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2020 Half Year Results

Providence Resources P.l.c.
·29-min read

Providence Resources P.l.c.
2020 Half Year Results

Dublin and London – September 30th, 2020 - Providence Resources P.l.c. (PVR LN, PRP ID), the Irish based Energy Company, today announces its unaudited interim results for the half year ended June 30, 2020.

Highlights of the year to date;

  • Change of company leadership with appointment of Alan Linn as CEO in early January 2020

  • Substantial reduction in corporate operating cost base achieved (~63% reduction year on year)

  • Company financial position stabilised through a successful share placing and subscription in April 2020

  • Portfolio rationalised to establish clear focus on Barryroe development and adjacent Celtic Sea opportunities

  • Barryroe farmout process refreshed, resulting in SpotOn Energy being granted exclusivity through to 31st October this year

  • Consortium of global service industry leaders brought together to deliver the Barryroe project on a shared risk basis as part of proposed farmout

  • Reversion of Barryroe interest, previously conditionally granted to APEC, nearing completion

  • Relinquishment of all West of Ireland exploration licences underway

  • Angus McCoss stepped down from the board following the AGM and was replaced by Andrew Mackay

Alan Linn, Chief Executive Officer commented:

“On joining Providence Resources in January 2020, I was tasked by the board with updating the company strategy and expediting implementation.

Providence Resources is now focused upon progressing the development of the Barryroe oil and gas field in the North Celtic Sea, offshore County Cork. Barryroe is one of the largest undeveloped offshore oil and gas fields in Europe and is unquestionably the core asset in our portfolio.

Good progress has been made to date, supported by a capital raising of $3.3million, before expenses, which provided working capital in April to fund the Barryroe farmout process and move the project into production through phased economic development.

In May 2020, there was a further £200,000 raised through a subscription agreement with SpotOn Energy Limited bringing their total investment in Providence Resources Plc to £500,000.

The Barryroe field was recognized as a valuable national resource in 2012, when Providence drilled the 48/24-10Z appraisal well and confirmed the presence of high-quality hydrocarbons, which tested at rates of ~4000BOEPD. Two independent resource reports confirmed Providence’s assessment of 346MMBOE of recoverable hydrocarbons within the assessed reservoirs, and a significant increase in recoverable volumes is expected to be proven once development drilling confirms the extent and quality of the additional reservoirs present within the Barryroe field structural closure.

Providence is fully committed to push ahead with the production of both oil and gas from the Barryroe field and entered in a period of farmout exclusively with SpotOn Energy until October 31st, 2020, with the aim of agreeing a Barryroe field development partnership and a phased Barryroe development plan, designed to progress economic production from a low risk, low emissions, energy efficient hydrocarbon development offshore Ireland.

SpotOn Energy has established relationships with a consortium of world class services companies willing to underwrite the quality of the Barryroe project by taking development risk and deferring a portion of their normal fees into the production phase of the project. Farmout discussions are progressing on schedule.

In 2020 Ireland will import 100% of its oil and ~70% of its gas requirements. Energy security is essential for a strong economy, and government economic forecasts confirm the long term need for efficiently developed hydrocarbons to support energy reliability and stability in Ireland. Providence Resources considers the Barryroe development to be a project of national importance which, when approved and commissioned, will make a significant contribution to the Irish economy and exchequer and bring direct long-term financial benefits and employment to Cork and surrounding areas.

Concurrently, Providence Renewables (a 100% owned subsidiary of Providence Resources) is assessing the benefits of introducing carbon capture into the scope of the Barryroe development, with the ambition of delivering a sustainable hydrocarbon development in the Cork area. Carbon capture and storage (CCS), with government support, can ensure locally produced natural gas is a source of reliable carbon neutral energy, contributing to delivery of the government’s target for a carbon neutral economy by 2050.”

