Providence Resources Annual Report 2016

FY2016 Annual Report · Providence Resources

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WELCOME TO THE PROVIDENCE RESOURCES P.L.C.
ANNUAL REPORT 2016

CONTENTS

(cid:1) Business Review

Highlights

Chairman and Chief Executive’s
Statement

List of Providence Assets and
Map of Interests

(cid:1) Our Governance

Board of Directors

Directors’ Report

(cid:1) Financial Statements

Independent auditor’s report

Consolidated income statement

Consolidated statement of
comprehensive income

Consolidated statement of
financial position

Consolidated statement of
changes in equity

Consolidated statement of
cash flows

Notes forming part of the
consolidated financial statements

Company balance sheet

Statement of changes in
company equity

Notes to the company
financial statements

(cid:1) Investor Information

Notice of Annual General Meeting

Glossary of Terms

Corporate Information

IBC

OIL AND GAS EXPLORATION AND APPRAISAL
Who we are

Providence Resources P.l.c. is an Irish based upstream oil

and gas company with a portfolio of appraisal and

exploration assets located offshore the island of Ireland.

Operating offshore Ireland for over 30 years, the Company

has a well-established background in the Irish oil and gas

business, having worked closely with many major

international companies including ExxonMobil, Repsol,

ENI, Petronas and Cairn Energy.

The Company is involved in a number of material

exploration prospects and appraisal projects in multiple

basins offshore Ireland.

Strategy

The Company’s strategy has been to assemble a material

equity position in a portfolio of assets offshore Ireland

combining existing discoveries with new prospects to improve

overall economics and reduce risk profile in order to realise

value and to generate sustainable incremental wealth for the

Company and its shareholders.

• Focus on oil & gas exploration offshore the ‘Island of Ireland’

— Core focus on early stage exploration & appraisal

drilling opportunities in multiple basins

• Create a diversified and material exploration & appraisal

portfolio

— +300 MMBOE net audited 2C Contingent Resources

— +6,000 MMBOE gross un-risked Prospective

Resources (STOIIP/GIIP)

• Farm out to defray CAPEX for subsequent

drilling/development and/or seismic acquisition

• Leverage in third parties to validate and co-venture with on

prospects and projects

Information on the Company and its oil and gas portfolio is available at www.providenceresources.com

2016 OPERATIONAL HIGHLIGHTS

(cid:1) Business Review

2016 Operations
● Barryroe Oil Project, North Celtic Sea Basin (SEL 1/11)

–

2 year extension to Phase 1 of SEL 1/11 to July 2017 and an extension
to the 2nd phase term to July 2019

Area of SEL 1/11 increased by c.118 km2 to accommodate mapped
potential extensions of Barryroe, formerly located within the previous
LO 12/4

– Conclusion of all litigation with Transocean

–

Upper C-Sand GIIP within SEL 1/11 & OPL1 Option area now
estimated at c. 400 BSCF

Farm-out of discussions continued to be progressed

● Newgrange Prospect, Goban Spur Basin (FEL 6/14)

–

Schlumberger Collaboration Project supports top seal and reservoir
presence for large Cretaceous four-way dip-closed structure

–

Prospective Resource potential of c. 13.6 TSCF GIIP or c. 9.2
BBO STOIIP

Top seal capacity analysis indicates potential for a hydrocarbon
column of up to 350 metres

Adjacent third party Licensing Options awarded in 2015 Atlantic
Margin Licensing Round

● Kish Bank Oil Prospect, Kish Bank Basin (SEL 2/11)
– Company’s working interest increased to 100%

● Offshore Petroleum Lease 1 (OPL 1) South Option, North Celtic Sea

Basin

–

Extension to the 1st phase of SEL 2/11 to August 2018 and an overall
extension of one year to the licence term until August 2020

– Option with PSE Kinsale Energy Limited (KEL) for a right to earn a 60%
working interest in southern portion of OPL1 (subject to Ministerial
consent) exercisable for a 3-year period

– Option is earned through the 100% financing and drilling of exploration

well to the Base Wealden interval

–

Based on Providence mapping, this area has the potential to host
significant incremental resources

● Spanish Point Gas Condensate Project, Northern Porcupine Basin

(FEL 2/04 and 4/08)

–

Adjacent third party Licensing Options awarded in 2016 from the 2015
Atlantic Margin Licensing Round

● Helvick/Dunmore Oil Discoveries, North Celtic Sea Basin

–

Award of Lease Undertakings

50% staged farm in by Marginal Field Development Company Limited

Exploration Prospects
● Druid/Drombeg and Diablo Oil Prospects, Southern Porcupine Basin

(FEL 2/14)

– Multi-domain analysis with Schlumberger confirms that 3D seismic
responses from the Druid & Drombeg prospects are consistent with
the presence of 2 large vertically stacked stratigraphically trapped
oil accumulations

–

Total cumulative in place un-risked prospective resources of c. 5.095
BBO (Pmean)

–

Druid – c. 3.180 BBO (Pmean)

Drombeg c. 1.915 BBO (Pmean)

Large deeply buried pre-Cretaceous Diablo Ridge presence
confirmed

–

Adjacent third party Licensing Options awarded in 2016 from the 2015
Atlantic Margin Licensing Round

Druid and Drombeg exploration prospects to be evaluated with a
single vertical well (pre-spud designation 53/6-A)

–

LR Senergy appointed as Well Management Company

Drilling contract signed with Stena for use of the Stena IceMax
drill ship

Planned spud in June 2017, subject to regulatory consents

● Dunquin South Oil Prospect, Southern Porcupine Basin (FEL 3/04)

–

Dunquin North post-well technical studies continuing

Evidence of more significant residual oil in the Dunquin North well

Adjacent third party Licensing Options awarded in 2016 from 2015
Atlantic Margin Licensing Round

ENI appointed Operator

Providence’s equity increased to 26.846% (subject to Ministerial
consent)

● Avalon Oil Prospect, Porcupine Basin (LO 16/27)

–

Award of new Licensing Option in 2016 from 2015 Atlantic Margin
Licensing Round

Large AVO stratigraphic Paleocene oil play identified

Identified prospect is analogous to and spatially larger than the Druid
prospect

● Relinquishments made to licensing authorisations over:
– Cuchulain (FEL 1/99), Southern Porcupine Basin

–

Polaris (P1885), Rathlin Basin

Dragon (UK) (P1930), St George’s Channel Basin

Spanish Point South (FEL 1/14), Northern Porcupine Basin

Silverback (LO 13/4), South Celtic Sea Basin

2016 Financial Highlights
● Operating Loss for the period of €18.844 million versus €13.080 million

(2015)

●

Loss of €20.546 million versus €24.137 million (2015)

Loss per share of 5.80 cents versus 19.57 cents (2015)

At December 31, 2016,
€31.403 million versus €6.518 million (at 31/12/15)

total cash and cash equivalents were

In June 2016, £53.712 million was raised through the Placing of 447.607
million shares at £0.12 pence per share €1.516 million was raised through
the issuance of 9.975 million shares at €0.152 cents per share

The Company has no debt at December 31, 2016 versus €18.289 million
(at 31/12/15)

The total issued and voting share capital comprises 597,658,958 ordinary
shares of €0.10 each

Board Changes

●

In October 2016, James McCarthy stepped down as Non-executive
Chairman, Pat Plunkett was appointed Non-executive Chairman and Phil
Nolan retired from the Board

Post Year End Progress
● Druid/Drombeg Oil Prospects, Southern Porcupine Basin (FEL 2/14)
Farm out agreed with Capricorn, a subsidiary of Cairn Energy, subject
to Ministerial approval

–

In consideration for Capricorn taking a 30% working interest in FEL
2/14 with an effective date of 1 July 2016, Capricorn will pay:

–

45% of the costs of drilling the 53/6-A exploration well in 2017,
subject to a gross well cap of $42 million

A cash payment of $2.82 million (being 30% of the total sunk
costs of $9.4 million incurred through 30 June 2016 by
Providence/Sosina on FEL 2/14) on a pro rata basis

In the event that the JV partners agree to drill a subsequent
appraisal well in FEL 2/14, Capricorn will pay 40% of the appraisal
well costs subject to a gross well cap of $42 million and will have
the right to take over Operatorship

–

Drilling operations are scheduled to commence June 2017, subject to
regulatory approvals

The resultant equity ownership in FEL 2/14 would be Providence 56%
(Operator), Cairn 30% and Sosina 14%

● Dunquin South Oil Prospect, southern Porcupine Basin (FEL 3/04)

–

Licensing of 1,800 km2 of 3D data from CGG as part of a multi-client
3D acquisition programme in 2017

Providence Resources P.l.c. | Annual Report | 2016 1

CHAIRMAN’S AND CHIEF EXECUTIVE’S STATEMENT

Leadership in the Irish Offshore

Dear Shareholder,

The Company is pleased to present the 2016 Annual Report,
which provides a detailed summary on our activities over the 2016
period, as well as an update on post year end activities, including
the recently announced commercial transactions.

2016 was a transitional year for the whole global E&P sector –
essentially a year of two halves – and it was particularly so for
Providence where, thanks to the support of its shareholders, the
Company was successfully re-capitalised in July 2016 and this
facilitated the ability to clear all debts owing to Melody and settle
the Transocean litigation, whilst also providing capital for drilling
which, in turn, has resulted in a number of recent commercial
discussions, which will be discussed below.

History of Providence in the Irish Offshore
20 years ago, Providence was formed by the demerger of the
hydrocarbon assets from ARCON International Resources P.l.c.
However, the Company’s roots go much further back in time – to
1981 – when Atlantic Resources plc was formed with the objective
of exploring the Irish offshore. With this pedigree, Providence has
the notable distinction of being one of the longest term licencees
offshore Ireland where it has witnessed many industry cycles.

Once considered a backwater to the North Sea, the Irish offshore
has now emerged as a major centre for the international E&P
sector. This was best demonstrated in 2016 through the significant
number of licensing authorisations issued following the 2015 Irish
Atlantic Margin Licensing Round. Not only did this represent the
highest number of Licensing Authorisations ever issued (43) in an
Irish Licensing Round, but what was particularly notable was the
successful bidders – such well known international E&P players
as ExxonMobil, Statoil, BP, ENI, Nexen-CNOOC, Woodside and
Cairn, to name just some of the notable awardees.

For Providence, this heightened level of interest was very much
an acknowledgement of the hydrocarbon potential of offshore
Ireland in general and specifically in the Porcupine Basin. It also
affirmed all that Providence has long stated about Ireland – that
there is a great deal of potential, but to unlock this, one needs to
drill wells.

There have been many elements which have contributed to the
change in attitude to Ireland by the international E&P industry –
some of this is due to ‘on the ground’ activity, including the
Barryroe appraisal well
in 2011/12, the drilling of the Dunquin
North exploration well in 2013 and the start-up of the Corrib gas
field in 2015. In addition, there have also been technological
advances (such as the application of modern 3D seismic surveying
together with new drilling capabilities) as well as the Irish
government’s pro-active stance on licensing terms and conditions.
And inevitably, changes in costs and a more benign forward view
on commodity prices have played a major role.

The Porcupine Basin
When one looks at the most recent map of licensing authorisations
(shown on page 7), one can see that there is a huge focus in the
Atlantic Margin region, particularly in the Porcupine Basin, an area
prognosed to hold significant resource potential. The increased
level of interest has been driven by the industry’s focus on the
“North Atlantic Margin” conjugate play – simply put, where E&P
companies look at the geology of one side of the Atlantic and then

2 Providence Resources P.l.c. | Annual Report | 2016

extrapolate the geology/petroleum systems across to the other
side. This is sometimes referred to as the “North Atlantic Jurassic
Oil Source Rock Super Highway”.

