Member Info for Manyana

Unfortunately on the back of a paltry 43,000 shares.

We had a ramp last week. Hopefully we will not have a repeat this week.

The people who made read money this week in Dublin were the investors in Green Reit which was sold at a very healthy premium.

As my old mother used to say "there is nothing as safe as bricks and mortar". I think Providence has proven the truth of that one over the years.

The Irish economy owes too much to the EU at €225billion to be able to attach itself to anybody else. Otherwise, it would probably have left the EU along with the UK. Many years ago the idea of turning Ireland into the 51 state of the US was mooted but it came to nothing.

As for offering oil in payment for the survey vessel, the whole deal with APEC is it is a zero carry. If oil is found in commercial quantities in Barryroe and it is developed Providence's and Lansdowne's costs will be repaid in oil. If, on the other hand, commercial oil is not found APEC carry the can for the total costs and Providence and Lansdowne pay nothing.

Over the years there have always been doubts about Barryroe. Six wells have been drilled on it and 4 tested with all flowing oil. However, there is no guarantee that the six wells are interlinked. There has always been a question of faults as the oil layer is reckoned to be thin at about 25k but covers about 400km sq. If the oil is not contiguous then numerous wells will have to be drilled to retrieve it whereas one big pool of oil means a few wellheads are needed.

As for Barryroe being bought as part of a deal with IOLAR it should be noted that any oil found in either has to be sold to an Irish company at arms length and cannot be just spirited out of the country. So either CNOOC have to set up an Irish company if it has found oil in IOLAR or it can use an Irish company to trade the oil. In that case EXOLA would be the perfect vehicle to do it as it could be the trader for both IOLAR and Barryroe. EXOLA is a totally Irish company except all its shares are owned by the Providence Resources parent company.

I am wondering if it has something to do with IOLAR.

If you consider that APEC is just CNOOC in another form then CNOOC are drilling both Barryroe and IOLAR so if they found oil in IOLAR what are the chances they would make a bid for Barryroe? After all, developing both in conjunction would make a lot of sense.

Why do I think they might have found something in IOLAR? Because we have heard nothing and the ICEMAX has been gone now about five days and it must have finished its drilling depth many days before that. It will arrive back at its base in Las Palmas tomorrow as follows:

"Current destination of STENA ICEMAX is LAS PALMAS and the estimated time of arrival (ETA) is Aug 22, 15:00."

So why have we heard nothing about IOLAR? If it were a dud I would have expected to hear about it immediately. There would be no point in delaying the inevitable. However, if they found "something" they could delay an announcement on the basis that they were doing "analysis" which they could claim takes time.

And given that the same company is paying and developing Barryroe through COSL which is a 100% owned CNOOC company would they develop both simultaneously or would they develop them in series?

The silence of IOLAR, to me, is as mysterious as the famous $10m and when you consider that amount, in the oil world, is peanuts when compared to say the value of the oil in Barryroe and potentially in IOLAR it vanishes into total insignificance.

Two things together.

The reason why Barryroe was put into Exola as a wholly owned company by Providence was so the company could sell Barryroe just by selling Exola as it could be sold as a single entity. For example, if CNOOC came in to buy it all they have to do is buy the 100% Exola shares. Simple.

As for debts, look at the raises. raised €100m selling 13.1m shares in 2012. Also sold Singleton to Igas for £41m, say $50m but Singleton sale can't be reclaimed against Barryroe because it was English but it did pay off all of Providence's debts at the time so all subsequent debts are against Barryroe.

2015, it raised $25.5m issuing 66.8m shares at 25p a share.

Then you had the asset raise to pay of Transocean and fund Druid/Drombeg which came to $68.4m and was issued to institutions at 1:4.4 shares .

So, I reckon excluding Singleton which cannot be offset against Barryroe but was used to pay down debt you have a figure somewhere in the order of $200m with Dunquin North being probably the most expensive even though ExxonMobil was the lead but oil was expensive at the time and hence exploration costs were very high.

So $200m profit is a fair estimate of what Providence can generate after production cost before they pay any tax.
It seems Corrib is running into a bit of trouble and it is reducing output.

https://www.irishtimes.com/business/energy-and-resources/sales-at-corrib-gas-field-drop-as-gas-output-declines-1.3991037

So what happens to Irish gas which comes from Moffat when Boris takes the UK out of the EU with a no deal? Surely that is an opportunity for the gas that lies under Barryroe but we hear nothing about it.

