Member Info for Manyana

The deal with APEC is a "no foal no fee".

Providence owned 80% and Lansdowne owned 20%. The deal with APEC is for APEC to carry all the costs associated with developing Barryroe. For that they get 50% of the field; 40% from Providence and 10% from Lansdowne.

If they find buckets of oil they will be recompensed for Providence's and Lansdowne's potential costs at the rate of APEC talking 80% of the oil until Providence's and Lansdowne's 50% costs are paid off. If they find Barryroe is not commercial, then Providence and Lansdowne pay nothing.

As a sweetener, at the end of the drilling, and for a period of six months, APEC will have the option to subscribe for 59.2m shares in Providence at a price of 12p.

This deal is best described as "beggars cannot be choosers" and while it looks to be a great deal from APEC's point of view, it is by far the best deal Providence and Lansdowne could get.

Even poor old Theresa May got a worse deal from those bureaucrats in Brussels. It is not about backstops; it is about barricades.

All relevant dates and limits to public comments are found at the heading of the survey request as follows:

https://www.dccae.gov.ie/en-ie/natural-resources/consultations/Pages/Application-for-consent-for-a-site-survey-at-Barryroe,-North-Celtic-Sea,-South-West-Coast,-Ireland-proposed-by-Exola-DAC-wh.aspx

From the request to carry out the site survey, there are three areas to be surveyed and each will take approximately 16 days.

This can be found in Page 4 Section D of the following:

https://www.dccae.gov.ie/en-ie/natural-resources/consultations/Documents/18/consultations/EXOLA%20Barryroe%20Application%20To%20Conduct%20A%20Site%20Survey.pdf

Surely you mean sell EXOLA for £1.4billion as that is the vehicle which owns Providence's share of Barryroe. But if there is up to 1billion barrels in total rather than 340m when they drill down in the Permian that would make it a whole lot more valuable and worth about £3.5billion with 400mbbls to them.

And why would you sell the whole company when there is the possibility that there are 12billion barrels of oil in Avalon and they hope to drill that with Total in 2020 or 2021.

A few pointers back to 2012.

Remember Daddy O'Reilly owned the biggest share holding in the company at one stage owning about 45% so there was a shortage of shares and the Irish wanted to jump on board. Nothing like a shortage of stock to push the price up. Hopefully it will happen again but unfortunately the free float this time will be many times larger.

Secondly, the Indians pulled out of the deal for some reason and in fact the offer was supposed to be for $1.5billion equating to €1.1billion. I think they pulled out because they got a better offer elsewhere so moved off. Here is an article that postulated the details of the deal.

https://www.independent.ie/business/irish/providence-1bn-sale-would-have-saved-oreilly-30391508.html

I am not sure of the relevance of $13 a barrel for 2P reserves but I came across this heading which would indicate a value of about $15 a barrel for 2P reserves. "Canacol Energy Ltd. Announces 2P Reserves of 85 MMBOE Worth US$1.3B". Seems reasonable to me.

Mistake in previous item.

when they consolidated down in the 100:1, there were 60m shares and not 600m. That share number has subsequently gone up to 598m shares or approximately 600m.

When you consider the Indians wanted to buy Providence for $1.1billion, at 600m shares that would be about $1.85 which in sterling would be £1.42p. We would now be more than happy with that, I am sure.

I am very happy with my holdings in both Providence and LOGP and expect good things in the months to come.

Anything above 5p for Lansdowne and 15p for Providence would be a major bonus to me.

For those long in the tooth who remember the "good old days" before they did the 100:1 consolidation there were 6billion shares in Providence with a share price of 8p. You can see from that they were capitalised, with nothing but hope, at a figure of £480m. At that price, they would currently be worth 80p a share.

Providence consolidated down to 600m prior to Barryroe and from there the share price peaked at £6.25 in September 2012 and Logp peaked at 65.13 on July 31 2012 on the basis of the Barryroe find of 340mbbls and a promise by TOR that he would use the $100m he got from the share sale to develop it.

On the assumption that there are now 600m Barryroe, that gives a price of 62.5p to Providence and we accept Cantor's latest estimate of 8.5p for Lansdowne we have all this to look forward to as long as the survey and the drilling get underway in Barryroe.

we know the track record of the false promises the TransOcean debacle etc with the wolves circling to take over Barryroe for peanuts to where we are now back in the green field post the discovery. All we need now is action of the survey and the drilling. And if they find far more than the 350m bbls what estimates then?

Am I happy? So far, very - and hoping that there will be plenty riches "manyana".

Given a strong wind, we seem to be sailing in the right direction with the Public consultation. It would seem so far so good.