The initial driver for this North Atlantic focus was the drilling
success of companies like Statoil and Husky in the Flemish Pass
Basin, offshore eastern Canada, where multiple world-class
discoveries have been made – i.e. Bay du Nord, Harpoon and
Mizzen. What then followed was a huge surge in industry interest
in that region amounting to the committing of billions of exploration
dollars by companies including Statoil, ExxonMobil, Shell,
CNOOC, BP, Chevron & Husky.

On the Irish side of the Atlantic, Providence’s leadership role in the
region has been absolutely vital. Providence was the only licensee
in the Porcupine Basin in the 2004 round and since then,
Providence has been the main catalyst for inward investment –
best demonstrated by ExxonMobil, Repsol and ENI farming-in to
Dunquin; Chrysaor and Cairn farming into Spanish Point; and
more recently, Cairn farming into Druid & Drombeg.

The results of the 2011 Atlantic Margin Round had already pointed
to an increasing awareness and interest in Ireland with 13
Licensing Options being issued. Importantly, during this Licensing
Round, the Company secured 2 Licensing Options over the Druid
& Drombeg and Newgrange exploration prospects (which have
subsequently been converted into Frontier Exploration Licences,
FELs 2/14 & 6/14, respectively).

However, the key event for the exploration perspective for the
southern Porcupine Basin was the drilling of the Dunquin North
44/23-1 exploration well (operated by ExxonMobil) in 2013. This
Providence generated exploration prospect was first licensed in
2004, farmed out to ExxonMobil in 2005 and after the acquisition
of new 2D seismic in 2006 and the farming in by other co-
venturers, an exploration well was drilled in 2013. This was the
first exploration well to be drilled in the southern Porcupine Basin,
an area of c. 25,000 km2 (this is an equivalent size to the Central
North Sea, where over 3,000 wells have been drilled).

Whilst the 600 MMBO Dunquin North residual oil accumulation
was deemed non-commercial, it was a hugely important new
data-point given that it demonstrated, for the first time, the
presence of prolific oil prone source rocks together with excellent
reservoir development in the frontier southern Porcupine Basin (a
basin that many previously thought, if hydrocarbon bearing at all,
was more likely to be gas prone).

Post well
results reported a c. 44m residual oil column
encountered in a massive over-pressured high porosity carbonate
reservoir system with estimated pre-breach oil STOIIP of
c. 1.2 BBOE, with a current residual oil STOIIP of c. 600 MMBO.
Having drilled the Dunquin North prospect, ExxonMobil, the then
Operator, estimated that the Dunquin South prospect could
contain hydrocarbons in place of c. 3.475 BBOE (Pmean), with
recoverable potential of c. 1.389 BBOE (Pmean).

Atlantic Margin Licensing Round
In September 2015, the Irish government announced that the
Atlantic Margin Licensing Round delivered the highest number of
applicants ever in the history of the Irish state. In 2016, the Irish
government announced the First Phase offers, when Licensing
Options offered to companies including Nexen-CNOOC, Statoil,

(cid:1) Business Review

ExxonMobil, ENI
(in partnership with BP) and Woodside. Of
particular note was the fact that many new licensees in the Irish
Licensing Round were the same players who participated in the
eastern Canadian bidding rounds and that only limited well data
has been released from the Dunquin North well.

In the Irish round, Nexen-CNOOC was awarded acreage directly
adjacent and along the interpreted depositional play fairway to the
Company’s acreage at Druid & Drombeg (FEL 2/14). An
ExxonMobil/Statoil consortium was awarded one tranche a further
block away. Newgrange (FEL 6/14) was partially encircled by new
Licensing Options awarded to Nexen-CNOOC and an
ExxonMobil/Statoil consortium, with the main Newgrange
structural grain extending directly westward into the new
Nexen-CNOOC acreage.

As part of the Licensing Round, the Company was offered
Licensing Option 16/27, where the Company identified the Avalon
Fan, which is adjacent to the 600 MMBO Dunquin North oil
residual accumulation. This new Licensing Option, which covers
an area of 1,324 km2, shows similar characteristics to the nearby
Druid prospect and was the Company’s first bid preference in the
Round. Importantly, the Company believes that the Avalon system
could potentially have accessed breached oil from the nearby
Dunquin North residual oil accumulation.

Whilst Providence is now no longer the largest license acreage
holder in the southern Porcupine Basin, it is by far still the most
active. Providence’s licence position is still significant with interests
in 4 licensing authorisations at FEL 2/14 (Drombeg & Druid), FEL
6/14 (Newgrange), FEL 3/04 (Dunquin South) and LO 16/27
(Avalon) with the most advanced technical database, including
2014 vintage 2D/3D seismic, the well results from the Dunquin
North exploration well and importantly, through Providence’s
exploration collaboration project with Schlumberger, Providence
also has the further benefit of advanced proprietary basin
model studies.

Schlumberger Exploration Collaboration Project
During the initial pre-FEL 2/14 authorisation phase (Licensing
Option 11/9: 2011- 2013), 2 large vertically stacked Paleocene
(Druid) and Lower Cretaceous (Drombeg)
fan systems, with
notable Class II amplitude versus offset (AVO) anomalies, were
identified primarily from previously acquired 2D seismic data. The
Company subsequently agreed to licence part of a multi-client 3D
seismic survey over this area. This 3D seismic survey was
acquired by Polarcus in the summer of 2014 and was
subsequently processed by ION Geophysical in 2014/15.

In September 2015, the Company entered into a strategic
exploration project with Schlumberger, where Schlumberger
provided specific ‘state of the art’ technology capabilities to
assess the Company’s portfolio of assets in the southern
Porcupine Basin. Over a 6-month period, a multi-disciplinary team
of 24 technical professionals from Schlumberger and 6 from the
joint venture worked on this project focusing on the primary
technical disciplines of Geology, Geophysics, Geo-mechanics and
Petroleum Systems Modelling. With thousands of man-hours
this project was designed to confirm prospective
involved,
resource potential as well as helping to mitigate risk at both the
basin and prospect levels. This joint study was primarily designed
to further de-risk Drombeg, Druid and Newgrange exploration
prospects, together with any other acreage held in the area.

In April 2016, the Company announced the key results of the
collaborative project which confirmed the significant resource
potential of Druid and Drombeg, with multi-domain analysis
confirming that the 3D seismic responses from the Druid &
Drombeg prospects are consistent with the presence of two large
vertically stacked stratigraphically trapped oil accumulations. The
results of the study confirmed total cumulative in-place un-risked
prospective resources of nearly 5.095 BBO (Pmean), comprised
of c. 3.180 BBO (Pmean) for Druid and c. 1.915 BBO (Pmean)
for Drombeg.

This was followed in June 2016 by the publishing of the results for
Newgrange in FEL 6/14. This second technical update focuses
on the Cretaceous Newgrange carbonate prospect. A revised
volumetric estimation was carried out for the Newgrange prospect
incorporating the recently acquired (2014) 2D long offset seismic
reflection profile data resulting in significantly increased un-risked
prospective resource potential to c. 13.6 TSCF GIIP (Pmean, gas
case) or c. 9.2 BBO STOIIP (Pmean, oil case). Oil and gas cases
were modelled due to the uncertainty in the hydrocarbon phase
which may be applicable in this underexplored region.

A seal capacity analysis, which utilized offset well data, seismic
velocity data and surface mapping has however indicated that the
present day top seal could potentially contain up to a c. 350 metre
hydrocarbon column. The seal capacity analysis was taken into
account in the updated volumetric estimate.

Equity Capital Raise

On July 2016, the Company raised approximately US$76.6 million
(including expenses) through the Placing of 399,670,956 ordinary
shares of €0.10 to institutional and other investors at a price of
£0.12 per share and the issuance of 9.938 million new ordinary
shares to Melody and the issuance of 37.998 million new ordinary
shares to Cenkos (as payment of their fee for arranging the equity
capital raise).

The Company also raised approximately €1.516 million through
to qualifying shareholders on the basis of
an Open Offer
1 Open Offer Share at €0.152 per Open Offer Share for every
4.4 Ordinary Shares.

Documentation on the Proposed Placing Offer and Open Offer
was sent to shareholders in June 2016. The Placing Offer and
Open Offer were subject to ratification at the EGM on 14 July 2016
where all resolutions were successfully approved by shareholders.

As highlighted in the documentation, the net proceeds of the
Placing Offer and the Open Offer were identified to be used
principally for the following purposes:

• Firstly, funding (i) the Company’s share of payments arising
from the Transocean litigation; and (ii) the repayment of the
Melody Debt Facility;

• Secondly, funding general working capital to cover general and
administrative costs, sustaining capital expenditure and license
expenditure and costs associated with the Company’s portfolio
of oil and gas projects and prospects; and.

• Thirdly, funding the Company’s share of drilling costs for an

exploration well on the Druid exploration prospect.

Providence Resources P.l.c. | Annual Report | 2016 3

CHAIRMAN’S AND CHIEF EXECUTIVE’S STATEMENT
(CONTINUED)

Conclusion of Transocean Litigation
In May 2012, Transocean initiated proceedings against
the
Company for c.US$19 million. The Company counterclaimed
pleading that Transocean was in breach of contract because their
drilling rig and equipment were not in good working condition or
adequate to conduct the drilling activities over most of a period from
late December 2011 through to early February 2012.

In December 2014, a judgment was handed down by the
Commercial Court in London which confirmed the Company’s
pleadings that it should not have to pay Transocean for those
periods when the drilling rig was not operable, due to breaches of
contract arising from Transocean’s failure to carry out maintenance
on safety critical parts of its sub-sea equipment. The judgment
provided that the Company should also be allowed to set-off
certain third party costs against Transocean’s claim.

The judgment allowed the parties to agree financial matters with
the Company paying a net amount of c.US$6.15 million and 20%
partner Lansdowne paying c.US$1.54 million in May 2015.
Transocean was subsequently granted the right to appeal one
aspect of the judgment and, in April 2016, the Court of Appeal
ruled in its favour.

the wording of

The appeal of this one aspect of the judgment turned on the
Court of Appeal’s interpretation of
the
consequential loss clause in the rig contract. Pursuant to a Court
Order made on 13 April 2016, the Company was required to pay
Transocean a gross amount of c.US$6.77 million in respect of
certain costs claimed by Transocean in the context of the original
legal proceedings issued against the Company by Transocean in
May 2012.

The Order further stated that the Company was required to pay
part of Transocean’s legal costs of the appeal in the sum of gross
£225,000 by 27 April 2016. In part settlement of the Order,
the Company made a gross US$2 million interim payment
to Transocean in May 2016, with the balance of gross
the proceeds from the equity
US$4.77 million paid out of
fundraising in July 2016. The apportionment of
these
payments was 80% to Providence’s account, and 20% to
Lansdowne’s account.

The Order also stated that other matters still in dispute between
the Company and Transocean in the legal proceedings would be
the subject of a further hearing in the Commercial Court in London.
The two main matters which arose out of the Court of Appeal
judgment were (a) the quantification of interest on the judgment
sum awarded by the Court of Appeal to Transocean; and (b)
whether Transocean was entitled to its legal costs (and interest
thereon) in respect of the first instance decision handed down by
the Commercial Court in London in December 2014, on the basis
of Transocean having previously made an offer to the Company to
reach a settlement in respect of those proceedings pursuant to
Part 36 of the English Civil Procedure Rules.

