Friday 23 April 2021

Providence Resources P.l.c. (PVR LN, PRP ID), the Irish based resource development company (“Providence” or the “Company”), announces that it has terminated the farm-out agreement with SpotOn Energy for the Barryroe Licence and is progressing arrangements for an alternative funding package to finance 100% of the costs of the early development scheme (“EDS”) for the Barryroe license (SEL 1/11).

• The Barryroe partners have terminated the farm-out agreement with SpotOn because key financing conditions were not met. Providence will now lead the project development and funding arrangements.

• Building from the many positive elements of the SpotOn project development and financing model, the Barryroe partners are pursuing a similar development approach, including payment deferrals by individual service providers on equivalent or better terms and a Nordic bond issue. This revised approach will enable Providence to participate in a much greater share of the value of the Barryroe asset than was proposed under the SpotOn structure.

• Work to progress the funding solution is well advanced and is expected to be concluded before the end of the third quarter, in time to progress a 2022 drilling programme.

• To maintain development pace and demonstrate their continuing and material support for the project, Pageant Holdings, a substantial shareholder, has made an offer to underwrite a capital raise for US$2.5m at 3p per share. The offer includes a one for one warrant which would potentially raise a similar amount.

• The Barryroe EDS has the potential to deliver exceptional value for Providence. Internal modelling forecasts a project NPV (10) valuation of $560m to Providence at US$60 per barrel based upon recovering 48m barrels of oil, equivalent to c. 16% of the estimated recoverable resource within the SEL 1/11 Barryroe license area.

Providence CEO Alan Linn commented: “Having actively supported SpotOn over the past year it is disappointing that it’s become necessary to terminate the farm-out process with them. However, we are looking forward and actively building a revised development partnership with key service providers and a financing package designed to meet the needs of the project. We have been encouraged by the support we are receiving from service providers and banks and the commitments being offered to work with us in progressing the project. We are currently working with key service providers to structure direct long-term partnerships on a risk/ reward basis and we are also in discussions with brokers to raise a Nordic bond. The interim funding offer from Pageant Holdings is very welcome and a confirmation of their continuing support for the value potential of the development.

The Barryroe early development scheme is an attractive investment which offers excellent returns, even in a low oil price environment. We look forward to completing the funding process and appreciate the support and patience of shareholders. The early development scheme will be of considerable benefit to the local economy and contribute to Ireland’s energy security as we move towards a low carbon economy.”