H1 2020 OPERATIONAL HIGHLIGHTS

Barryroe, North Celtic Sea (SEL1/11)
Reassignment of equity back to Providence/EXOLA and Lansdowne from APEC progressed with the Department of Communications Climate Action and the Environment (DCCAE).
A Lease Undertaking application to DCCAE is pending
2 Drilling Site Surveys complete
1 Planning Application to DCCAE is in the final stage of regulatory review and is expected to be awarded shortly.
The Farmout to SpotOn Energy is progressing on schedule and we are actively engaged in planning the development stages for this project and bringing a consortium of global service industry leaders to the table to partner in the development.

Dragon, St. George’s Channel (SEL 1/07)
Under discussion with the regulatory authorities

Hook Head, North Celtic Sea (SEL 2/07)
Subject of Lease Undertaking application

Helvick/Dunmore, Celtic Sea (Lease Undertaking)
Subject to MFDevCO work programme

Kish Bank, Kish Bank Basin (SEL 2/11)
Licence expired August 17th, 2020.

Dunquin South, Southern Porcupine (FEL 3/04)
May 2020 Providence advised JV partners of its withdrawal from the licence. (Under discussion with the regulatory authorities)

Avalon, Southern Porcupine (FEL 2/19)
May 2020, Providence advised JV partners of its withdrawal from the licence. (Under discussion with the regulatory authorities)

Spanish Point, Northern Porcupine (FEL 2/04) Work programme complete. Relinquishment in progress

H1 2020 FINANCIAL HIGHLIGHTS

Operating loss of €1.063 million for the period compared to €5.309 million in 2019, attributable to the cost reduction initiatives put in place by the company

Core corporate administration expense of €0.819m (2019: €2.208m) down 63% year upon year due to the cost reduction program

Loss for the period was €9.247 million versus €5.543 million in 2019 (including €7.764 million in financing expense in relation to fair value movement of warrants issued during the period as part of the equity raise in May 2020)

Loss per share of 1.30 cents versus 0.93 cents in 2019

At 30 June 2020 total cash & cash equivalents were €2.269 million (2019: €1.788 million)

The Company had no debt at 30th June 2019 (2019: nil)

The total issued and voting share capital at 30th June 2020 was 841,514,060 ordinary shares of
€0.001 each

POST H1 2020 EVENTS - BOARD CHANGES

On July 20th, 2020, the board accepted Angus McCoss’s resignation from the board

Andrew Mackay was appointed as an Independent Non-Executive Director with effect from the 3 July 2020. Andrew Mackay has over 40 years’ experience in the industry. He founded NRG Group in 1988 and has extensive experience in the upstream oil & gas with a focus upon well engineering and regulatory frameworks and control.

OUTLOOK

Providence Resources is funded through July 2021 and expects to complete the Barryroe Farmout within existing resources. During the April 2020 fund raise Providence Resource issued £0.03 and £0.09 warrants as part of the capital raise. There is an expectation that near-term funding will be met through warrant exercise following the completion of the farmout process. The recent exercise of 16,433,333 warrants has generated additional cash of £492,999.99 into the Company.

Following the recent general election, the Irish government extended the ban on future oil exploration to include gas. The government confirmed that existing licences would be unaffected and will proceed as normal. Providence Resources has title over several licences in the North Celtic Sea which contain both oil and gas discoveries. It is our intention to focus our technical efforts upon assessing near field exploration potential associated with existing discoveries, including Barryroe, and working with the government to maximise the economic recovery from our existing licences.

ANNOUNCEMENT & FORWARD-LOOKING STATEMENTS
This announcement contains certain forward-looking statements. Actual results may differ materially from those projected or implied in such forward-looking statements. Such forward-looking information involves risks and uncertainties that could significantly affect expected results. No representation is made that any of those statements or forecasts will come to pass or that any forecast results will be achieved. You are cautioned not to place any reliance on such statements or forecasts. Those forward-looking and other statements speak only as at the date of this announcement. Providence Resources P.l.c undertakes no obligation to update any forward-looking statements.