In October 2016, the hearing of Transocean’s application in
respect of Part 36 of the English Civil Procedure Rules was heard
by Mr Justice Popplewell in the Commercial Court in London. The
Commercial Court handed down its Judgment in October 2016.
This Judgment stated that, as a result of the decision of the Court
of Appeal in April 2016, Transocean was entitled to its costs of the
first instance proceedings from 30 August 2014 on the Standard
Basis (i.e. approximately 70%) but that the other Part 36 cost
consequences in relation to obtaining costs on the indemnity

4 Providence Resources P.l.c. | Annual Report | 2016

basis, interest on costs and the principal sum and the surcharge
of £75,000 would not apply.

In coming to this conclusion, the Judge found that it would be
unjust to apply the full Part 36 costs consequences in the
circumstances of this case, including his previous criticisms of
Transocean’s conduct which he said “was not merely
unreasonable but dishonest”. Based on the Judgment,
Providence paid Transocean a gross figure of approximately
£1.10 million (equivalent to approximately $1.35 million) in respect
of all outstanding costs, interest and principal sums, which
compared to the estimated gross figure of $3.90 million previously
described in the Company’s 2016 Interim Results. Lansdowne,
the Company’s partner in Barryroe, paid for its share of costs
associated with the litigation.

the Company, something that

The litigation between the Company and Transocean was a very
challenging episode for
the
Company never wished to be involved with. Unfortunately, having
suffered the implications of a rig that was not fit for purpose, the
Company was then thrown into defending litigation that was
brought against it by Transocean. Whilst the Company was
vindicated by the Commercial Court judgment in December 2014,
the subsequent decision by the Court of Appeal in April 2016 was
a material setback for the Company. Thankfully, through the
support of investors through the equity capital raise, the Company
had the financial ability to discharge the obligations to Transocean.
With this matter addressed, and with no appeal to the Supreme
Court, all litigation matters with Transocean are now ended.

Repayment of Melody Debt
In June 2014, the Company arranged a US$24 million financing
with Melody. This financing was structured by way of a
US$20 million facility and a US$4 million facility, with Melody taking
security over all of the Company’s assets by way of a floating
charge.

In February 2015, the Company and Melody restructured the
commercial arrangements with the US$4 million facility being
repaid in June 2015 and the US$20 million facility being extended
to May 2016, with extension fees and associated costs being
capitalised, resulting in an outstanding sum payable to Melody of
US$21.7 million.

In May 2016, with the Company then exploring the potential to
raise equity capital to satisfy various short term obligations, the
Company and Melody agreed to extend the repayment date of
the debt facility to June 2016. Subsequent to this, various other
amendments were agreed between the Company and Melody to
facilitate the equity capital raise where it was agreed that
repayment of amounts outstanding under the Facility would be
satisfied by:

ii.

a cash payment equal to US$20 million (together with any
accrued and unpaid interest thereon);

the issuance of 9.938 million new ordinary shares to Melody (at
£0.12 per share) to satisfy of US$1.7 million of the outstanding
debt.

In July 2016, the Company confirmed that following receipt of the
funds from the Company’s Capital raise, the Melody debt was
repaid in full and that the Company is now debt free.

(cid:1) Business Review

Drilling of Druid & Drombeg
Following the capital raise in July 2016, the Company moved
forward with accelerated plans to drill an exploration well on FEL
2/14 in 2017 (pre-spud designation 53/6-A).

In November 2016, Providence signed a contract for the provision
of a Harsh Environment Deepwater Mobile Drilling Unit with Stena
Drillmax Ice Limited, a wholly owned subsidiary of Stena
International S.A., for the Stena IceMAX drill-ship. The Stena
IceMAX is a modern harsh environment dual derrick drill-ship
designed to operate in water depths of up to c. 3 km. The rig
contract provides for one firm well (Druid and Drombeg), plus an
additional option, which is electable at the discretion of the JV
Partners for the drilling of a second follow-on well. The operational
rig rate is $185,000 per day.

Over this same period, the Company ran a data room for
interested co-venturers. This farm out process has already
resulted in the farm out of equity in FEL 2/14 to Cairn Energy and
the farm out data room is still open.

The Cairn farm out sees it’s Irish subsidiary, Capricorn, take a 30%
non-operated interest in FEL 2/14 with Cairn being responsible
for 45% of the drilling costs of Druid and Drombeg (up to a cap of
$42 million gross well cost), after which the parties pay their costs
according to their equity share. In the event that a decision is taken
to drill an appraisal well, Cairn would be responsible for 40% of the
drilling costs (up to a cap of $42 million gross well cost), after
which the parties would pay their costs according to their equity
share. If a decision is taken to drill an appraisal well, Cairn has the
right to assume the licence operatorship role from Providence.

incremental

funds from the Cairn farm in
The provision of
transaction allows for the 53/6-A well to be drilled to evaluate both
the Druid Paleocene and deeper Lower Cretaceous Drombeg
exploration prospects with 45% of the well costs covered by Cairn
(subject to pre-agreed caps). Subject to the requisite regulatory
approvals, the Company anticipates that drilling activities will
commence in June 2017.

Barryroe Farm Out Process
In 2012, the Company successfully announced the results from
its appraisal drilling programme on Barryroe (SEL 1/11). Following
post-well analysis, the Company appointed Rothschild in the
summer of 2013 to run a data room process.

the opening of

the Barryroe data-room was
Unfortunately,
coincident with a significant period of global negative investment
sentiment within the industry. Escalating capital costs through
2013 caused a major curtailment of capital expenditure which was
subsequently followed by the collapse in oil prices in late 2014
through to mid-2016.

The industry’s reaction in 2015 and 2016 to this price fall was
severe – significant redundancies worldwide and major cutbacks
in investment. In the North Sea sector alone, some c. 100,000

jobs were lost and investment fell to levels not seen since
the 1990’s.

The collapse in M&A activity, combined with the Company’s
balance sheet constraints in the first half of 2016 made progress
in completing a Barryroe farm in very challenging. However,
following the recapitalisation of Providence in July 2016 and with
some recovery in the oil price, farm in activity has increased. This
has facilitated the Company in pursuing new commercial
opportunities which are ongoing. It is an important objective of
Providence to advance the appraisal and development of this
important asset. With this in mind, the Company is commencing
various pre-permitting activities in anticipation of future drilling.

Portfolio Management

Annually, the Company reviews its portfolio to ensure that it is
consistent with its stated strategy. The Company’s geographic
focus is currently Ireland, though depending on the outcome
of current activities, there is scope to look internationally in
the future.

From an asset perspective, the Company’s focus is to progress
assets through to the drilling phase via farm outs and balance
sheet capital. The Company is primarily focused on oil
followed by potential mega-gas projects. Key
opportunities,
drivers that influence the Company’s asset investment decisions
are well productivity, fluid phase and resource density.

From a HSEQ perspective, safety is paramount
in all of
Providence’s operations. The Company ensures that it implements
all major Irish, EU & UK standards and policies to ensure a safe
and environmentally friendly operating environment.

With these drivers, during the first half of 2016, the Company
carried out a review of its portfolio and, as a result, relinquished its
100% working interests in the Polaris Prospect, in the Rathlin
Basin (P1885), offshore Northern Ireland, as well as its 100% of its
interest in the UK licence adjacent to Dragon (P1930), in the St.
George’s Channel Basin, offshore Wales. The Company also
relinquished its 3.2% working interest in the Cuchulain licence (FEL
1/99), its 58% interest in FEL 1/14 in the Spanish Point area in the
Northern Porcupine Basin and its 100% interest in the Silverback
Licensing Option (LO 13/4) in the South Celtic Sea Basin.

The farm out at Druid & Drombeg is consistent with the Company’s
objective to leverage in world class E&P partners to take assets to
the next valuing enhancing stage. For Druid & Drombeg, this
means an even stronger consortium for the upcoming drilling
programme.

In addition, the licensing of 3D seismic over FEL 3/04 (Dunquin),
which hosts the material Dunquin South carbonate exploration
prospect, should not be overlooked against the back-drop of the
more immediate drilling programme. The Dunquin licence remains
the key that has unlocked the hydrocarbon exploration door of the
Porcupine Basin.

Allied to the asset portfolio management, during the first half of
2016, the Company implemented a number of cost reduction
programmes. The result of this have led to a c. 8% reduction in
normalised general and administration costs annum (compared
to FY 2015) and a c. 36% reduction relative to FY 2014.

Providence Resources P.l.c. | Annual Report | 2016 5

CHAIRMAN’S AND CHIEF EXECUTIVE’S STATEMENT
(CONTINUED)

Summary
The Company has come through a very difficult period of
following the
contraction in the oil and gas sector but,
recapitalisation in July 2016, it is now in a strong financial position
and is debt free. The equity placing was supported by a number
of leading financial institutions and as a result, Providence now
enjoys a very strong shareholder base.

The Company has a quality portfolio of high impact exploration
and appraisal assets in offshore Ireland and is working hard to
enhance their value as evidenced by recent farm in success. The
value of acreage offshore Ireland has been enhanced in recent
times by the increased interest in the area from a range of
international industry players.

2017 is expected to be a very active year particularly with the
drilling of the high impact Druid & Drombeg exploration prospects
later in the year. The successful negotiation of the Cairn farm in
leaves the Company well financed to undertake this potentially
transformational activity. In addition, the Company will be pursuing
other portfolio management initiatives to ensure that it has a
balanced portfolio of opportunities into the future.

Sincere thanks are due to the small team at Providence who have
worked very hard in confronting the issues presented by the
recession in the industry and in putting the business on a firm
footing for future growth. The support of our fellow Board
colleagues is also very much appreciated.

The Company looks forward to updating shareholders in the future
on further developments as it continues to consolidate a leading
position offshore Ireland.

