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Providence drops as Apec cash remains elusive

Shares in Irish independent take a hit as it sets yet another new backstop date for receipt of funds from Chinese partner

Providence Resources has had to set another new backstop date for receipt of funds from farm-in partner Apec Energy after the cash yet again failed to hit the Irish player’s bank account.

Chinese-backed private company Apec has been given until 19 August to pay a loan advance to Providence on foot of its farm in to standard exploration licence 1/11 off the south-west coast of Ireland, which contains the Barryroe oilfield.

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Providence has been continually pushing back the deadline for receipt of the funds, which are said to be held up by a bank processing procedure at HSBC.

On Tuesday, Dublin-based providence said it has “received further assurances” that the funds are in the process of being paid.

“S hould these funds not be received by the revised backstop date and taking into account creditors on the balance sheet and existing forward commitments, including the necessary planned site survey at Barryroe and the proposed business re-engineering, the company would need to put in place alternative financing arrangements in order to provide it with sufficient working capital beyond the end of August 2019,” it added.

Last Friday, Providence said it had received a site survey permit for preparatory work at the Barryroe field in the North Celtic Sea basin.

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The permission to undertake a seabed debris clearance, environmental baseline and habitat assessment survey was awarded by Ireland’s Department of Communications, Climate Action & Environment.

Providence, which last week said it is moving out of its Dublin headquarters, making workers redundant and has reduced the size of its board in a cost-cutting drive, expects the site survey to begin later this month.

However, this is contingent on the company finally getting a $10 million cash payment from private Chinese farm-in partner Apec Energy. Of the $10 million, $9 million is to cover front-end and pre-drill costs of SEL 1/11 operator Exola - a Providence subsidiary - with $1 million covering Apec costs.

Providence holds 40% of SEL 1/11, with Apec on 50% and Irish junior Lansdowne Oil & Gas on 10%.

Shares in Providence slipped more than 7% before 8am in London on Tuesday, while Lansdowne’s stock was down almost 10% at the same time.

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The initial farm-in deal with Apec in March last year called for the Chinese-backed player to pay 50% of costs related to the drilling of three lateral wells plus associated sidetracks and testing.

It was also to fund the remaining 50% of all costs of all field partners for the drilling programme via a non-recourse loan facility, and was to provide the rig.

In February, Providence confirmed that China Oilfield Service Ltd’s (COSL) semi-submersible rig COSL Innovator had been selected for the drilling.

Apec has a strategic relationship with COSL.

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