Providence considering legal remedies against APEC over Barryroe loan

Providence Resources still has not received APEC’s loan to cover the costs of a survey over its Barryroe oil accumulation offshore Ireland. Providence has granted APEC another extension, but it is now considering legal remedies against the company due to its contract non-performance.

SEL 1/11 is operated by EXOLA (40%), a wholly-owned Providence subsidiary, on behalf of its partners, APEC Energy Enterprises Limited and Lansdowne Celtic Sea Limited (10%).

The area lies in c. 100-meter water depth in the North Celtic Sea Basin and is located c. 50 km off the south coast of Ireland.

On June 5, 2019, the company announced that it had agreed on certain amendments to the farm-out agreement for the Barryroe Project with APEC and Lansdowne, including a revised backstop date with APEC for receipt of the $9 million loan advance to June 14, 2019, which was subsequently extended through various extensions to September 2, 2019.

Providence ‘considering legal remedies’

As at close of business on September 2, 2019, no funds had been received in the company’s account, Providence informed on Tuesday.

Accordingly, in granting APEC a further week’s extension to September 9, 2019, the company has also issued written notice to APEC that, should the APEC loan amount not be received by the close of business on that date, the company reserves the right to end exclusivity, while also considering all legal remedies available to it against APEC for contract non-performance, including the re-assignment of equity in SEL 1/11.

Site survey starts this week 

On August 9, 2019, the Barryroe partners confirmed that they had received permission from the Minister of State at the Department of Communications, Climate Action and Environment to undertake a seabed debris clearance, environmental baseline and habitat assessment site survey over the area of the Barryroe field within SEL 1/11.

While the full implementation of the site survey is subject the receipt of the APEC loan amount, the company announced on August 20, 2019, that it had agreed on the payment of the contractual mobilization fee. Based on the prepayments made to the contractor, the company confirmed that the vessel had mobilized to Ireland. Operations are expected to start later this week.

The projected program provides for a minimum of two locations to be surveyed at this time with the scope to increase the number of locations upon receipt of the APEC loan amount.

Working capital 

Noting the creditors on the balance sheet and existing forward commitments, including the costs associated with implementation of the site survey at Barryroe and the proposed business re-engineering, the company will require to put in place alternative financing arrangements in order to provide it with sufficient working capital beyond the end of September 2019 in the event that the APEC loan amount is not received.

Accordingly, and noting the time required to put in place alternate financing arrangements, the company confirmed that it is now actively exploring these alternatives.

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