Pat Plunkett
Chairman

Tony O’Reilly
Chief Executive

6 Providence Resources P.l.c. | Annual Report | 2016

LIST OF ASSETS

(cid:1) Business Review

Ref

Licence

Issued

Asset

Operator

Providence Partners

PVR %

Type

NORTH CELTIC SEA BASIN

SEL 1/11

SEL 2/07

2011

2007

2016

BARRYROE

HOOK HEAD

HELVICK

Providence

Lansdowne

Atlantic; Sosina

Atlantic; Sosina;
Lansdowne; MFDevCo

80.0

72.5

62.5

Oil discovery

Oil and gas discovery

2016

DUNMORE

Providence

Atlantic; Sosina; MFDevCo

72.5

Oil discovery

NORTHERN PORCUPINE BASIN

FEL 2/04

FEL 4/08

2004

2008

SPANISH POINT

SPANISH POINT NTH

Cairn

Cairn; Sosina

58.0

Oil and gas discoveries

Oil and gas exploration

SOUTHERN PORCUPINE BASIN

LO 16/27

FEL 2/14

FEL 3/04

2016

2014

2004

AVALON

DRUID

DROMBEG

DUNQUIN

GOBAN SPUR BASIN

Providence

Eni

Sosina

Cairn; Sosina

Eni; Repsol; Sosina

80.0

56.0*

26.8*

Oil and gas exploration

Oil exploration

FEL 6/14

2014

NEWGRANGE

Providence

Sosina

80.0

Oil and gas exploration

KISH BANK BASIN

SEL 2/11

2011

KISH BANK

Providence

100.0

Oil and gas exploration

ST GEORGE’S CHANNEL BASIN

SEL 2/07

2007

DRAGON

Providence

100.0

Gas discovery

* Subject to ministerial approval

(cid:12) (cid:69)(cid:95)(cid:77)(cid:93)(cid:87)(cid:98)(cid:86) (cid:66)(cid:94)(cid:87)(cid:93)(cid:99)

(cid:8)(cid:6) (cid:61)(cid:87)(cid:98)(cid:86)
(cid:51)(cid:77)(cid:93)(cid:89)

(cid:8)(cid:8) (cid:53)(cid:97)(cid:77)(cid:85)(cid:94)(cid:93)

(cid:13) (cid:50)(cid:101)(cid:77)(cid:90)(cid:94)(cid:93)

(cid:10) (cid:58)(cid:82)(cid:90)(cid:101)(cid:87)(cid:80)(cid:89)

(cid:8) (cid:51)(cid:77)(cid:97)(cid:97)(cid:104)(cid:97)(cid:94)(cid:82)

(cid:11) (cid:53)(cid:100)(cid:93)(cid:92)(cid:94)(cid:97)(cid:82)

(cid:9) (cid:58)(cid:94)(cid:94)(cid:89) (cid:58)(cid:82)(cid:77)(cid:81)

(cid:15) (cid:53)(cid:100)(cid:93)(cid:96)(cid:100)(cid:87)(cid:93)

(cid:14) (cid:53)(cid:97)(cid:100)(cid:87)(cid:81) (cid:935)

(cid:53)(cid:97)(cid:94)(cid:92)(cid:79)(cid:82)(cid:85)

(cid:16) (cid:64)(cid:82)(cid:102)(cid:85)(cid:97)(cid:77)(cid:93)(cid:85)(cid:82)

Third party licence authorisations based on published data

Providence Resources P.l.c. | Annual Report | 2016 7

LIST OF ASSETS
(CONTINUED)

Appraisal: North Celtic Sea Basin

Ireland

Helvick

Dunmore

Table: Total gross audited on-block Barryroe oil resources:

Basal Wealden STOIIP (NSAI)
Basal Wealden Recoverable (NSAI)
Middle Wealden STOIIP (RPS)
Middle Wealden Recoverable (RPS)

Total STOIIP

1C
(MMBO)

2C
(MMBO)

3C
(MMBO)

338
85
31
4

369

761
266
287
45

1,135
511
706
113

1,048

1,841

311

624

Hook Head

Total Recoverable Oil Resources

Barryroe

Barryroe East Extension
(Under Option)

Ireland

United
Kingdom

Note: The table above excludes recoverable Basal Wealden solution gas

(i.e. 207 BCF or 34.5 MMBOE in the 2C case)

Further incremental resource potential has also been identified in
logged hydrocarbon bearing intervals within stacked Lower
Wealden and Purbeckian sandstones, which the Company
estimates contain total associated P90, P50 & P10 in place
oil resources of 456 MMBO, 778 MMBO and 1,165 MMBO,
respectively.

100 Km

France

In 2016, the Company updated on the resource potential of the
Upper C-Sand. The latest estimated GIIP within SEL 1/11 & OPL1
Option area is now estimated at c. 400 BSCF.

SEL 1/11 – Barryroe Project
The Company currently holds an 80.0% working interest in SEL
1/11 which contains the Barryroe oil accumulation. The licence is
located in the North Celtic Sea Basin, offshore southern Ireland
and is adjacent to the giant PETRONAS operated Kinsale Head
gas field. The Company currently acts as Operator with partner
Lansdowne holding 20.0% working interest.

In the past, under different operators, five wells were successfully
drilled on Barryroe. All of
these wells successfully logged
hydrocarbon-bearing reservoirs with three successfully flowing oil
to surface. In 2011, having acquired new 3D seismic over the field,
the Company and Lansdowne drilled a sixth well on this areally
extensive field. In March 2012, the Barryroe partners announced
the flow rates from this well, results which far exceeded pre-drill
expectations with oil rates in excess of 3,500 BOPD from a
7-metre vertical section of reservoir.

Post-well analysis, in conjunction with the new 3D seismic data
set, led to a substantial upgrade in the field size to over 1 billion
barrels STOIIP (2C). Subsequent work on multiple development
concepts, together with detailed engineering studies on recovery
factors,
led to estimated 2C recoverable resources of over
300 million barrels of oil from the two main tested reservoir intervals.

In April 2013, a Competent Persons Report was issued by
Netherland Sewell & Associates Inc. confirming the Company’s
previously published figures on the main basal sandstone
reservoir. In conjunction with a previous audit carried out by RPS
Energy on the overlying secondary Middle Wealden reservoir, the
total upgraded resource base at Barryroe is listed in the table
below.

The Barryroe partners were granted a 2-year extension to the
current phase of the Barryroe licence (SEL 1/11) to July 2017 as
well as an extension to the term of the 2nd phase to July 2019.

Exclusive Option Agreement, southern portion
of OPL 1
In December 2015 the Company announced that, through its
wholly owned subsidiary, Exola, it had entered into an exclusive
option agreement with KEL over the southern portion of the
adjacent offshore authorisation OPL 1.

Under the terms of this Option, Exola has the right to earn a 60.0%
working interest in the area relating to the Option through the
100.0% funding and drilling of an exploration well to the Base
Wealden.

The Option is exercisable for a period of 3 years and is at the sole
discretion of Exola, with any future assignment of equity
in respect of the Option, being subject to the approval of the Irish
government.

SEL 2/07 – Hook Head, Helvick and
Dunmore Projects
SEL 2/07 was awarded to the Company and its partners in 2007.
The licence is located in the North Celtic Sea Basin approximately
mid-way between the Dragon gas discovery in the St George’s
Channel Basin and the giant PETRONAS operated Kinsale Head
gas field.

There are 3 oil appraisal projects located within SEL 2/07 – Hook
Head, Helvick & Dunmore.

8 Providence Resources P.l.c. | Annual Report | 2016

(cid:1) Business Review

Hook Head
Hook Head has had four wells drilled on it, all of which have logged
hydrocarbon bearing reservoir intervals. Hook Head has audited
recoverable resources of c. 35 MMBO (2C) in the drilled central
part of the stucture. The Company has made an application for a
Lease Undertaking for Hook Head to allow the partners to
evaluate innovative methods to commercialise this discovery with
third parties.

The MFDevCo work programme will determine whether the
discoveries can be developed commercially, through the use of
MFDevCo’s innovative low cost development technologies. If the
joint venture partners determine that the discoveries can be
developed commercially, MFDevCo will carry out the necessary
work required to prepare and submit, to the Minister, an outline
plan of development and an application for a Petroleum Lease in
respect of each discovery.

Subject to the award of a Petroleum Lease by the Minister, the
next phase of the work programme would then involve the
preparation and submission of a formal plan of development to
the Minister. Subject to completion of the work programme in full
and Ministerial approval of the plan of development, MFDevCo will
earn in aggregate a 50.0% working interest in the Helvick and
Dunmore discoveries.

The current working interests in Hook Head are Providence
(72.5%), Atlantic (18.3%), and Sosina (9.2%), with the Company
acting as Operator.

Helvick & Dunmore
The audited recoverable resource estimate for Helvick is c.
3 MMBO, whilst the joint ventures’ latest internal work indicates a
STOIIP resource estimate for Dunmore of up to c. 17 MMBO. The
working interests in Helvick are Providence (62.5%), Atlantic
(18.3%), Lansdowne (10.0%) and Sosina (9.2%), with the
Company acting as Operator. The current working interests in
Dunmore are Providence (72.5%), Atlantic (18.3%), and Sosina
(9.2%), with the Company acting as Operator.

In November 2013, the Company agreed a phased farm-in in
relation to the Helvick and Dunmore discoveries with MFDevCo,
formerly known as ABT Oil and Gas, a UK based company who
low cost
has proprietary technology for the deployment of
development solutions for marginal fields. As part of the farm-in,
MFDevCo will assist the joint venture partners in the carrying out
of a detailed phased work programme. In March 2016, the
Minister awarded a separate Lease Undertaking for both the
Helvick and Dunmore oil discoveries

Providence Resources P.l.c. | Annual Report | 2016 9

LIST OF ASSETS
(CONTINUED)

Appraisal: Northern Porcupine Basin

Spanish Point

Ireland

United
Kingdom

100 Km

France

FEL 2/04 – Spanish Point Prospect
FEL 2/04 was originally licenced in 2004 and is located in the
Northern Porcupine Basin, c. 170 km off the west coast of Ireland.
The licence is situated in c. 400 metre water depth and contains
the Spanish Point and Burren gas condensate and oil discoveries,
respectively.

In 2008, the Company entered into a staged farm-in arrangement
with Chrysaor E&P Ireland Limited (CEPIL) in relation to both FEL
2/04 and FEL 4/08, with CEPIL assuming an initial 30% working
interest in return for carrying the costs of a 3D seismic programme,
which was subsequently acquired in 2009.

In 2011, Senergy completed a Competent Persons Report on the
licence which resulted in estimated recoverable contingent
resources of 97 MMBOE (2C) for the Spanish Point field. At this
point, the partnership moved to the next stage of the licence with
a commitment to drill an appraisal well on Spanish Point. Under
the CEPIL farm-in agreement, CEPIL’s cost exposure was capped
for up to two wells (or well and potential side-track).

In May 2013, CEPIL entered into a farm in agreement with
Cairn Energy plc whereby Cairn became operator and agreed to
drill an appraisal/exploration well on Spanish Point. As a result,
the revised working interests for FEL 2/04 and FEL 4/08 then
changed to Cairn (38.0%), Providence (32.0%), CEPIL (26.0%)
and Sosina (4.0%).

In July 2014, the Company announced that the planned Spanish
Point appraisal well was delayed due to rig refurbishment issues
with the selected Blackford Dolphin rig.

10 Providence Resources P.l.c. | Annual Report | 2016

In February 2015, the Company acquired 100.0% of the issued
share capital of CEPIL, effective from November 2014, thereby
increasing the Company’s interest to 58.0% in both FEL 2/04 and
FEL 4/08, and to 43% in FEL 1/14, for a nominal consideration of
US$1 and a contingent payment of US$5 million, payable in the
event that a Final
is made for the
Investment Decision (FID)
Spanish Point gas condensate project.

In March 2015, drilling was again deferred due to changes to the
make- up of the joint venture and the consequent delay to the
securing of equipment and other necessary requirements.

In October 2015, the Company commenced a farm-out process
for part of its interest in FEL 2/04 and FEL 4/08. To date, no farm
out has been agreed or finalized.

As no partner sanction for drilling has been agreed, Cairn has
requested (on behalf of the joint venture) an extension to the term
of FEL 2/04 (and the alignment of the phasing of FEL 4/08 with
that of FEL 2/04) to allow further time for evaluation of the Spanish
Point project economics which will, in turn, decide the future
course of action on the asset. Accordingly, the directors have
taken a prudent decision to impair the carrying value of the
Spanish Point assets in the year end accounts.

FEL 4/08 – Spanish Point North Prospects
FEL 4/08 lies adjacent to and north of FEL 2/04 and was originally
awarded to the Company (80.0%) and partner, Sosina (20.0%) in
2008. Additional resource potential has been highlighted in a
possible stratigraphically controlled Spanish Point field extension
to the north, together with an overlying Lower Cretaceous pinch-
out play of the sands which successfully tested oil in the nearby
35/8-1 Burren well.