I note also that DCCAE have cleaned up their website and made it a bit more beautiful and even has the EXOLA Survey highlighted at https://www.dccae.gov.ie/en-ie/Pages/default.aspx

As a comparison, some years ago I applied for planning permission which was turned down numerous times on spurious appeals by NIMBIs. Each time I was turned down I demanded a record of the objections. After a number of failed attempts, I put all the objections together, passed them to a very experienced planning consultant and said "all you have to do is answer all these objections". What happened? My next planning application flew through.

Hopefully that will happen with EXOLA.

You can be sure the government want Barryroe to continue for all the good reasons we know, least of all an increase in security of gas supply and independence of oil into Whitegate. I am sure they will convince the Chinese that such a move would be in their best interests. Anything over the 70,000 barrels a day, Whitegate's capacity, can be forwarded to China if they wish.

They would have to create a new share option scheme which would have to be approved by the shareholders.

The reason why they were able to issue the options in 2016 was because they were granted an option scheme in 2009 and under the terms of that one they were able to make changes to it up to 7 years with a full termination of the scheme after ten years.

If you follow that logic you see why they changed it in 2016 as that was the limit for modifications and because of the ten years it expires this year as the ten years will be up.

So they could propose a brand new one but it would have to be approved by the shareholders at an EGM or AGM. If they made it too generous it would be voted down but if the company started to develop Barryroe with the chances of big bucks they could come back with a new incentive scheme which we would obviously pass and would still allow them cheap access to up to 5% of the company.

Have a read of the 2009 scheme alterations embedded in the 2016 statement used to amend it under the 7 year permission.

https://www.investegate.co.uk/providence-res---pvr-/gnw/providence-resources-p-l-c-alteration-to-2009-s---/20160809111958H4029/

In fact there are rules against a company buying back its own shares.

A company is allowed to buy and hold up to 10% of its shares in what are known as treasury shares but these can only be bought out of profits. Providence has no profits so it cannot buy treasury shares.

Furthermore, the directors are currently up to their ears in options. TOR has 12m and O'Sullivan has 9m with the other directors having smaller allocations. The exercise price is 45c and has to be exercised by 8th August this year or they lapse.

Will the shares hit 45c by then? 45c is currently about 39p so the share price would need to get a move on to be significantly above that to make the exercise of the options worthwhile. Remember the option is only worth a margin. You buy at 39p in the hope they are 50p to £1, say, so that you exercise and sell making a nice margin given that you would need to borrow the money to exercise.

You can, of course, exercise the option at 45c when the price is lower but why would you do that? It is not worth it as you might as well wait until then and buy at market price especially if the price is not in excess of the option price. Imagine paying 39p for a share on 8th August when the market price is say 25p - you would never do it.

After all, O'Reilly would need to put up about £5m to exercise his options and O'Sullivan about £3.6 to exercise his so why would they do it if the price was less than 45c?

The other alternative, if Providence starts to come good is to consolidate which they did many years ago when they went from 6billion shares down to 60m in a 100:1 consolidation. It has since crept up through share issues to about the 600m share level with all the issues but if Barryroe looked good and the share price was rising they could once more do a consolidation as a means of reducing shares in the market.

So, as you see, to suggest they would buy shares now in the market and it went to the 45c they would make a killing like the rest of us but who can see a price of 45c or 39p by August 8th 2019?

Anybody out there living on that hope?

I am not sure if you understand the term "closed period".

Providence usually issue their financial year end statements in April or early May.

If that is the case this year then they are precluded from buying shares in the company for a period of two months prior to the end of year statement. That is known as the "closed period" for share purchases by directors.

The management must also make sure they do not buy shares if they have insider information that might be detrimental or beneficial to the company. For example, we are all waiting on the approval of the survey. That is critical information and as such can be construed as "insider" so they cannot buy shares until we get the result of that.

You seem to have forgotten the biggest ingredient as to why the Chinese are developing Barryroe - they have the money and beggars cannot be choosers.

The Irish Government will never get involved in the oil exploration and development until there is some level of success and some revenues start to roll in.

When you consider that over the years roughly 500 wells have been drilled in Irish waters. Only a handful have been successful so would you invest if you did not have the spare cash, been through the rape of the country with the "Celtic Tiger" and currently owe about $1.7 trillion.

Do you know that Ireland actually got a loan of £3.2billion from the UK ("the auld enemy") in 2011 when it was "bust" plus the bail out from the EU. It has been repaying the interest on the loan to the UK for years and I am not sure if it has yet started to actually pay down the actual loan.

If you are Irish, you have been paying that wonderful tax USC (Universal Service Charge) . Introduced in 2011 it is an off-the-top of up to 7% of all your income and while it was originally introduced as a temporary measure it still exists as it rakes in penal taxes from the population to pay off the interest on the debts it ran up in the Celtic Tiger.

