Issues FY 2011 results
14 May 2012
FACTS: Providence Resources has issued (May 14th) its 2011 full-year results. The group reported revenue of €13.8m, a loss before tax of €5.2m and a retained loss of €13.9m after tax charges and write-downs related to discontinued operations. A pro-forma balance sheet taking into account asset sales, equity funding and debt repayment was provided, showing a current net cash position of €24.6m.
ANALYSIS: The results contain very little new operational information and the financial performance does not reflect the fact that the group is for the most part an exploration business which generates value through the drill bit and oil and gas discovery. Current production at Singleton in the UK provides a useful cash-flow platform for day-to-day operations.
There was little new information in the results statement. It confirmed the high level of work underway on Barryroe and also the preparation for the two wells — Spanish Point and Dunquin — along the Atlantic margin in 2013. In all, the review indicated that at least five wells will be drilled before the end of 2013 and that the current Singleton well will be completed by the end of June. Providence is now the largest acreage holder offshore Ireland.
DAVY VIEW: The results confirm the group's improvement over the last year. Much work has been done to reduce debt and what remains is reserve-based. Consequently, Providence is now funded for its ongoing activities. The Barryroe well was a significant success and work continues to develop a commercial development proposition. Shareholders have the results of this work to look forward to by the end of the year and then up to five wells in 2013 with two very important wells along the Atlantic margin. We value the group at £13.48 per share with an 'outperform' rating.