ABOUT PROVIDENCE RESOURCES PLC
Providence Resources P.l.c. is an Irish based Oil & Gas Energy company with a portfolio of appraisal and exploration assets located offshore Ireland. Providence’s shares are quoted on the AIM in London and the Euronext Growth market in Dublin. Further information on Providence can be found on www.providenceresources.com

INVESTOR ENQUIRIES

Providence Resources P.l.c.

Tel: +353 1 219 4074

Alan Linn, Chief Executive Officer

J&E Davy

Tel: +353 1 679 6363

Anthony Farrell

MEDIA ENQUIRIES

Murray Consultants

Tel: +353 87 6909735

Joe Heron


PROVIDENCE RESOURCES P.l.c.
Condensed consolidated income statement
For the 6 months ended 30 June 2020

Notes



6 months ended 30 June 2020
Unaudited
€’000



6 months ended 30 June 2019
Unaudited
€’000



Year ended 31 December 2019
Audited
€’000

Continuing operations

Administration expenses

2

(1,063)

(2,235)

(4,542)

Pre-licence expenditure

-

-

(273)

Impairment of exploration and evaluation assets

4,8

-

(3,072)

(21,121)

Operating loss

(1,063)

(5,307)

(25,936)

Finance income

1

22

30

Finance expense

3

(8,185)

(258)

(947)

Loss before income tax

(9,247)

(5,543)

(26,853)

Income tax expense

-

-

-

Loss for the period

(9,247)

(5,543)

(26,853)

Loss per share (cent) – continuing operations

Basic and diluted loss per share

10

(1.30)

(0.93)

(4.39)

The total recognised loss for the period is entirely attributable to equity holders of the Company.
The accompanying notes are an integral part of these condensed consolidated financial statements.

PROVIDENCE RESOURCES P.l.c.
Consolidated statement of comprehensive income
For the 6 months ended 30 June 2020

Notes

6 months ended 30 June 2020
Unaudited
€’000

6 months ended 30 June 2019
Unaudited
€’000

Year ended 31 December 2019
Audited
€’000

Loss for the financial period

(9,247)

(5,543)

(26,853)

OCI Items that may be reclassified into profit or loss

Foreign exchange translation differences

206

389

1,195

Total income recognised in other comprehensive income from continuing operations



206



389



1,195

Total comprehensive expense for the period

(9,041)

(5,154)

(25,658)

The total comprehensive expense recognised for the period is entirely attributable to equity holders of the Company.
The accompanying notes are an integral part of these condensed consolidated financial statements.

PROVIDENCE RESOURCES P.l.c.

Consolidated statement of financial position
As at 30 June 2020

Notes

30 June 2020
Unaudited
€’000

30 June 2019
Unaudited
€’000

31 December 2019
Audited
€’000

Assets

Exploration and evaluation assets

4

65,940

83,214

65,377

Property, plant and equipment

24

75

38

Total non-current assets

65,964

83,289

65,415

Trade and other receivables

5

240

661

398

Cash and cash equivalents

2,269

1,788

710

Total current assets

2,509

2,449

1,108

Total assets

68,473

85,738

66,523

Equity

Share capital

6

71,696

71,452

71,512

Share premium

6

253,240

247,918

251,300

Undenominated capital

623

623

623

Foreign currency translation reserve

10,293

9,281

10,087

Share based payment reserve

858

1,785

642

Retained deficit

(284,362)

(254,302)

(274,898)

Total equity attributable to equity holders of the company

52,348

76,757

59,266

Liabilities

Decommissioning provision

8

6,014

7,674

5,733

Warrant liability

9

4,356

-

-

Lease liability

-

-

9

Total non-current liabilities

10,370

7,674

5,742

Warrant liability

9

4,561

-

-

Trade and other payables

7

1,194

1,307

1,515

Total current liabilities

5,755

1,307

1,515

Total liabilities

16,125

8,981

7,257

Total equity and liabilities

68,473

85,738

66,523

The accompanying notes are an integral part of these condensed consolidated financial statements.