FEL 1/14 – Ruadhan Prospect
LO 11/2 was awarded to CEPIL, Providence and Sosina in
October 2011 as part of the 2011 Irish Atlantic Margin Round and
lies adjacent to and south of FEL 2/04. In May 2013, Cairn farmed
into the Licensing Option, as part of the Cairn farm in agreement,
and assumed Operatorship.

new data

In January 2014, LO 11/2 was converted into FEL 1/14 and a
c. 900 km2 3D seismic survey was acquired over the acreage.
the
These
pre-Cretaceous (‘Ruadhan’) and Paleocene intervals. However,
further evaluation through 2016 downgraded the prospectivity of
FEL 1/14 and so the joint venture partners agreed to relinquish
the licence at the end of 2016.

highlighted the potential within

(cid:1) Business Review

Exploration: Southern Porcupine Basin

Avalon

Dunquin

Ireland

United
Kingdom

100 Km

France

FEL 3/04 – Dunquin Project

FEL 3/04 was originally awarded to the Company (80.0%,
Operator) and partner Sosina (20.0%) in 2004. The licence lies in
the southern Porcupine Basin, c. 200 km off the south-west coast
and in c. 1,500 metre water depth.

In 2006, the Company agreed a farm-in with ExxonMobil, whereby
they assumed an 80.0% working interest in return for a pre-agreed
investment programme. This transaction reduced the Company’s
working interest to 16.0% and Sosina’s to 4.0%. In 2006, the
partnership acquired c.1,500 line km of 2D seismic reflection
profile data over FEL 3/04.

In 2009, ENI farmed into FEL 3/04 for a 40.0% working interest,
resulting in revised working interests of Providence (16.0%),
ExxonMobil (40.0%), ENI (40.0%) and Sosina (4.0%). Separately,
ExxonMobil assumed Operatorship and moved the partnership to
the next phase of
the licence by formally making a well
commitment. In 2011, Repsol farmed in for a 25.0% working
interest, thereby changing the working interests to ExxonMobil
(27.5%), ENI (27.5%), Repsol (25.0%), Providence (16.0%) and
Sosina (4.0%). In 2013, Atlantic Petroleum farmed into the licence
resulting in final pre-drill working interests of ExxonMobil (25.5%),
ENI (27.5%), Repsol (25.0%), Providence (16.0%), Atlantic (4.0%)
and Sosina (2.0%).

Drilling operations on the 44/23-1 Dunquin North exploration well,
situated on the northern flank of a c. 700 km2 intra-basinal ridge
system, were completed in July 2013 reaching a final total depth
of c. 5,000 metres MDBRT. The primary Lower Cretaceous
Dunquin North prospect was encountered within the pre-drill
depth prognosis and comprised a thick over-pressured carbonate
reservoir system. The well was terminated having drilled a total
thickness of c. 250 metres of massive porous carbonate reservoir.
Preliminary well analysis indicated the reservoir to be water
bearing, however, petrophysical log interpretation, elevated gas
levels, together with oil shows in sidewall cores over the upper
section of the reservoir, suggested the presence of a residual oil
column.

In 2014, the results of the post well analysis from the Dunquin
North exploration well were announced which confirmed that the
prospect contained at least a c. 44 metre residual oil column in a
thick, over-pressured, high porosity carbonate reservoir system
that was breached, with pre-breach oil STOIIP volumetrics of c.
1.2 BBOE, and with a current residual oil STOIIP of c. 600 MMBO.

the other
ExxonMobil also carried out an assessment of
exploration prospect contained in FEL 3/04, Dunquin South,
which identified un-risked hydrocarbons in place of 3.475 BBOE
(Pmean), with a recoverable estimate of 1.389 BBOE (Pmean).

In July 2015, the Company announced that it had agreed to
acquire Atlantic 4% working interest.

In March 2016, the Company announced that Dunquin North
post-well technical studies are continuing with a focus on the
future potential of
the adjacent Dunquin South exploration
prospect. Additional stacked potential was also assessed in the
underlying c.700 km2 Dunquin Ridge. A re-analysis of the 44/23-1
the original
Dunquin North well data now suggests that
hydrocarbon column was significantly greater than the previously
reported 44 metres and may have covered the entire 250 metre
drilled interval. This has significant read through implications for
the Dunquin South prospect and the underlying Dunquin Ridge.

Following the announcement in August 2016 of ExxonMobil’s
withdrawal from FEL 3/04, the remaining partners in FEL 3/04
increased their equity interests in the licence through a pro-rata
distribution of ExxonMobil’s equity interest with ENI assuming the
role of Operator. Accordingly, the revised equity interests in FEL
3/04 are ENI (36.913%), Repsol (33.557%), Providence (26.846%)
and Sosina (2.684%).

Providence Resources P.l.c. | Annual Report | 2016 11

Recent Activity
In April 2017, the Company announced that the Dunquin JV
partnership had agreed to licence 1,800 km2 of 3D data over FEL
3/04 to be acquired as part of a multi-client seismic survey during
summer 2017.

LIST OF ASSETS
(CONTINUED)

LO 16/27 – Avalon Prospect
In June 2016, the Company (80.0%) and its partner Sosina
(20.0%) were offered Licensing Option 16/27 over a 1,324 km2
area, c. 150 km off the west coast of Ireland and situated in
c. 1,300 metre water depth. The Licensing Option lies directly
adjacent to and north of FEL 3/04 which contains the 600 MMBO
Dunquin North residual oil accumulation and the Dunquin South
exploration prospect.

During regional interpretation and mapping of vintage 2D seismic
reflection data, Providence identified an areally extensive (c. 550
km2) north-south orientated Paleocene basin-floor channel and
fan system (‘Avalon’) within the axial part of the Porcupine Basin.
The Avalon system, which is located c. 2,500 metres BML, is
interpreted to be sourced from the north of the basin and shales
out in a southerly distal direction. A structural flexure down to the
north negates the requirement for sandstone pinch out in the
proximal direction, greatly improving reservoir sealing potential.
The presence of a thick sandstone interval
is indicated by
compactional drape morphologies which are imaged within parts
of the system. The pre-existing Mesozoic structural grain appears
to have exerted some control on deposition as evidenced by
thickening of the system within pre-existing structural lows. Whilst
limited seismic reflection gather data were available during the
evaluation phase, the available data suggest the potential for a
depth-conformant amplitude versus offset (AVO) anomaly similar
to the nearby Druid prospect in FEL 2/14.

The main element of the agreed work programme during the
2-year term of LO 16/27 is the purchase, reprocessing and
interpretation of existing 2D seismic reflection data.

12 Providence Resources P.l.c. | Annual Report | 2016

(cid:1) Business Review

Exploration: Southern Porcupine Basin

Druid / Drombeg

Ireland

United
Kingdom

100 Km

France

FEL 2/14 – Druid & Drombeg Prospects
FEL 2/14, which is located in the southern Porcupine Basin off the
south west coast of
Ireland, was awarded to the Company
(80.0%) and partner Sosina (20.0%) in October 2011 as part
of the 2011 Irish Atlantic Margin Licensing Round.
In April
2014, LO 11/9 was converted into FEL 2/14 with the same
working interests.

During the initial pre FEL 2/14 authorisation phase (LO 11/9), the
joint venture identified two large vertically stacked Paleocene
(“Druid”) and Lower Cretaceous (“Drombeg”) fan systems with
notable Class II amplitude versus offset (AVO) anomalies primarily
from previously acquired 2D seismic data in 2008. The joint
venture subsequently agreed to licence part of a multi-client 3D
seismic survey over the area. This 3D survey was acquired by
Polarcus in the summer of 2014 and was subsequently processed
by ION Geophysical in 2014/15.

The Company entered into an exploration collaboration agreement
with Schlumberger in respect of the southern Porcupine and
Goban Spur Basins. Over a 6-month period, a multi-disciplinary
team of 30 technical professionals from Providence/Sosina and
Schlumberger worked on the FEL 2/14 3D seismic data focusing
on the primary technical disciplines of Geology, Geophysics,
Geomechanics and Petroleum Systems Modelling. With
thousands of man-hours logged, this project was designed to
confirm prospective resource potential as well as helping to
mitigate risk at both the basin and prospect levels.

In April 2016, the results of the Collaborative Project confirmed
the significant resource potential of Druid and Drombeg, with
multi-domain analysis confirming that the 3D seismic responses

from the Druid and Drombeg prospects are consistent with the
presence of 2 large vertically stacked stratigraphically trapped oil
accumulations. The results confirmed total cumulative in-place
un-risked prospective resources of c. 5.095 BBO (PMean) for
Druid and Drombeg.

Druid
• Two fans located c. 1,750 m BML and structurally up-dip from
a potential significant fluid escape feature from the underlying
pre- Cretaceous Diablo Ridge

• Cumulative in-place un-risked prospective resources of

c. 3.180 BBO (PMean)

•

Fan 1 – c. 984 MMBO (Pmean)

Fan 2 – c. 2,196 MMBO (Pmean)

• Pre-stack seismic inversion and regional rock physics analysis
shows Druid is consistent with a highly porous (30%) and high
net-gross, light oil-filled sandstone reservoir system up to 85
metres thick

• A depth conformant Class II AVO anomaly is present and
synthetic forward modelling of an oil-water contact correlates
with the observed seismic response

• Spectral decomposition, seismic compactional drape and
mounding are reflective of a large sand-rich submarine fan
system with no significant
faulting and clear
demonstration of an up-dip trap mechanism

internal

• Geomechanical analysis using regional well and high resolution
seismic velocity data indicates that Druid is normally pressured
and the top seal is intact

Drombeg
• Located c. 2,750 m BML and structurally up-dip from a
potential significant fluid escape feature from the underlying
pre-Cretaceous Diablo Ridge

•

In-place un-risked prospective resource of c. 1.915 BBO
(Pmean)

• Pre-stack seismic inversion and regional rock physics analysis
shows Drombeg is consistent with a highly porous (20%), light
oil-filled sandstone reservoir system up to 45 metres thick

• A depth conformant Class II AVO anomaly is present and
spectral decomposition is reflective of a large sand-rich
submarine fan system with no significant internal faulting, and
supports an up-dip trap mechanism

• Geomechanical analysis using regional well and high resolution
seismic velocity data indicates that Drombeg is over-pressured
with an intact top seal

Providence Resources P.l.c. | Annual Report | 2016 13

LIST OF ASSETS
(CONTINUED)

Recent Activity
Following the capital raise in July 2016, the Company has
accelerated plans to drill an exploration well on FEL 2/14 in 2017,
(pre-spud designation 53/6-A) which will allow it to assess the
cumulative in-place un-risked prospective resources of c. 5.095
BBO (Pmean).

The provision of incremental funds from this farm-in (which is
subject to Ministerial consent) allow for the 53/6-A well to be drilled
to evaluate the originally planned Druid Paleocene as well as the
deeper Lower Cretaceous Drombeg exploration prospect. Subject
to the requisite regulatory approvals, the Company anticipates that
drilling activities will commence in June 2017.

Over the past 8 months, the Company has submitted the
necessary regulatory applications to the relevant authorities, hired
an experienced drilling team, appointed a leading well
management company (LR Senergy), and tendered for all the
other necessary work packages to facilitate the planned drilling
operations. In November 2016, Providence signed a rig contract
with Stena Drillmax Ice Limited, a wholly owned subsidiary of
Stena International S.A., for the Stena IceMAX drill-ship.

