Lansdowne Oil & Gas hit as Providence Resources weighs farm-out options

Shares in AIM-quoted Lansdowne Oil & Gas tumbled 20 per cent on last week after investors were spooked by a comment in the results statement from Providence Resources, the operator of Lansdowne’s flagship asset.

The recent results statement from fellow AIM company Providence, operator of the Barryroe oilfield in the Celtic Sea in which Lansdowne has a material 20 per cent stake, included an update on the long-running effort to secure a farm-in partner for the project.

Providence confirmed in February that it had, at last, reached agreement on commercial terms with a proposed farminee but that the closing of the deal was conditional on the would-be partner raising funds. On Wednesday, Providence advised that this has yet to happen and it is “seeking to clarify the status of those conditions and the proposed farminee’s position”.

The Dublin-based company reminded shareholders that there is no certainty that the farm in will be concluded with the proposed farminee and, as this was not an exclusive arrangement, Providence has continued commercial discussions with various counterparties, a number of whom are currently active in the data room process.

This leaves investors in Lansdowne concerned about the timeline on finding a partner in order to advance Barryroe, still the only commercial oil strike in Irish waters. In April, Lansdowne announced it was launching a review of its strategic options to maximise value for shareholders. It said it was undertaking a careful evaluation of its business plan, operational assets, development strategy, market valuation of assets and capital structure.

The options under review could include a corporate transaction, a sale of the business or a farm down or disposal of assets. It added, however, that it was a viable option for the company to continue with its current strategy and structure given its current position and quality of its assets.

The company raised just over £1 million in a placing priced at five pence per share, a then 14.3 per cent premium, in March, when it also issued a loan note to the value of £1.86 million to one of its major shareholders, LC Capital Master Fund.

The funds will see the company through to the end of 2015, by which time it said it hoped to complete the farm-out of Barryroe – it remains unclear how this timetable may be impacted by Providence’s results statement. Shares in the company were trading at 6.37 pence last evening.