PROVIDENCE RESOURCES P.l.c.
Consolidated statement of changes in Equity
For the 6 months ended 30 June 2020

Share Capital €’000

Undenominated capital €’000

Share Premium €’000

Foreign Currency Translation Reserve €’000

Share Based Payment Reserve €’000

Retained Deficit €’000

Total €’000

At 1 January 2020

71,512

623

251,300

10,087

642

(274,898)

59,266

Loss for financial period

-

-

-

-

-

(9,247)

(9,247)

Currency translation

-

-

-

206

-

-

206

Total comprehensive income

-

-

-

206

-

(9,247)

(9,041)

Transactions with owners, recorded directly in equity

Shares issued in period

184

-

1,940

-

-

(217)

1,907

Share based payments in period

-

-

-

-

216

-

216

At 30 June 2020

71,696

623

253,240

10,293

858

(284,362)

52,348

At 1 January 2019

71,452

623

247,918

8,892

1,745

(248,759)

81,871

Loss for financial period

-

-

-

-

-

(5,543)

(5,543)

Currency translation

-

-

-

389

-

-

389

Total comprehensive income

-

-

-

389

-

(5,543)

(5,154)

Transactions with owners, recorded directly in equity

Share based payments in period

-

-

-

-

40

-

40

At 30 June 2019

71,452

623

247,918

9,281

1,785

(254,302)

76,757

At 1 January 2019

71,452

623

247,918

8,892

1,745

(248,759)

81,871

Loss for financial year

-

-

-

-

-

(26,853)

(26,853)

Currency translation

-

-

-

1,195

-

-

1,195

Total comprehensive income

-

-

-

1,195

-

(26,853)

(25,658)

Transactions with owners, recorded directly in equity

Share based payments

-

-

-

-

40

-

40

Share options lapsed in year

-

-

-

-

(1,143)

1,143

-

Shares issued in year

60

-

3,382

-

-

(429)

3,013

Transactions with owners, recorded directly in equity

60

-

3,382

-

(1,103)

714

3,053

At 31 December 2019

71,512

623

251,300

10,087

642

(274,898)

59,266

PROVIDENCE RESOURCES P.l.c.
Consolidated statement of cash flows
For the 6 months ended 30 June 2020

6 months ended 30 June 2020

6 months ended 30 June 2019

Year ended 31 December 2019

Unaudited

Unaudited

Audited

€’000

€’000

€’000

Cash flows from operating activities

Loss before income tax for the period

(9,247)

(5,543)

(26,853)

Adjustments for:

Depletion and depreciation

14

9

35

Impairment of exploration and evaluation assets

-

3,072

21,121

Finance income

(1)

(22)

(30)

Finance expense

8,185

258

947

Equity settled share based payment charge

216

40

40

Foreign exchange

34

(13)

(122)

Change in trade and other receivables

158

(197)

66

Change in trade and other payables

(321)

608

825

Net cash outflow from operating activities

(962)

(1,788)

(3,971)

Cash flows from investing activities

Interest received

1

22

30

Acquisition of exploration and evaluation assets

(390)

(4,013)

(6,075)

Acquisition of property, plant and equipment

-

(56)

(56)

Net cash used in investing activities

(389)

(4,047)

(6,101)

Cashflows from financing activities

Proceeds from issue of security instruments (see note 6)

3,277

-

3,442

Security instrument Issue costs

(350)

-

(429)

Net cash from financing activities

2,927

-

3,013

Net increase/(decrease) in cash and cash equivalents

1,576

(5,835)

(7,059)

Cash and cash equivalents at beginning of period

710

7,617

7,617

Effect of exchange rate fluctuations on cash and cash equivalents

(17)

6

152

Cash and cash equivalents at end of period

2,269

1,788

710

The accompanying notes are an integral part of these condensed consolidated financial statements.

PROVIDENCE RESOURCES P.l.c.
Note 1 – Accounting Policies

General Information

Providence Resources P.l.c (“the Company”) is a Company incorporated and domiciled in the Republic of Ireland. The registration number of the Company is 268662 and the address of the registered office is Paramount Court, Corrig Road, Sandyford Business Park, Dublin 18, D18 R9C7. The unaudited consolidated interim financial statements of the Company for the six months ended 30 June 2020 (the "Interim Financial Statements") include the Company and its subsidiaries (together referred to as the "Group"). The Interim Financial Statements were authorised for issue by the Directors on 30 September 2020.