Surely the Corrib issue must be a plus for the gas in Barryroe but we hear nothing about it and with O'Sullivan gone we will now, I presume, depend on McCoss as our technical wizard.

So final guesstimate: $200m already wasted so could be recouped from profits before tax is paid and with an oil price of say $60 and a production estimate of

Your figure of €25.9m is far from the mark.

Yes for Barryroe you can use a figure of that but it only relates to Barryroe at book value. But what about all the other money Providence has spent on exploring Dunquin North, Druid/Drombeg, Spanish Point, Hook Head. etc over the years? What about all the money they spent on those duds?

Well, they are entitled to recoup all those costs before they pay a penny tax on any profits made from Barryroe or any other find. That is why Brid Smith has her head up her rear end if she thinks the government can just cut off all exploration at nil cost because of commitments made by the Irish Government back then which allows them to recover all costs to date as long as it is within a twenty-five year period.

It all happened in 1987, when a previous minister, Ray Burke (member of good old Bertie Ahern's Fine Fail), made a deal with the oil exploration companies, of which Providence was one, that if they found a commercial find they could recoup their development costs of any project on any exploration in Irish waters carried out over a 25 year period.

That is why, I believe, Providence has been running around like a headless chicken over the last years drilling, surveying etc. before it develops Barryroe because all costs sustained in those futile explorations will be recouped from the profits from Barryroe on any development in a twenty-five year period.

That is why a miserly $10m with another $15m to follow is chicken feed in the bigger picture of things.

There have been numerous complaints about O'Reilly's salary but at least he has been doing something for it over the years but who has complained about O'Sullivan's who has been raking it in with no actual success for years.

He has been earning nearly as much as O'Reilly and last year he also got a bonus for the non-result of Druid/Drombeg fiasco with a total package of €549,000 whereas O'Reilly got €649,000. This year he got €384,000.

At least with his department "with immediate effect" that is already a major saving for the company.

How do I know these figures? They are all in the annual accounts if you want to check.

If Providence is convinced the money is in the system, it is clean and will appear at some point then surely the right thing to do is to borrow €10m from the market now and repay it when the money from APEC comes through.

On the other hand, if he is going into the market to raise funds through an issue then you can be sure he believes the APEC money has strings attached.

It would have to be conclusively proven that it was "hot" before that can happen otherwise you would have the mother and father of a court case with huge fines.

The process of getting money out of China for individuals and foreign companies is notorious as is explained in the following article:

http://www.eb5globalventures.com/blog/how-do-i-get-my-money-out-mainland-china

While Providence are pretty sure the money is in the system they cannot count it as theirs until it comes out of the other end. A bit like a cow; if it is milk, great, if it is the other thing then you get covered for the wrong reasons.

I was watching a program last night which said 58% of all foreign Chinese transfers go through Hong Kong and that foreign exchange Chinese transfers has nearly drawn to a halt with the unrest.

Since we know HSBC is at one end of the loan and HSBC is at the Irish end of the loan we can be pretty sure the delay is being caused by the unrest in Hong Kong.

Here is an article from the Economist of a few years ago which outlines the issue between China and Hong Kong and how important Hong Kong is to China when it trades with the rest of the world.

https://www.economist.com/the-economist-explains/2014/09/30/why-hong-kong-remains-vital-to-chinas-economy

Why are APEC in breech of contract? There is no way that the money, the €9m is not in the system. The question is, what is wrong with it that it cannot get through?

But if APEC has paid the €9m into the system and it is still there they are not in breech of contract until it is categorically proven that it is "hot" money and not coming out. Once it is paid in, they are in the clear unless it bounces.

I am sure there are many who would like to jump on Barryroe as long as Providence stumps up its share. The beauty for Providence with the APEC deal is the non-investment scenario with the Providence side costs being paid out of oil revenue. I am pretty sure if Providence was to raise the capital for its part there would be a number of takers.

But Providence see the deal with APEC as a loss-leader. Get it generating money even though not as much as they would have wished, and then move on to bigger and more profitable ventures such as Spanish Point, Dunquin South, Newgrange or even a tie up with KEL to pursue the Seven Heads infrastructure to develop the gas from Barryroe.

And if IOLAR comes good the "big boys" will be in like flies to take a chunk of Providence but if IOLAR is a dead duck we will be back where we started.

My suspicion is that the money is "hot" and will not get through.

It is possible that the turmoil in Hong Kong is causing a problem but surely there are ways around that.

I agree with you and have said it before. Find another partner.

After all, ExxonMobil was partner with Providence in Dunquin North which was said to have oil in it with a residual column but it had all seeped out. But there is hope for Dunquin South where ENI took over from ExxonMobil.