Over this same period, the Company operated a data room
process for interested co-venturers. This farm out process has
resulted in the farm out of equity in FEL 2/14 to Cairn Energy,
whereby Cairn will take a 30% interest in FEL 2/14 with Cairn
being responsible for 45% of the drilling costs of Druid and
Drombeg (up to a cap of $42 million gross well cost), after which
the parties pay their costs according to their equity share. If an
appraisal well is drilled, Cairn would be responsible for 40% of the
drilling costs (up to a cap of $42 million gross well cost) and would
have the option to take over Operatorship from Providence.

14 Providence Resources P.l.c. | Annual Report | 2016

(cid:1) Business Review

In 2014, a non-exclusive multi-client 2D seismic survey was
acquired over Newgrange and the surrounding area, of which the
Company licenced c. 2,500 line km of data. Geopressure analysis
from these newly acquired 2D seismic data indicates the likely
presence of top-seal at Newgrange. Pre-stack seismic inversion
and rock physics analysis showed low acoustic impedance,
indicative of good quality reservoir within the Lower Cretaceous
section. Mapping of these newly acquired 2D seismic data
indicated the pre-rift Base Cretaceous Newgrange structural
closure to be much larger than previously thought covering a total
area of c. 1,800 km2 with c. 1,000 km2 within the Company’s
licenced area. The Irish government has recently offered new
Licensing Options in the nearby southern Porcupine/Goban Spur
area – notable licensees include ExxonMobil, Statoil, Nexen
(CNOOC), Woodside & ENI (in conjunction with BP).

In July 2016, the second phase results from the Schlumberger
exploration collaboration project were released. This project
supports top seal and reservoir presence for Cretaceous
Newgrange target. The estimated gross un-risked Prospective
Resource potential for Newgrange is estimated to be c. 13.6 TSCF
GIIP or c. 9.2 BBO STOIIP. In addition, top seal capacity analysis
indicates the potential
for a hydrocarbon column of up to
c. 350 metres. Adjacent third party Licensing Options were also
awarded in 2015 Atlantic Margin Licensing Round.

Exploration: Goban Spur Basin

Newgrange

Ireland

United
Kingdom

100 Km

France

FEL 6/14 – Newgrange Prospect
FEL 6/14, located in the Goban Spur Basin, some 260 km off the
south-west coast of
Ireland, was originally awarded to the
Company (80.0%) and its partner Sosina (20.0%) in October 2011
as LO 11/11 during the 2011 Irish Atlantic Margin Round. In April
2014, LO 11/11 was converted into FEL 6/14 with the same
working interests.

The Newgrange prospect is a similar Cretaceous carbonate play-
type to the recently drilled Dunquin North residual oil accumulation.

The Newgrange prospect is located in c. 1,000 metre water depth.
However, it is notable that the crest of the Cretaceous closure is
just c. 500 metres below the seabed which means that this
prospect should be particularly cost-effective to drill. The
previously drilled 62/7-1 well, which was located c. 30 km from the
down-structure,
and was
Newgrange
encountered hydrocarbon shows in sands of Lower Jurassic age
indicating the presence of an active petroleum system.

prospect

drilled

Providence Resources P.l.c. | Annual Report | 2016 15

LIST OF ASSETS
(CONTINUED)

Exploration: Kish Bank, St George’s Channel and South Celtic Sea Basins

Ireland

United
Kingdom

France

Kish
Bank

Dragon

United Kingdom

100 Km

LO 13/4 – Silverback Prospect
In December 2013, the Company (100.0%) was offered a new
Licensing Option situated in c. 100 metres of water, c. 130 km off
the south coast of Ireland and covers nine offshore blocks totaling
a c. 1,530 km2 area. Seismic interpretation and mapping of
reprocessed 2D seismic reflection profile data has confirmed the
presence of a large Mesozoic structural closure within LO 13/4.
The closure as mapped at the top of the interpreted primary Lower
Triassic Sherwood Sandstone Group extends over a c.170 km2
area with the crest situated at a depth of c. 1,500 metres.

The Company was granted an 18-month extension to the term of
LO 13/4 which expired in December 2016 and the Company
elected not to convert it into a Standard Exploration Licence and
so the Licensing Option was relinquished.

SEL 2/11 – Kish Bank Prospect
Licensing Option (LO) 08/2 was originally awarded to the
Company (50.0%) and Star PETRONAS (50.0%) in 2008, with the
Company as Operator. The area is located in the Kish Bank Basin,
offshore Dublin, which is a Mesozoic basin bearing many
geological similarities with the adjacent and prolific East Irish Sea
Basin, offshore UK.

In December 2011, LO 08/2 was converted into SEL 2/11 with
the same working interests and an exploration well commitment
was made by the JV partners. In January 2012, a Foreshore
Licence application was made to carry out temporary seismic and
exploration drilling works on the Kish Bank Oil Prospect located
approximately c. 8 kilometres offshore. This Foreshore Licence
was granted to the Company in October 2012.

In February 2013, the Company decided to voluntarily surrender
the Foreshore Licence when it became clear that there had
been a governmental
in relation to the
European EIA Directive. In 2014, this transposition error was finally
corrected.

transposition error

In January 2016, the Company assumed a 100.0% working
interest in SEL 2/11 and subsequently, the Company has sought
a further time extension from the Irish government so that the
Company can advance the requisite permitting process for the
drilling of an exploration well. The Lower Triassic Sherwood
Sandstone Kish Bank Oil Prospect has estimated un-risked
recoverable prospective resources of c. 210 MMBO.

SEL 1/07 – Dragon Prospect
SEL 1/07 was awarded to the Company in February 2007
(100.0%), having previously being held under a Licensing Option
authorisation. The licence is situated on the Irish/UK median line
in the St George’s Channel. Having relinquished the adjacent UK
licence (P 1930) due to limited resource potential, based on newly
reprocessed PSDM 3D seismic data, the Company is currently
discussing the future status of the Irish licensing authorization with
the Irish regulator.

16 Providence Resources P.l.c. | Annual Report | 2016

BOARD OF DIRECTORS

(cid:1) Corporate Governance

Pat Plunkett B.A. Non-Executive Chairman
Pat Plunkett was appointed Non-Executive Chairman of the Company in October 2016. He was previously Non-Executive Chairman
of Tullow Oil Plc from 2000 to 2011 during which time Tullow grew from a small cap Oil & Gas plc to become Africa’s leading
independent oil company and a constituent of the UK’s FTSE100. He is currently Executive Chairman of T5 Oil and Gas Ltd, a private
company he founded in 2013 and which is focused on acquiring oil and gas assets in Africa and the Middle East. Pat has over 30 years’
experience in the financial services sector. He was a founding partner of the Riada & Co stockbroking and corporate finance businesses
and following their acquisition by ABN AMRO NV, he continued to manage these businesses until 1998. He is a former director of the
Irish Stock Exchange.

Tony O’Reilly B.A. Chief Executive
Tony O’Reilly has been Chief Executive of Providence Resources P.l.c. since 2005, having founded the Company in 1997 and
he has served as a Director since its incorporation. He has previously worked in mergers and acquisitions at Dillon Read and
in corporate finance at Coopers and Lybrand, advising natural resource companies. He served as Chairman of ARCON
International Resources P.l.c. (having been Chief Executive from 1996 to 2000) until April 2005 when ARCON merged with Lundin
Mining Corporation.

Dr. John O’Sullivan CGeol Technical Director
John is a geology graduate of University College, Cork and holds a Masters in Applied Geophysics from the National University of Ireland,
Galway. He also holds a Masters in Technology Management from the Smurfit Graduate School of Business at University College
Dublin and a doctorate in Geology from Trinity College Dublin. John is a Chartered Geologist and a Fellow of the Geological Society of
London. John has more than 25 years of experience in the oil and gas exploration and production industry having previously worked
with both Mobil and Marathon Oil. John is a qualified person as defined in the guidance note for Mining Oil & Gas Companies, March
2006 of the London Stock Exchange.

James S.D. McCarthy M.B.A. Non-Executive
James McCarthy was appointed as a Non-Executive Director of the Company in May 2005 and was appointed chairman of the board
on the retirement of Dr. Brian Hillary on 26 May 2015. He stepped down as Chairman on 1 October 2016. Mr McCarthy holds a
Bachelor Degree in Civil Law, an MBA from the University of Pittsburgh and is a qualified solicitor. He is Chief Executive of Nissan
Ireland and a Director of Corporate Finance Ireland Limited, Windsor Motors and Rockall Technologies Limited and a number of other
companies. Mr McCarthy is a former Director of Arcon International Resources P.l.c

Lex Gamble B.A., M.B.A. Non-Executive Director
Lex Gamble was appointed as a Non-Executive Director of the Company in August, 2005. Mr. Gamble holds a Bachelor of Arts Degree
from the University of Washington, and a Master’s Degree from Harvard Business School. He is a Director of Cardiac Insights Inc. and
a former Director of Harris Private Bank NA, North-western Trust Co., Keystone Capital Corp., General Nutrition Corp. and Ashford
Castle. He has been an investment banker for over 35 years serving as a Managing Director of Smith Barney, Morgan Grenfell and
Kidder Peabody. He has provided strategic advice to more than 200 U.S. and international companies, including several in the FTSE
100 and Fortune 500.

Philip O’Quigley B.Comm., FCA Non-Executive Director
Philip O’Quigley was Finance Director of Providence Resources from June 2008 until his appointment as Chief Executive Officer of
Falcon Oil & Gas in May 2012. Philip continues to serve the Company in his capacity as Non-Executive Director. Philip has over
20 years’ experience in finance positions in the oil and gas industry. His career spans a number of London and Dublin listed resources
companies. He is the chairperson of the Onshore Petroleum Association of South Africa. Philip is a fellow of the Institute of Chartered
Accountants in Ireland and qualified as a Chartered Accountant with Ernst & Young.

Providence Resources P.l.c. | Annual Report | 2016 17

DIRECTORS’ REPORT

The Directors submit their annual report together with the audited
financial statements of
the Company and its subsidiaries
(“Providence” or the “Group”) for the year ended 31 December
2016.

Directors
In October 2016, James McCarthy stepped down as
non-Executive Chairman, Mr. Pat Plunkett was appointed
non-Executive Chairman and Dr. Phil Nolan retired from the board.

Principal Activities, Business Review and Future
Developments
Information with respect to the Group’s principal activities and the
review of the business and future developments as required by
the Section 327 of the Companies Act 2014 is contained in the
Chairman’s and Chief Executive’s Statement and the Business
Review on pages 1 to 16.

During the period under review, the principal focus of management
has been on the Group’s hydrocarbon interests, offshore Ireland.

Results for the Year and State of Affairs at
31 December 2016
The Consolidated Income Statement
the year ended
31 December 2016 and the Consolidated Statement of Financial
Position at that date are set out on pages 25 to 27. The loss for
the year amounted to €20.546 million and net assets at
31 December 2016 were €111.318 million. No dividends or
transfers to reserves are recommended by the Directors.

for

Important Events since the Year End
On 8 March 2017, the Company signed a Farm Out Agreement on
FEL 2/14 (Druid & Drombeg) with Capricorn Ireland Limited, a
subsidiary of Cairn Energy Plc. Under the terms of the Farm Out,
Capricorn will take a 30% equity interest in return for paying 45%
of the costs of the exploration well on Druid & Drombeg in 2017
(up to a gross cost cap of $42 million) and will make a payment of
$2.8 million on a pro rata basis to the Company and to Sosina. In
the event that a subsequent appraisal well is drilled on FEL 2/14,
Capricorn will pay 40% of the costs of the proposed well (up to a
gross cost cap of $42 million) and will have the option to take over
Operatorship. This transaction is subject to Ministerial consent.