Basis of accounting

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with the Group's last annual consolidated financial statements as at and for the year ended 31 December 2019 ('last annual financial statements'). They do not include all of the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements.

The 30 June 2020 figures and the 30 June 2019 comparative figures do not constitute statutory financial statements of the Group within the meaning of the Companies Act, 2014. The consolidated financial statements of the Group for the year ended 31 December 2019, together with the independent auditor’s report thereon, were filed with the Irish Registrar of Companies following the Company’s Annual General Meeting and are also available on the Company’s Website. The auditor’s report on those financial statements was unqualified and contains a “material uncertainty related to going concern” paragraph.

The condensed set of financial statements included in this half-yearly financial report has been prepared on a going concern basis as the Directors consider that the Group has adequate resources to continue in operational existence for the foreseeable future (See below for further details on the Directors assessment of going concern).

In preparing these interim financial statements, management has made judgements and estimates that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual report.

The Interim Financial Statements are presented in Euro, rounded to the nearest thousand, which is the functional currency of the Company and also the presentation currency for the Group’s financial reporting.

The significant accounting policies applied in these interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ending 31 December 2019.

As part of a funding round, the Company issued warrants during the current period. The Group’s accounting policy relating to these is as follows:

The Group classifies instruments issued as financial liabilities or equity instruments in accordance with the substance of the contractual terms of the instruments. The warrants issued are derivative in nature and are liability classified. They do not qualify for equity classification as any cash settlement on exercise of these warrants will be received in a foreign currency (to the Group’s functional currency), £ sterling. The warrant liabilities are recognised at their fair value on initial recognition and subsequently are measured at fair value through profit or loss. Any incremental direct costs associated with the issuance of warrants is taken as an immediate charge to finance costs through the income statement.

Amendments to standards and interpretations which are effective for the Group from 1 January 2020 do not have a material effect on the results or financial posting in the interim financial statements as at and for the period ending 30 June 2020.

Going concern

The Directors have considered carefully the financial position of the Group and, in that context, have prepared the interim financial statements on a going concern basis.

The process of farming out Barryroe with SpotOn Energy Limited is ongoing and, once it is completed, will reduce the Group’s cost exposure due to funding of the Barryroe program being provided by the SpotOn Energy consortium.

SpotOn Energy has exclusivity until 31 October 2020, with the aim of completing a farm-out agreement with the Group by that time. SpotOn Energy Limited invested £300,000 in the equity placing on 5 May 2020 and a further £200,000 through a subscription agreement on 28 May 2020.

Discussions are progressing, and on 31 July 2020 the Company announced the composition of the consortium participating in the Barryroe project. The consortium is made up of Schlumberger, AGR, Maresk Drilling, Keppel FELS, Aker Solutions and Aibel AS. The members of the consortium are “blue chip” service companies capable of progressing the project to the highest technical standards.

In the event that the farm-out does not complete with SpotOn Energy, the Group will re-commence the Barryroe farm-out process.

The business re-engineering has been completed in this period, and resulted in significant reductions in the Group’s operating expenditure. Control of expenditure continues to receive a high priority.

The Group is monitoring the impact of Covid-19 on its business and notes an impact on the global market and demand.

The Directors have reviewed the cashflow forecast for the next 12 months and the underlying assumptions. The primary risk factor relates to completion of the farm-out with SpotOn Energy. Taking into account all information currently available, including the recent equity placing with £0.03 and £0.09 warrants attached and other options available to fund the commitments, including other equity funding alternatives, the Directors believe that the Group will have sufficient funds available over the next 12 months to meet all its commitments as they fall due.

However, the failure to complete a farm-out on Barryroe represents a material uncertainty that may cast significant doubt upon the Group and Company’s ability to continue as a going concern in the long term and that therefore the Group and Company may be unable to continue realising assets and discharging liabilities in the normal course of business.

