Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Providence Resources; sadly, one to avoid

By Ben Turney

9 February 2015 04:17

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This morning’s announcement by Providence Resources (PVR) looks naughty. Rather than announce completion of the long, long awaited farm-out of its 80% owned Barryroe exploration project, off the southern coast of Ireland, CEO Tony O’Reilly has tried to seduce the market with a sexy little show of ankle. The problem for Mr O’Reilly is that very few seem to be buying it!

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Comments

wildrides

9 February 2015, 04:59

Nice to see you back Ben . Surely at this price it would make a superb long for the bottom draw ……….say up to a five year hold . Ive got some Lansdowne which at 7p looks even cheaper .
(as well as being a Rolls Royce lobster pot complete with walnut trim ……. thanks Chris oil )
Ben Turney

9 February 2015, 05:33

@wildrides – thanks, good to be back after a little break. I almost see your logic about PVR, but the questions over the strength of its balance sheet present risk of more downside. The 1billion barrel Barryroe is only really worth something to the company if it can commercialise it. I’ve thought about this some more this morning and I am troubled by what the RNS suggests about the calibre of the farm-in partner. This then raises concerns why PVR couldn’t attract someone better.
I Swear

9 February 2015, 11:00

Trouble is PVR have spent the best part of 3 years trying to farm Barryroe out, during which time the oil price headed over $100 and they still could not complete the deal, Rothschild assisted. The share price has dropped over 90% in that time yet the board continue to draw obscene salaries , Tony O’Reilly Jnr is up over the 500,000 euro mark , little or no director buying has taken place in this time due to market rules apparently ( 3 years ! ) , they need a significant cash deal just to repay their loan facility due half year and their contribution to the Spanish Point appraisal drilling with Cairn Energy , if indeed it actually goes ahead this year, not to mention the usual running costs , consistantly saying a deal was close over the last year when it wasn’t have not helped their reputation either.
Ben Turney

10 February 2015, 05:02

@I Swear – I looked at the salaries and decided not to mention those. On reflection I think you are right. They have been very well paid for failing to deliver. I have seen repeated references to an imminent farm out, which I agree harms their credibility. Given how much skin in the game the BoD has, I am not sure those claims were malicious, but perhaps just hopefully optimistic. Whatever the case, this has been a poor performer. If I return to it, I will analyse the director remuneration in more detail.