So why am I bringing this up? Because the Irish government would be crucified if it then poured money into oil and gas exploration when it is totally in hock without a tangible proof that the oil and the gas can be produced.

The deal with the Chinese is definitely written in favour of the Chinese but without it Barryroe would never be developed. So we are now in the "bird in the hand" as distinct from the "bird in the very thick bush". So ask yourself who made the Chinese "rich". Greedy countries who used the cheap labour of that country to sell plastic ducks.

You may cry into your milk about the Chinese shipping Irish oil to China but without this deal Barryroe would be going nowhere and oil in the ground is worthless. unless you have some way of getting it out.

Blame the Irish government for this mess - Haughey, Ahern, Reynolds as starters. They allowed greed to take over and we are all still suffering from it.

TirNaNog,

I think you are putting words in my mouth which are not correct.

How do you do "due diligence" on a rig when it breaks down part of the way through the drill? Has your car ever broken down when you least expected it? That is what happened when Transocean did not do a proper maintenance on their rig.

What the courts said was that "in December 2014, the Commercial Court in London found that Transocean was in breach of contract for failing to maintain various parts of its sub-sea equipment, and that the contractor was not entitled to certain remuneration."

Because Providence was paying for the rig on a daily basis, they claimed they should not pay for the days when the drill was out of action because of the repairs. The court agreed with this and compensated Providence accordingly.

Providence also claimed that Transocean should also pay them for the ancillary costs associated with the drilling such as crew costs, transportation etc.. Because this had not been specified in the contract, it was deemed that Transocean did not have to pay those.

It seems that this anomaly in the contract had not been noticed before even by others and subsequent to this episode it seems that these issues are now addressed as standard in contracts when it comes to rig hire.

Your second point about the departmental oversight has again nothing to do with Providence. It was up to the department to make them aware, if there was a dependency, before issuing he approval just as they have now done with Nexen by asking for further information to cover their behinds.

As for the difference between the IceMax and COSLInnovator, they are both of the same level of technology but the difference is that IceMax was drilling in 2,230m of water whereas the COSLInnovator has only got 100m of water at Barryroe. If you are on the end of a drill which is waving around in 2,230m of water before it even hits mud then you have far more problems than if you were doing that in only 100m.

The fact that the IceMax could manoeuvre and drill down and stay over the well head, 220km from shore, with its technology makes it easy for COSLInnovator to do that in far calmer waters only 50km off Cork and I am sure can continue through the winter as well, if necessary.

If you are Irish, have you ever been to Spanish Point on the West Coast, or Dun-an-oir, Ballyferriter, Dingle, Co Kerry and see the waves crashing in at about 60ft and then compare it to the quiet calm, in comparison, to the North Celtic Sea where it is no more than a gentle swell?

TirNaNog,

I don't think you can blame Providence for the Transocean fiasco as that was caused by faulty equipment supplied by Transocean which actually prevented them from doing the full testing on Barryroe in 2012. Providence actually won the case but had to pay Transocean because of a technicality in the contract.

As for drilling Druid/Drombeg, it actually proves that there is little chance of stopping the drilling once the permission for the survey is given and completed. Remember, the idea was to drill only Druid but when that was found to be water bearing they then pushed on to drill Drombeg which was lower down.

Finally, the drilling vessel to drill Barryroe has already been assigned and it is the COSLInnovator which is the latest technology with the ability to work in harsh environments as follows:

"The COSLInnovator is a semi-submersible drilling rig designed to operate in water depths up to 750 meter. The unit is designed for North Sea/ Norwegian Sea and world – wide use in harsh environments. Station keeping is maintained by an 8 line mooring system or by dynamic position mode maintained by 6 fixed pitch, variable speed thrusters (DP3).COSLInnovator. The COSLInnovator is a semi-submersible drilling rig designed to operate in water depths up to 750 meter. The unit is designed for North Sea/ Norwegian Sea and world – wide use in harsh environments. Station keeping is maintained by an 8 line mooring system or by dynamic position mode maintained by 6 fixed pitch, variable speed thrusters (DP3)."

All looks good to me and even can continue if the weather gets rough in the North Celtic Sea where Barryroe is located.

I might be wrong but as long as the survey does not throw up any anomalies the drilling can proceed without any further approval. If, however, there were any reasonable objections those would have to be addressed first and signed off by the Minister.

The big advantage to Providence was the drilling of Druid/Drombeg which was a major venture. They proved conclusively that they had the ability and the nous to carry it out with great expertise, efficiency and no issues.

Compared to Druid/Drombeg Barryroe is a walk in the park.

So, post April 1, they can start beefing up the drilling.

Itsriskythat is correct when he points out that Petronas has applied to the Minister to decommission much of the structure covering the gas fields of Ballycotton, Kinsale and Seven Heads but the actual exhaustion of the gas is not due unto 2020/2021 so the decommissioning will not start before then.