It is very interesting that IceMax has departed IOLAR where the specification was to drill, inspect, plug and abandon. All of this done without a single word from either CNOOC or ExxonMobil who shared the drill and had a result some weeks ago if IceMax is on her way back to her home port of LAS PALMAS because it must have taken them time to plug and abandon.

But in most, if not all, of its prospects Providence is farmed out to bigger fish. For example, they are also in bed with Total, Sosina, Cairn so they have plenty of potential partners but they should be secondary and not primary movers so why do they need John O'Sullivan's group who are useless and have only cost millions over the years?

For example, if CNOOC and ExxonMobil have found oil or gas in IOLAR and not telling us is it possible they are going to make a move on Providence. Both have billions in the bank so would easily chew Providence up and considering that the Indians wanted to buy them for $1.5billion and, it seemed, Providence was willing to sell until the Indians pulled out. But at that price Providence would be cheap and it would give us a share price of $2.50 which we would not sneeze at.

Another RNS on Tuesday perhaps? How we long to read the never ending saga as Providence puts up another backstop which is as stupid as the Irish one and the "hard" border.

The total funds coming from APEC to Providence is $24m; $9m now and a further $15m prior to the start of the drilling. If they finally get the $9m they should start the process of getting the $15m straight away but I expect they will wait to see the result of the survey before they start that.

Most of the development and drilling will be done by APEC/COSL at their cost which is a fully owned Chinese CNOOC company and the $15m is to cover residual costs over and above the main work. At the end of the drilling, if they wish, APEC can subscribe for 59m warrants in Providence at a price of 12p which will in effect give them about 10% of Providence's whole portfolio and they can take operatorship of Barryroe as well.

The interesting point about the delay is what information Providence receives every time they are told that it is in the works. Are they being told it will be freed this week, as I would expect? After all, what is the point in knowing it is in the system if you do not know when it is coming out.

If they are being informed then how come they keep putting up more and more backdrops unless the money is "hot" and will never see the light of day or because it is coming through Hong Kong and we know that is one terrible mess at the moment with all the dissension and strikes taking place over the last eight weeks.

What are the chances we get to next Monday and we find we are in for another "backstop"? How long is a piece of string, comes to mind.

Callasjunkie,

You have not taken into consideration the costs Providence has already paid towards the survey/drilling costs.

Those will come back to it out of the $24m when/if it gets paid. And given that their new administration costs will reduce to about $1.6m a year after they get rid of O'Sullivan et al. they will have enough to carry them through for perhaps three years without any further funding as APEC and COSL will carry all of the costs of Barryroe if they stump up.

Also, remember Providence has spent about $200m over the last number of years in exploration. Under the Irish tax system, all exploration costs can be claimed back against revenues from Barryroe if they ever get any oil out of it or elsewhere for that mattter.

Technically I don't think it can be declined because APEC has paid what is due and obviously there was never specified a particular date. The issue as I see it says the money is in the system but will it come out? If it is "dirty" money it will never come out and hence Providence will need to find alternative funding and APEC will be out.

I suspect the depletion of the Providence funds over the last few months is due to the costs associated to date with getting the survey through DCCAE and also it has possibly been paying the costs of the survey ship which was due to do the survey last year but has been in dock for months waiting on the decision. That all costs money which they expected to be replenished with the APEC money.

But obviously if they are going to run out of money by the end of August if APEC's money has not cleared by next week they will need to either borrow or raise through equity. If they cannot borrow £10m on their assets and the potential of Barryroe it will prove that O'Reilly's credibility in the market is shot. £10m is peanuts in the context of Barryroe.

As for the clean out. I don't think that is O'Reilly's decision. I believe he has been convinced by Plunkett and McCoss who will be staying on that the Barryroe technical group is a dead weight and should be discarded. Its success rate over the last years has been abysmal so why keep it? When you compare what Providence has done compared to Tullow which was set up by an Aer Lingus accountant years ago, well after Providence started as Atlantic, and which has made billions you wonder how Providence could have gotten it so wrong.

And when you consider that Tullow has just found a huge oil field off the coast of Guyana and its shares have rocketed even though it has $3billion of debt you wonder how they have the credibility to get that much debt when Providence cannot even get a paltry £10m given all its assets other than Barryroe.

I would love to see Woodside or Tullow take a big stake in Providence. I believe, long term, we would be far better off than this crazy deal with APEC which seems to be falling apart.

In total $24m has been earmarked to be paid to Providence from APEC.