On 3 April 2017, the Company announced that it and fellow JV
partners in FEL 3/04 (Dunquin) agreed to licence 1,800km2 of 3D
from CGG which is being acquired in 2017 as part of multi-client
3D acquisition programme.

Mr. Tony O’Reilly and Dr. John O’Sullivan both retire from the
Board by rotation and, being eligible, offer
themselves for
re-election. Mr. Pat Plunkett, having been appointed in October
2016, offers himself for election.

Mr. Tony O’Reilly, Chief Executive, has a service contract, effective
from 1 May 2015, with the Company in respect of services outside
of the Republic of Ireland through a company beneficially owned
by him, Kildare Consulting Limited. The emoluments and fees
payable under the above mentioned contract amounted to
€366,390 for 2016 (see Note 8 and Note 25 (Related Party
Transactions)). The above mentioned contract is of two years
duration and is subject to one year’s notice period. The contract
was renewed on 1 April 2017.

Other
than the above there have been no contracts or
arrangements during the financial year in which a Director of the
Company was materially interested and which was significant in
relation to the Company’s business.

Secretary
Mr. Michael Graham retired as Company Secretary and
Ms. Críona Ryan was appointed Company Secretary with
effect from 1 March 2016.

Directors’ Shareholdings and Other Interests
The interests of the Directors and their spouses and minor children
in the share capital of the Company, all of which were beneficially
held, were as as follows:

31 December
2016
Or date of
appointment
if later)

31 December
2015

11 April
2017

1,000,000 1,000,000

242,470

500,011

Directors

Pat Plunkett

Tony O’Reilly

Dr. John O’Sullivan

61,154

226,154

Lex Gamble

Philip O’Quigley

James McCarthy

Company Secretary

Criona Ryan

200,000

400,000

6,136

167,531

39,411

203,300

18 Providence Resources P.l.c. | Annual Report | 2016

(cid:1) Corporate Governance

Details of the movement on outstanding options, and those exercised during the year are as follows (correct up until 11 April 2017):

Directors

Pat Plunkett

Tony O’Reilly

Dr. John O’Sullivan

James SD McCarthy

Lex Gamble

Philip O’Quigley

Secretary

Críona Ryan

At 31 December
2015

At 31 December
2016

70,000

100,000

12,000,000

70,000

100,000

35,000

25,000

150,000

70,000

25,000

15,000

9,000,000

400,000

15,000

275,000

Price
(Euro)

2.95

6.13

0.45

2.95

6.13

0.45

6.13

0.45

6.13

0.45

3.80

2.95

6.13

0.45

Expiry
Date

N/A

December 2017

July 2019

August 2019

December 2017

July 2019

August 2019

July 2019

August 2019

July 2019

August 2019

June 2016

December 2017

July 2019

August 2019

6.13

0.142

July 2019

August 2023

Based on the closing share price on 31 December 2016, no
options over shares were capable of being exercised, as the share
price was below the exercise price. The closing market price of
the ordinary shares at 31 December 2016 was €0.1747 and the
range during the financial year was €0.1000 to €0.2325.

Special Business

to Section 1022 and Section 1023(3) of

1) That, the Directors be and they are hereby empowered
pursuant
the
Companies Act 2014 to allot equity securities (within the
meaning of Section 1023 of the Companies Act 2014) for cash
as if the said Section 1022(1) of the Companies Act 2014 did
not apply to any such allotment, such power being limited to:

(a) the allotment of equity securities in connection with or
pursuant to any offer of equity securities open for a period
fixed by the Directors, by way of rights issue, open offer
or otherwise (an “Offering”) to the holders of ordinary
shares and/or any other persons entitled to participate
therein (including without limitation any holders of options
under the Company’s share option scheme(s) for the time
being)
to their
in proportion (as nearly as may be)
respective holdings of ordinary shares (or, as appropriate,
the number of ordinary shares which such other persons
are for the purposes of such Offering deemed to hold) on
a record date fixed by the Directors (whether before or
after the date of this meeting) and subject to such
exclusions or other arrangements as the Directors may
deem necessary or expedient to deal with any legal or
practical problems under the laws of any territory or the
requirements of any regulatory body or any stock

exchange in any territory or in relation to fractional
entitlements or otherwise howsoever;

(b) pursuant to the terms of any scheme for Directors and/or
employees etc. of the Company and/or its subsidiaries;
and

(c) otherwise than pursuant to sub-paragraphs (a) and (b)
above, having in the case of the relevant shares (as defined
by the said Section 1023 the allotment of equity securities
up to a nominal aggregate amount equal to €5,976,589
(representing approximately 10% of the issued share
capital of the Company as at the close of business on
10 April 2017),

provided in each case the power shall, unless revoked or
renewed by special resolution or the articles of association of
the Company, expire on the earlier of fifteen months from the
date of passing this Resolution and the conclusion of the next
annual general meeting of the Company unless previously
renewed, varied or revoked by the Company in general
meeting, save that the Company may before such expiry
make an offer or agreement which would or might require
equity securities to be allotted or issued after such expiry and
the Directors may allot equity securities (as defined by the said
Section 1023) in pursuance of such offer or agreement as if
the power conferred hereby had not expired.

The Directors are of the opinion that the above proposals are
in the best
interest of shareholders and unanimously
recommend to you to vote in favour of all resolutions as they
intend to do in respect of their own beneficial holdings.

Providence Resources P.l.c. | Annual Report | 2016 19

DIRECTORS’ REPORT
(CONTINUED)

Compliance Policy Statement of
Providence Resources P.l.c.
the
The directors,
Companies Act 2014, acknowledge that they are responsible for
securing the Company’s compliance with certain obligations
specified in that section (‘relevant obligations’). The directors
confirm that:

in accordance with Section 225(2) of

–

a compliance policy statement has been drawn up setting out
the Company’s policies that in their opinion are appropriate
with regard to such compliance;

appropriate arrangements and structures have been put in
place that, in their opinion, are designed to provide reasonable
assurance of compliance in all material respects with those
relevant obligations; and

a review has been conducted, during the financial year, of
those arrangements and structure.

It is also the policy of the Company to review at least twice during
the Company the
the course of each financial year of
arrangements and structures referred to above which have been
implemented with a view to determining if
they provide a
reasonable assurance of compliance in all material respects with
Relevant Obligations.

Statement of Directors’ Responsibilities in respect
of the Annual Report and the Financial Statements
The Directors are responsible for preparing the Directors’ Report
and the financial statements in accordance with applicable law
and regulations. Company law requires the Directors to prepare
financial statements for each financial year. Under that law they
have elected to prepare the Group financial statements in
accordance with International Financial Reporting Standards
(IFRS) as adopted by the EU and applicable law and the Company
financial statements in accordance with Financial Reporting
(‘FRS101’),
Standard 101 ‘Reduced Disclosure Framework’
issued by the Financial Reporting Council
in the UK and
promulgated by the Institute of Chartered Accountants in
Ireland.Reporting Standard 101 ‘Reduced Disclosure Framework’
(‘FRS101’), issued by the Financial Reporting Council in the UK
and promulgated by the Institute of Chartered Accountants in
Ireland.

Under company law the Directors must not approve the Group
and Company financial statements unless they are satisfied that
they give a true and fair view of the assets, liabilities and financial
position of the Group and Company and of the Group’s profit or
loss for that year. In preparing each of the Group and Company
financial statements, the Directors are required to:

•

select suitable accounting policies and then apply them
consistently;

• make judgements and estimates that are reasonable and

prudent;

•

state whether they have been prepared in accordance with
IFRS as adopted by the EU and as regards the Company,
comply with FRS101 together with the requirements of the
Companies Act 2014; and

• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and
Company will continue in business.

20 Providence Resources P.l.c. | Annual Report | 2016

The Directors are responsible for keeping adequate accounting
records which disclose with reasonable accuracy at any time the
assets, liabilities, financial position and profit or loss of the
Company and which enable them to ensure that the financial
statements of the Group are prepared in accordance with
applicable IFRS, as adopted by the EU and comply with the
provisions of the Companies Act 2014. They have general
responsibility for taking such steps as are reasonably open to
them to safeguard the assets of the Group and the Company
and to prevent and detect fraud and other irregularities. The
Directors are also responsible for preparing a Directors’ Report
that complies with the requirements of the Companies Act 2014.

The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website. Legislation in the Republic of Ireland governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.

Going Concern
The Directors have considered carefully the financial position of
the Group and, in that context, have prepared and reviewed cash
flow forecasts for the period to 31 May 2018. As set out further in
the Chairman’s and Chief Executive’s statement
the Group
expects to incur significant levels of capital expenditure in 2017
and 2018, consistent with its strategy as an exploration company.
In this regard, the Directors have considered both current and
future expenditure commitments and also the options available to
fund such commitments, including further farm out arrangements,
disposal of assets, and both equity and debt funding alternatives.
Having regard to current levels of funding in place, the proceeds
due to be received from the recently announced farm out of Druid
and Drombeg, and the other options available, the Directors are
satisfied that the Group will be in a position to fund this capital
expenditure programme as well as other planned exploration and
operating activities. On this basis, the Directors are satisfied that
it is appropriate to prepare the financial statements on a going
concern basis.

Corporate Governance
The Company is committed to high standards of corporate
governance. Although the Company, as an ESM and AIM quoted
Company, is not required to comply with the UK Corporate
Governance Code, the Directors support high standards of
corporate governance and, in so far as is practical given the
Company’s size, have implemented the following corporate
governance provisions for the year ended 31 December 2016.

The Board
The Board is made up of two executive and four Non-Executive
Directors. Biographies of each of the Directors are set out on
page 17.

All the Directors bring independent judgement to bear on issues
affecting the Group and all have full and timely access to
information necessary to enable them to discharge their duties.
The Directors have a wide and varying array of experience in the
industry. The Board agrees a schedule of regular meetings
to be held in each calendar year and also meets on other
occasions as necessary. Meetings are held at the head office in
Dublin. Board meetings were held on 17 occasions during 2016.
An agenda and supporting documentation was circulated in
advance of each meeting.

(cid:1) Corporate Governance

There is an agreed list of matters which the Board has formally
reserved to itself for decision, such as approval of the Group’s
financial
commercial strategy,
statements, Board membership, acquisitions and disposals, major
capital expenditure, risk management and treasury policies.
Responsibility for certain matters is delegated to Board
Committees.

trading and capital budgets,

Remuneration Committee
The Remuneration Committee comprises four Non-Executive
Directors and is chaired by Mr Philip O’Quigley. Emoluments of
Executive Directors and senior management are determined by
the Remuneration Committee. In the course of each financial year
the Remuneration Committee determines basic salaries as well as
the parameters for any possible bonus payments.

There is an agreed procedure for Directors to take independent
legal advice. The Company Secretary is responsible for ensuring
that Board procedures are followed, and all Directors have direct
access to the Company Secretary. Mr. Michael Graham retired as
Company Secretary and Ms. Críona Ryan was appointed
Company Secretary with effect from 1 March 2016.

financial
All Directors receive regular Group management
statements and reports and full Board papers are sent to each
Director in sufficient time before Board meetings, and any further
supporting papers and information are readily available to all
Directors on request. The Board papers include the minutes of all
committees of the Board which have been held since the previous
Board meeting, and, the chairman of each committee is available
to give a report on the committee’s proceedings at Board
meetings if appropriate.