After making enquiries and considering the uncertainties described above, the Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Directors have adopted the going concern basis in preparing the interim financial statements and the interim financial statements do not include any adjustments that would be necessary if this basis were inappropriate.

PROVIDENCE RESOURCES P.l.c.
Note 2 – Administration Expenses

6 months ended 30 June 2020

6 months ended 30 June 2019

Year ended 31 December 2019

Unaudited

Unaudited

Audited

€’000

€’000

€’000

Corporate, exploration and development expenses

819

2,208

3,857

Restructuring costs

-

580

1,170

Share based payment expense (note 11)

216

40

40

Foreign exchange losses/(gains) net

28

(86)

(120)

Total administration expenses for the period

1,063

2,742

4,947

Capitalised in exploration and evaluation assets

-

(507)

(405)

Total charged to the income statement

1,063

2,235

4,542

PROVIDENCE RESOURCES P.l.c.
Note 3 – Finance Expense

6 months ended 30 June 2020

6 months ended 30 June 2019

Year ended 31 December 2019

Unaudited

Unaudited

Audited

€’000

€’000

€’000

Unwinding of discount on decommissioning provision (note 8)

287

213

521

Foreign exchange on decommissioning provision

-

45

424

Interest on right to use asset

1

-

2

Issued costs associated with the warrants

133

-

-

Movement in fair value of warrants (note 9)

7,764

-

-

Total finance expense recognised in income statement

8,185

258

947

PROVIDENCE RESOURCES P.l.c.
Note 4 – Exploration and evaluation assets

€’000

Cost and book value

At 1 January 2019

81,867

Additions

3,702

Cash calls received in period

(196)

Administration expenses capitalised

507

Impairment charge

(3,072)

Foreign exchange translation

406

At 30 June 2019

83,214

At 1 January 2019

81,867

Additions

5,670

Administration expenses capitalised

405

Impairment charge

(23,763)

Foreign exchange translation

1,198

At 31 December 2019

65,377

At 1 January 2020

65,377

Additions

390

Foreign exchange translation

173

At 30 June 2020

65,940

The exploration and evaluation asset balance at 30 June 2020 relates to the Group’s Barryroe interest.

PROVIDENCE RESOURCES P.l.c.
Note 5 – Trade and other receivables

30 June 2020

30 June 2019

31 December 2019

Unaudited

Unaudited

Audited

€’000

€’000

€’000

VAT recoverable

46

72

53

Prepayments

155

190

242

Amounts due from joint operation partner

39

399

103

Total

240

661

398


PROVIDENCE RESOURCES P.l.c.
Note 6 – Share Capital and Share Premium

Number

Authorised:

‘000

€’000

At 1 January 2020

Deferred shares of €0.011 each

9,944,066

109,385

Ordinary shares of €0.001 each

986,847

987

At 30 June 2020

Deferred shares of €0.011 each

9,944,066

109,385

Ordinary shares of €0.001 each

1,800,000

1,800

Number

Share Capital

Share Premium

Issued:

‘000

€’000

€’000

Deferred shares of €0.011 each

At 31 December 2018 and 30 June 2019

1,062,442

11,687

5,691

Re-designated as Ordinary Shares at 30 September 2019

5,378,931

59,168

-

At 31 December 2019 and 30 June 2020

6,441,373

70,855

5,691

Ordinary share of €0.001 each

At 31 December 2018 and 30 June 2019 (Ordinary Shares of €0.10 each)

597,659

59,765

242,227

Re-designated as Ordinary Shares of €0.001 each at 30 September 2019

597,659

597

242,227

Shares issued during the year

59,766

60

3,382

At 31 December 2019 (Ordinary shares of €0.001 each)

657,425

657

245,609

Shares issued in period

184,089

184

1,940

At 30 June 2020

841,514

841

247,549

At 30 June 2020 (Total deferred and Ordinary shares)

7,282,887

71,696

253,240

On 5 May 2020, the Company issued 177,973,004 Ordinary Shares as part of a placing and subscription agreement which raised c. €3.1m from security instruments before expenses. Each of these security instruments comprised of one Ordinary Share of €0.001, one £0.03 warrant and one £0.09 warrant.