The $9m, long overdue, is for EXOLA expenses in doing the survey and the pre-drilling work and the $15m is to be payable prior to the spudding of the first well.

Note:

"Pursuant to the terms of the Updated FOA, this US $9million loan is to cover the costs associated with front-end well-site survey operations and pre-drill well consenting."

"The balance of US$15 million is payable prior to the spudding of the first well and is to cover Operator-related drilling costs".

I suspect the drop in Providence capital to about $1.4m is due to the expenses Providence has already spent on the Barryroe project to date as it is obvious APEC have still not spent a dollar.

Nice work if you can get it.

They say it is in the banking system but it has to get out of the banking system. That seems to be the problem and there are numerous reasons why it might not see the light of day from that dark dungeon.

The banking system is there to make sure it is tax paid clean money. Otherwise it is either confiscated or sent back whence it came.

If they had firm confirmation that the deal was dead, the money was not coming they would have had to issue an RNS this morning at7.00am before the market opened since they gave the last backstop as 9th August.

The fact that they have not issued an RNS for or against must indicate that they are waiting on the money to hit the bank account before they make an announcement.

Perhaps at 2.00pm which is another normal RNS moment we might hear what is going on.

In the meantime the share price is playing silly bu**ers and cannot be taken as an indication of what has happened or else somebody is guilty of insider trading.

No 7.00am RNS probably signals that the money is coming through.

Since bank transfers do not take place over the weekend, they have probably been informed that it will be deposited today.

Here's hoping no RNS (Yet) is a sign the doubting is over and the sun shines in.

Can you tell me how you calculated "the full development of upper Barryroe would be worth $5 bn to PVR". Is that in conjunction with APEC or on its own?

If, on its own, I am sure you can do a valuation on the assessment when Barryroe was found in 2012 that:
"The price on Friday afternoon of a barrel of crude oil in US markets stood at $107 – meaning the well could, if the price held steady, have a total trade value of $107 billion – that’s about €81 billion." So on a pro rata basis of 60/107 * 81 = €45 billion which is the total value, according to them of Barryroe at current oil prices.

The sooner Sunday Business Post shuts down the better.

What a load of codswallop "Could a Chinese injection of €9m save Providence Resources?" What is that all about?

Providence Resources does not want saving. It has too many irons in the fire worth vast sums of money if only it can exploit it properly. While it might have limited funds now it has no debt and, if necessary, can still raise equity on the market. We might not like it but it means Providence is far from dead.

The clean out of Providence is the best thing since sliced bread. I believe John O'Sullivan is and was the biggest handicap holding Providence back over the last number of years. Surely as technical director he was responsible for choosing the developments they undertook and as he came into Providence as a rookie he has used his time there to learn on the job.

Look at the last caper. Providence trusted Schlumberger to come up with the goods on the Druid/Drombeg fiasco. I am sure O'Sullivan was the instigator for the relationship between Schlumberger and Providence and given Schlumberger's huge reputation in the oil market I can understand that. But how did they get Druid/Drombeg so wrong and while it did not cost them a great deal of money it certainly cost Providence, Sosina, and Cairn a lot of money but I don't think Schlumberger suffered one iota. You note, though, they haven't appeared in Providence's prayers since the fiasco.

In fact, if Providence had not farmed-in Cairn for 30% into Druid/Drombeg they would probably be dead by now as Cairn was in for up to $42m that otherwise Providence would have had to carry.

Read all about it at:

http://www.providenceresources.com/sites/default/files/Technical%20Update%20RNS%20-%20Exploration%20Collaborative%20Project%20-%20Druid%20%20Drombeg%20-%20April%202016.pdf

There you will read that:

"Over the past 6 months, a multi-disciplinary team of 30 technical professionals from Providence/Sosina and Schlumberger have worked on this project focusing on the primary technical disciplines of Geology, Geophysics, Geomechanics and Petroleum Systems Modelling. With thousands of man-hours involved, this project was designed to confirm prospective resource potential as well as helping to mitigate risk at both the basin and prospect levels. "

Schlumberger, with all of its years experience and, as it says, hundreds of hours of analysis, was convinced and subsequently convince Providence et al. that Druid and Drombeg contained billions of barrels of oil when in fact it turned out to be water.

No wonder O'Sullivan is gone. He probably waited on because of his 9m options but he should have been gone long ago and one thing the Druid/Drombeg Schlumberger proved was that Providence is not in the game to play "major oil player" until it has the money to speculate and that will take the development of Barryroe to give it even a basic chance.