see the world. Remember these are the same people who, up until the publication of an article in The Wall Street Journal two weeks ago, were convinced that a pandemic that has now infected 175 million people and killed 3.75 million people stemmed from a single bat bite. Agree to disagree, I suppose. That is why we have financial markets.
It is curious how 'TheShen' has become the loudest presence on the PVR board (everything is temporary) . . .
Only joined in recent weeks, only posts on Providence (or a little on Lansdowne), but seems to be putting some effort into it for some reason. Yet not a shareholder, or a prospective shareholder (according to themselves). Always talks the company and the current management down. Curious isn't it . . .
Unless he or she is a former employee (and there are a few around). Maybe a disgruntled former employee and this board is the 2021 version of putting anonymous flyers on the cars in the company car park. Could be . . .
In fairness, since there will be no new licences issued, the Association have a very limited panel of potential Chairs. As a positive though, it does reinforce that Providence and AL recognise that informing and influencing stakeholders, and building a compelling case for developing Barryroe is just as big a priority as securing the funding. They have demonstrated this well in recent communications.
It is very unlikely there will be any solid details of the Consortium before the 25th of September, so an opportunity to take some time off and not fret about Providence. It is all in hand (to the extent it can be).
There are some things of sincere intent that are right for blessings, and some things not. I would be all for crossing fingers at least. I do have a colleague who is quite happy to bless cats and dogs, so I suppose a down at heel exploration company might still be worthy. In relation to the link to the AGM, the company notice says 'it will be available', so I expect it will be like attending in person in the past when you or your broker contacted the company with information about your holdings, and asked to be included in the access list.
The new format of the Annual General Meeting is a welcome development. The Annual General Meeting has been a pointless exercise for management and committed shareholders in recent years. The AGM has been taken over by so-called 'climate activists' whose objective is (as they describe) the failure of the Providence strategy and business. Asking any question or engaging in any discussion which gives more information on or insight to the Providence business or operations is counter productive, because it just provides more material for the activists. We look forward to this being a sincere AGM which conducts the business on the Agenda and hopefully gives an update on progress. I note that it will be possible to attend on-line, but only to listen in and view the slides. Well done PVR management, a good call.
This is the actual line from the draft Programme for Government, just published:
'End issuing of new licenses for exploration and extraction of gas, on the same basis as the
recent decision in relation to oil exploration and extraction'.
This is the best outcome Providence and SpotOn were ever going to get at this stage. It is over to the Management of both Providence and SpotOn to embrace this opportunity, recognise that it has a loudly ticking countdown beside it, and achieve for the Company and for Ireland what so many have failed to do in the last twenty years. We're all in!
(Of course the parties may not vote to proceed on this basis, but here's hoping).
No need to waste energy fretting about the short-term almost zero oil price. The number one concern for BR and PVR is the same as it was in November. The talk in the town tonight is that the Greens will make up the balancing numbers in the new Government, and their hit-list includes an extraction ban. Not a licence ban, or an application ban . . an extraction ban. Makes no sense in a shattered economy, but that's it.
18 months is a long time with many twists and turns because the climate emergency is only off the agenda in Ireland due (tragically) to Covid 19 being the only item ON the agenda. Every permission and consent will be challenged by climate activist groups, and while their's was a fringe interest pre-2018, their lobby was a powerhouse in the December general election. In the 'Proactive' interview, AL showed clearly that he gets this, and that Providence recognises the need to regard the Irish government and people as real stakeholders in this venture - describing how BR will use existing infrastructure, make good use of the Kinsale gas field voids, and how it is genuinely good for Ireland. Keep it up!
Very good interview with Alan Linn, presume on 'Proactive' so that he can talk to the small private (battered) shareholders as well as other interested parties. Full marks, didn't put a foot wrong. A genuine and rational presentation. If I did not have an attic full of them already, would be tempted to buy a few PVRs. Only one 'room for improvement' . . . next time suggest Mr. Linn props the laptop up on a couple of shoe boxes, so that the interview is at eye-level (one of small tricks 'stay-at-home' Execs are learning!). Otherwise, round of applause for the new Chief Exec, will stick with it to see what happens next . .
Thanks for the positive post 'hereandnow'. Another positive perspective is that it seems likely today that the newly elected leader of the Labour party will probably change direction and consider joining the Government formation talks, giving the realistic option of a Fine Gael, Fianna Fail and Labour coalition with stable majority. This is the most favourable possible combination for the Barryroe opportunity. There is no way this mix will rescind an existing licence, at a time when the country is enduring an enormous downturn. They will not be subject to the abstract and impractical left and green ideology that has dominated the natural resources dialogue for the last 18 months. All good, and genuinely in the national interest . .
It’s not about extending the license, it is about ensuring that the conditions are met to maintain the validity of the existing license.
The site survey initiative is a good tactical move, and reflects well on the new management. As of today, the PP odds on the new government in Ireland after the General Election in February are 4/1 Fianna Fail and Green. The odds have to reach 12/1 before there is any mention of a FG partnership at all. There will be a new Minister in charge of natural resources, and a new Green-friendly programme for government (I outlined this in my posts last year). Exploration licences are not open-ended and fully-qualifying. They are subject to numerous ongoing conditions, to remain valid. At the top of the list for continued validity are having the funds to proceed with a work programme and also keeping to the outline works schedule referred to in the original licence. This seems to be a well-informed initiative to reduce the risk of the licence being challenged by the new administration. We hope to see more examples of good leadership in the very near future . .
The General Election in Ireland, due to be held in May or June, has been bounced forward to Saturday the 8th of February. As readers here know, so-called 'Climate Action' has rocketed up in the priorities of the (broadcast) electorate in the last year. The current government party, Fine Gael has just released its opening one-minute video to set the scene for the election. The first line on 'Climate' is "Oil Exploration Banned". Shows what a hot political topic this is now in Ireland. Overall it is a good thing that FG are portraying this as finished business.
Interesting how the flow of posts and genuine curiosity about the company dries up when the back and forth personal abuse takes over . . . maybe there's a chat forum for that kind of thing - somewhere else . .
The volume and consistency of 'buys' over the last 24 hours have been as much as when the site survey permit was granted in July. Not enormous money, but people clearly see a potential upside, and it would need to be substantial given how sensitive and illiquid this share is. Overall, the post last week that said there is no need to look at this again until January is probably right. There will be no company news until at least then (given the 'to the brink' pattern shown all year). An external point of interest may arise in November when the Dept of Comms, Climate Action and Environment clarify the Taoiseach's speech about ending exploration in Irish waters. This will inevitably affect the value, up or down, of any assets Providence has.