On issuance, a fair value of €1.9m was attributed to the Ordinary Shares (share capital / share premium outlined above) and €1.2m to the Warrant instruments based on the effective share price at that date. In line with the Group’s accounting policies these Warrants are presented as financial liabilities (note 9).

The holder of each warrant can exercise its rights under the instrument which allows that holder to convert the warrant into one ordinary share, with a par amount of €0.001, by payment of the exercise price of £0.03 or £0.09, as applicable. The warrants are non-transferrable.

The £0.03 warrants expire in May 2021 while the £0.09 warrants expire in May 2022.

On 28 May 2020, the Company issued 6,116,208 Ordinary Shares through a subscription agreement which raised c. €0.2m.

PROVIDENCE RESOURCES P.l.c.
Note 7 – Trade and other payables

30 June 2020

30 June 2019

31 December 2019

Unaudited

Unaudited

Audited

€’000

€’000

€’000

Accruals

487

882

385

Other payables

690

380

1,112

Lease liability

17

45

18

Total

1,194

1,307

1,515

PROVIDENCE RESOURCES P.l.c.
Note 8 – Decommissioning provision

30 June 2020

30 June 2019

31 December 2019

Unaudited

Unaudited

Audited

€’000

€’000

€’000

At beginning of year

5,733

7,406

7,406

Unwinding of discount

287

213

521

Foreign exchange (gain)/loss translation

(6)

55

448

Fair value adjustment in provision liability

-

-

(2,642)

Total

6,014

7,674

5,733

During 2019, the Group reassessed the estimated decommissioning period and this resulted in an adjustment of €2.6m. The adjustment was netted against the exploration and evaluation impairment line within the income statement. The provision for decommissioning is reviewed annually. The provision has been calculated assuming industry established oilfield decommissioning techniques and technology at current prices and is discounted at 10% per annum, reflecting the associated risk profile.

PROVIDENCE RESOURCES P.l.c.
Note 9 - Warrants

On 5 May 2020, the Company raised c. €3.1m by the issue of security instruments with each security instrument comprising one ordinary share, with a par amount of €0.001, one £0.03 warrant (expires in May 2021) and one £0.09 warrant (expires in May 2022). The fair value of the warrants was calculated using Black Scholes model. The following key input assumptions were applied to the initial valuation on issuance of these instruments:

£0.03 Warrants

£0.09 Warrants

Number of warrants

177,973,004

177,973,004

Volatility

148%

148%

Time period

1 Year

2 Years

Dividend yield

0%

0%

Risk free interest rate

(0.01%)

(0.01%)

Exercise price

£0.03

£0.09

Placing effective Share price

0.01068

0.01068

Initial value of security

0.00299

0.00349

Fair value

€531,444

€621,982

The c. €3.1m raised before expenses, from previous and new shareholder investors, for the security instruments in May 2020 was considered the transaction price fair value. The split of this fair value on issuance of these security instruments, based on a placing effective share price of €0.01068, was €0.531m for the £0.03 Warrants, €0.622m for the £0.09 Warrants and €1.901m for the Ordinary Shares (split between share capital and share premium account (note 6)).

On 30 June 2020, the warrants were fair valued using appropriate inputs including the closing share price on that day of €0.0448. The fair value movement being the difference between initial valuation and 30 June 2020 valuation in the amount of €7.764m going through the finance expense line in the income statement.

