(MENAFN- ProactiveInvestors - UK) Providence Resources PLC (LON:PVR) confirmed it has now cleared the decks following its US$70mln funding.
The Irish oil firm told investors it has now repaid a US$20mln debt, together with interest, owed to Melody Business Finance. As a result, Melody will now release the security it held (a floating charge over the group's assets).
It also confirmed that it has now discharged the balance of uncontested sums owed to Transocean following a Court of Appeal ruling in April.
Providence last week announced the closing of the share placing and open offer, which saw nearly 400mln new shares issued at 12p each to raise US$70mln of new capital.
At that time, chief executive Tony O'Reilly highlighted that institutional shareholders had consistently demonstrated support and belief in the group's strategy.
Separately, broker Cantor Fitzgerald issued a 'buy' note, with a 33p price target, and highlighted that the company had transformed its balance as a result of the funding deal.
Analyst Sam Wahab said it provides 'much needed commercial and financial flexibility' as the company advances farm-out talks and drilling plans.
'Encouragingly, the placing suggests that following a protracted period of stagnation in the sector, institutional support for E & Ps is growing with noticeable material fundraises taking place in the first half of 2016.'
Significantly, the funding provides new share price catalysts in the form of new drilling.
Whilst Providence continues a farm-out process for its flagship Barryroe oil field development project, it is now preparing for a new exploration well in Ireland's Atlantic margin.
Amid Ireland's most successful licensing round, which completed recently, the deep waters off the country's west coast have emerged as something of a hot spot for exploration. Major and 'super major' oil firms - such as Exxon, BP, ENI, StatOil and China's national oil company took on new ventures through the government's bidding process.
Providence was already a significant acreage holder in the area, and as the spotlight intensifies on the increasing high profile region it is now planning to drill the potentially huge Druid.
With its potential estimated at around 3bn barrels is seen by the company as one of the largest prospects in the world, the current low cost of drilling equipment and services makes it a compelling opportunity.
The company is prepared to drill the well by itself, though a farm-out process is also proceeding and that could see partners come into the venture to share drilling costs.
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