In the meantime, Providence is getting on with its drilling of Barryroe but one of the issues there is the gas which is estimated to be about the equivalent of about 40m barrels of oil mixed in with the oil.

So what does Barryroe do with the gas? Nigeria has in the past been penalised for "flaring" off gas and since it is very non environmental to be burning off the gas not to say very wasteful it has to make provision for it. Obviously, since Barryroe is directly below Seven Heads it could separate the gas and feed it through the Kinsale system to Cork but this whole aspect of the APEC deal.

Here is the start of the decommision plan by Kinsale Energy. note it has been requested to provide further information to the Minister regarding the plan.

https://www.kinsale-energy.ie/files/pdf/DecommissioningPlan_KinsaleHeadNo.1_Issue1_120618.pdf

In the past, in 2015, there was an agreement between Kinsale Energy and Providence to dril a well just outside Barryroe in what was classed as OPL/1 with Providence receiving 60% of whatever was found. The deal was for three years so I don't know if it is still alive. Who knows?

As for comparing Barryroe to Corrib, there is no comparison. Corrib Gas and Ballinaboy were green field and the NIMBI(s) in conjunction with An Taisce And An Bord Pleanála created one giant pigs ear to try and stop it. All it did was cost years of time and buckets of extra money all of which can be recouped before the Irish Government gets a penny in tax.

The cost of drilling the tunnel around the houses you mentioned was akin to drilling the Channel Tunnel and with an equivalent cost.

All we now need is to get past those pesky Brussels bureaucrats, get the survey under way and get on with the drilling. Will they dig up any more rubbish to thwart or delay the process? Your guess is as good as mine and it is the main reason why the share price is jumping about like a flea on a dog's back.

What I am betting on is that the institutions hold their shares for the long term. They are quite happy with twenty years if there is growth.

If that brings the shares in Providence down to a free float of say 50m shares and Lansdowne to about 250m shares we should see prices in the range of about £4 for Providence and at least 50p for Lansdowne. That would not be too far out of sync that they were in 2012.

Obviously I am not expecting another Poseidon but the whole reason for that bubble was the shortage of stock. If the brokers do not have stock to sell they have to keep on increasing the price until somebody does sell.

As I mentioned before, I bought Keywest shares in the 70s for peanuts; they were bought by Woodside and I got about AU$44 for those shares a few years ago. Something like half of that with Providence and Lansdowne would be very nice thank you.

And remember, if this moves ahead, there are no better jumpers-in than the Irish themselves - born gamblers.

I checked the DCCAE site this morning and it was not there then but at least we now have it there and I note we do not have to wait the 90 days which is a blessing.

As for my prices, unfortunately my bottom was 8.45p rather than 4.8p which I would have preferred obviously.

And unfortunately I had a very expensive wedding - not mine- in 2014 which meant I could only start investing again in 2015 but 2014 would actually have been worse as the price was higher then.

At least we now have a timeframe and hopefully all of An Taisce's issues will be covered and they can go back to sleep.

If we squeeze the free float hard enough could we have another Poseidon?

For those long in the tooth they might remember that in 1969 a nickel mining company's shares went from AU80c to about AU$285 in the period of six months and then faded into total oblivion almost overnight. The reason for the rise was a combination of hype and shortage of stock. Nearly as bad as the famous tulip bubble back in the 1630s when people were exchanging houses for them.

Could this happen to Providence and Lansdowne? You can be sure, if they find the oil they hope to find that the institutions will not be selling their shares in a hurry.

It might be slipping but isn't there now a sure line of action as long as those nasty An Taisce people stay out of it.

For years we were hearing "cry wolf" with all the false promises we got as the price fell from about £6 to 8.5p. Remember, baby sold 13.1m for $100m. Now, at least we have the potential to go in the opposite direction if you have the faith in the long term.

For myself, I know the Chinese are no fools. They are experts in oil development and acquisition around the world and they have so many fingers in so many pies in places such as Africa that you have to believe they know more about Barryroe than any of us. They would not have increased the wells in Barryroe from 3 to 7 without doing a very thorough analysis of what was there. At least we know that if you push a stick into Barryroe you would find oil. The issue, as Jimmy on iii used to say, was compartmentalisation but they know far more about that than they did in 2012 when they hit the gusher and even though the oil seam is thin at 25m they must have a good idea now on how to handle the compartmentalisation if it exists.

I, for one, hope the prices of LOGP and Providence stay at their current levels as I believe they are a great buying opportunity as I continue to accumulate. The first time around, from 2012 to 2015, I made enough money to buy a house with the proceeds. Having replenished my stocks since 2015 at ridiculous prices, I hope to repeat the process in the next upward cycle.