£0.03 Warrants

£0.09 Warrants

Number of warrants

177,973,004

177,973,004

Volatility

148%

148%

Time period

.85 Year

1.85 Years

Dividend yield

0%

0%

Risk free interest rate

(0.01%)

(0.01%)

Exercise price

£0.03

£0.09

Closing share price 30 June

€0.0448

€0.0448

Fair value as at 30 June 2020

€4,560,940

€4,356,476

The following table shows the fair value movement:

Initial valuation

30 June 2020

Fair value movement

€’000

€’000

€’000

€531

£0.03 warrants

€4,561

€4,030

€622

£0.09 warrants

€4,356

€3,734

€1,153

€8,917

€7,764

PROVIDENCE RESOURCES P.l.c.
Note 10 – Earnings per share

6 months ended 30 June 2020

6 months ended 30 June 2019

Year ended 31 December 2019

Unaudited

Unaudited

Audited

€’000

€’000

€’000

Loss attributable to equity holders of the company from continuing operations

(9,247)

(5,543)

(26,853)

The basic weighted average number of Ordinary shares in issue (‘000)

In issue at beginning of year and end of period

657,425

597,659

597,659

Adjusted for share issue in year

55,739

-

14,308

Weighted average number of ordinary shares

713,164

597,659

611,967

Basic and diluted loss per share (cent) – continuing operations

(1.30)

(0.93)

(4.39)

There is no difference between the loss per ordinary share and the diluted loss per share for the reported periods as all potentially dilutive ordinary shares outstanding are anti-dilutive.

There were 41,150,000 (2019: 28,325,000) anti-dilutive share options and 355,946,008 (2019: Nil) anti-dilutive warrants in issue as at 30 June 2020.

PROVIDENCE RESOURCES P.l.c.
Note 11 – Share schemes

Share option schemes were introduced in August 1997 (expired August 2007), May 2005 (expired October 2015) and June 2009 (expired in June 2019) under which share options may be offered to employees, Directors and consultants. In addition, a long-term incentive plan was introduced in 2016. Options are recommended at a level to attract retain and motivate participants in the competitive environment in which the Group operates, The Remuneration Committee reviews and assesses proposals to grant share options to participants.

The Group operates the following employee share schemes:

2020 Scheme

In 2020, the directors adopted a share option scheme which contains certain performance criteria. No options can be issued after 10 years of the scheme. The option price is the market price immediately preceding the date of the grant. The “2020 scheme” operates as an equity-settled share option scheme and the options granted are subject to certain conditions. No option is exercisable more than seven years after grant date and no option is exercisable within one year of grant. The “2020 scheme” was approved at the EGM on the 5 May 2020.

The applicable criteria for the exercise of the options are;

  1. 33% of the total number of options granted are exercisable after one year of grant provided that the agreed criteria by the Remuneration committee have been met.

  2. 33% of the total number of options granted are exercisable after two years of grant provided that the agreed criteria by the Remuneration committee have been met.

  3. The remaining 33% of the total number of options granted are exercisable after a further year has elapsed provided that the agreed criteria by the Remuneration committee have been met.

During the period, 36,500,000 share options were granted under the 2020 Share option scheme. 31,500,000 options were granted to the Directors and 5,000,000 options were granted to employees.

Grant Date

13 January 2020

6 April 2020

Number of options granted

15,000,000

21,500,000

Volatility

103%

108%

Time period

7 Years

7 Years

Dividend yield

0%

0%

Risk free interest rate

(0.01%)

(0.01%)

Exercise price

£0.04

£0.03

The total share based payments expense in the period to 30 June 2020 charged to the income statement was €216,000 (2019: €40,000).

PROVIDENCE RESOURCES P.l.c.
Note 12 - Commitments

As at 30 June 2020, the Group has capital commitments of approximately €0.3m (31 December 2019: €0.6m) to contribute to its share of costs of exploration and evaluation activities.

PROVIDENCE RESOURCES P.l.c.
Note 13 – Post Balance Sheet Events

On 25 August 2020, 333,333 warrants were exercised for £0.03 each raising total equity of £9,999.99.

On 28 September 2020, 16,433,333 warrants were exercised for £0.03 each raising total equity of £492,999.99.

These £0.03 warrants were issued as part of the equity placing in May of this year.

There have been no other significant events since the balance sheet date which would require disclosure in or amendment of these interim financial statements.