The Board has a process whereby each year every Director will
meet the Chairman to review the conduct of Board meetings and
the general corporate governance of the Group. The role of the
Chairman (Mr. Pat Plunkett) is Non-Executive. The Non-Executive
Directors are independent of management and have no material
interest or other relationship with the Group.

Each year, one third of the Directors retire from the board by
rotation and every Director is subject to this rule. Effectively,
therefore, each Director will retire by rotation within each three-
year period.

Board Committees

The Board has implemented an effective committee structure to
assist in the discharge of its responsibilities. The committees and
their members are listed inside the back cover of this report. All
committees of the Board have written terms of reference dealing
with their authority and duties. Membership of the Audit and
Remuneration Committees is comprised exclusively of Non-
Executive Directors. The Company Secretary acts as secretary to
each of these committees.

Audit Committee

The Audit Committee reviews the accounting principles, policies
and practices adopted in the preparation of the interim and annual
financial statements and discusses with the Group’s Auditors the
results and scope of the audit. It also reviews the scope and
performance of the Group’s internal finance function and the
effectiveness and independence of the external Auditors. The
external Auditors are invited to attend the Audit Committee
meetings, and the Chief Financial Officer also attends. The external
auditors have the opportunity to meet with the members of the
Audit Committee alone at least once a year. The Audit Committee
comprises three Non-Executive Directors and is chaired by
Mr. Lex Gamble.

The Remuneration Committee applies the same philosophy in
determining Executive Directors’ remuneration as is applied in
respect of all employees. The underlying objective is to ensure that
rewarded relative to their
individuals are appropriately
responsibility, experience and value to the Group. The
Remuneration Committee is mindful of the need to ensure that, in
a competitive environment, the Group can attract, retain and
motivate executives who can perform to the highest levels of
expectation. Annual bonuses, if any, are determined by the
Remuneration Committee on the basis of objective assessments
based on the Group’s performance during the year in terms of key
financial
indicators, as well as a qualitative assessment of the
individual’s performance.

Details of Directors’ remuneration for the current period are set
out in Note 8 to the financial statements.

Share Option Scheme
Share option schemes were introduced in August 1997 (expired
August 2007), May 2005 (expired October 2015) and June 2009
from which new share options may be offered to employees,
Directors and consultants. Options are recommended at a
level to attract retain and motivate participants in the competitive
environment in which the Group operates. There have been
no changes in this policy since the adoption of
the first
scheme in August 1997. The 1997 and 2005 Scheme have both
now expired and no new options may be granted from these
schemes. The Remuneration Committee reviews and assesses
proposals to grant share options to participants under the 2009
share option scheme. Participation is at the discretion of Directors
for eligible participants.

Under the 2009 Scheme, which is a ten year scheme, the exercise
period for any options granted is seven years. The 2009 Scheme
provides for the award of options over Ordinary Shares up to a
maximum of 5% of the issued share capital of the Company.

The 2009 Scheme set out certain share growth performance
criteria with the base price against which such criteria is assessed
being established from the closing market price of the Ordinary
Shares on the date preceding the date of grant. The 2009 Scheme
operates as an equity-settled share option scheme and options
can be granted subject to the following conditions (which can be
varied at the Company’s sole discretion):

(i) 50% of the total number of options granted are exercisable
after one year from the date of grant, provided that the market
price of the Ordinary Shares has increased by a minimum of
25% and that such an increase is maintained over a period of
three months prior to the exercise of any option;

(ii) The remaining 50% of the total number of option granted are
exercisable after a further year has elapsed, provided that the
market price of the Ordinary Shares has increased by a
minimum of 50% and that such an increase is maintained over
a period of three months prior to the exercise of any option.

Providence Resources P.l.c. | Annual Report | 2016 21

DIRECTORS’ REPORT
(CONTINUED)

2016 LTIP Scheme
In 2016, the Director implemented a long term incentive plan (the
“2016 LTIP Scheme”) for directors following alterations to certain
provisions of
the 2009 Share Option Scheme (the “2009
Scheme”). The alterations provide for a fixed exercise price
significantly above the then market price and a reduction to the
period of time during which options can be exercised. The
applicable alterations were as follows:

(i) 50% of the total number of options granted are exercisable
after one year from the date of grant provided that the market
price of the Ordinary Shares exceeds a price of €0.45 per
Ordinary Share;

(ii) The remaining 50% of the total number of options granted are
exercisable after a further year has elapsed, provided that the
market price of the Ordinary Shares exceeds a price of €0.45
per Ordinary Share.

No options shall be exercisable more than three years after the
grant date and all options which have not been exercised by that
date shall lapse.

In addition, the 2016 LTIP Scheme details the manner in which
options are exercisable by “Good Leavers” and “Bad Leavers”.

If a Participant ceases to hold office or employment by virtue of
which he is eligible to participate in the Scheme due to:

(a) resignation (other

than due to terminal

illness or

total

permanent incapacitation);

(b) dismissal for cause or poor performance; or

than due to genuine
redundancy or death) determined by the Board to constitute a
Bad Leaver,

then, the Board may in its absolute discretion decide whether any
Option or any portion thereof, shall be exercisable (subject to the
conditions applicable thereto) on or after such cessation provided
however that no Option shall be exercisable or exercised later than
the expiration of the earlier of the following periods which ever shall
first occur:-

(i)

the third anniversary of the grant of that Option; or

(ii) one month after such cessation of employment.

If a Participant ceases to hold office or employment by virtue
of which he is eligible to participate in the Scheme due to
genuine redundancy or otherwise for reasons other than as a Bad
Leaver, then in such case an Option held by such Participant may,
subject to the conditions applicable thereto, be exercisable to the
earliest of:

(i)

the third anniversary of the grant of that Option; or

(ii)

the expiry of twelve months from the date of death of the
Participant, and shall lapse on the expiry of such period.

Having introduced the 2016 LTIP Scheme on the terms set
out above, the Company granted 22.6 million options over
22.6 million ordinary shares of €0.10 each in the Company
(“Ordinary Shares”), with effect from 8 August 2016, with a
strike price set at €0.45 per Ordinary Share.

For the avoidance of doubt, the above alterations made to the 2009
Scheme only relate to options being granted under the 2016 LTIP

22 Providence Resources P.l.c. | Annual Report | 2016

Scheme. All other options granted or capable of being granted are
subject to the original provisions of the 2009 Scheme.

Nomination Committee
The Nomination Committee comprises the four Non-Executive
Directors. The Nomination Committee, which is chaired by
formally agrees criteria for new non-
Mr, James McCarthy,
executive Director appointments, including experience of the
industry in which the Group operates and professional
background.

Shareholders
There is regular dialogue with institutional shareholders and
presentations are made at the time of the release of the annual
and interim results. The Company encourages communication
with private shareholders throughout the year and welcomes their
participation at general meetings. The Company’s website is
www.providenceresources.com. This website is regularly updated.
All Board members attend the Annual General Meeting and are
available to answer questions. Separate resolutions are proposed
on substantially different issues and the agenda of business to be
conducted at the Annual General Meeting includes a resolution to
receive and consider the Annual Report and Accounts. The
chairmen of the Board’s committees will also be available at the
Annual General Meeting. The Board regards the Annual General
Meeting as a particularly important opportunity for shareholders,
Directors and management to meet and exchange views. Notice
of the Annual General Meeting together with the Annual Report
and accounts is sent to shareholders in accordance with the
Articles of Association of the Company and details of the proxy
votes for and against each resolution are announced after the
result of the hand vote.

Internal Control
The Directors have overall responsibility for the Group’s system of
internal control to safeguard shareholders’ investments and the
Group assets and have delegated responsibility for
the
implementation of this system to executive management. This
system includes financial controls which enable the Board to meet
its responsibilities for the integrity and accuracy of the Group’s
accounting records. Following the publication of the Turnbull
Report, the Board established a process of compliance which
involved an expansion of the Board’s responsibility to maintain,
review and report on all
internal controls, including financial,
operational and compliance risk management. Among the
processes applied in reviewing the effectiveness of the system of
internal controls are the following: Budgets are prepared for
approval by executive management and inclusion in a Group
budget approved by the Board. Expenditure and income are
regularly compared to previously approved budgets. The Board
establishes treasury and commodity risk policies as appropriate,
for implementation by executive management. All commitments
for expenditure and payments are compared to previously
approved budgets and are subject to approval by personnel
designated by the Board of Directors or by the Board of subsidiary
companies.

Regular management meetings take place to review financial and
operational activities. Cash flow forecasting is performed on an
ongoing basis to ensure efficient use of cash resources. Regular
financial results are submitted to and reviewed by the Board of
Directors.

The Directors,
effectiveness of the Group’s system of internal financial control.

through the Audit Committee,

review the

A review of the effectiveness of the system of internal control is
carried out annually, through the annual audit process. The Board
has considered the requirement for an internal audit function.
Based on the scale of
the Group’s operations and close
involvement of the Board, the Directors have concluded that an
internal audit function is not currently required.

Risk Management

Currency Risk Management

The Board reviews its annual Euro, Sterling and US dollar
requirements by reference to bank forecasts and prevailing
exchange rates and management is authorised to achieve best
available rates in respect of each forecast currency requirements.

General Industry Risk

The Group’s business may be affected by the general risks
associated with all companies in the oil and gas industry. These
risks (the list of which is not exhaustive) include: general economic
activity, the world oil and gas prices, the marketability of the
hydrocarbons produced, action taken by other oil-producing
nations and the extent of governmental regulation and taxation.

All drilling to establish productive hydrocarbon reserves is
inherently speculative and, therefore, a considerable amount of
professional judgement is involved in the selection of any prospect
for drilling. In addition, even when drilling successfully encounters
oil and gas and a well is completed as a producing oil or gas well,
unforeseeable operating problems or climatic conditions may arise
which render it uneconomical to produce such oil and natural gas.

Estimates of potential reserves include a substantial proportion
which are undeveloped. These reserves require further capital
expenditure in order to bring them into production. No guarantee
can be given as to the success of drilling programmes in which the
Group has interests. The Group can operate in different political
jurisdictions where there could be risks pertaining to local
regulations, war or nationalisation of reserves.

Substantial Shareholdings

So far as the Board is aware, no person or company, other than
those mentioned below, held 3% or more of the Ordinary share
capital of the Company at 11 April 2017.

M&G Investment Management Limited

14.67%

The Capital Group Companies, Inc.

Pageant Holdings Limited

Merseyside Pension Fund

Henderson Group Plc

Marlborough Fund Managers Ltd

BlackRock Inc.

Goldman Sachs International

9.71%

7.45%

7.20%

5.99%

4.86%

3.51%

3.07%

(cid:1) Corporate Governance

Political Donations
There were no political donations during the year (2015 Nil).

Books and Accounting Records
The Directors are responsible for ensuring adequate accounting
records, as outlined in Section 281 of the Companies Act 2014,
are kept by the Company. The Directors, through the use of
appropriate procedures and systems and the employment of
competent persons, have ensured that measures are in place to
secure compliance with these requirements.

Relevant audit information
The Directors believe that they have taken all steps necessary to
make themselves aware of any relevant audit information and have
established that the Group’s statutory auditors are aware of that
information. In so far as they are aware, there is no relevant audit
information of which the Group’s statutory auditors are unaware.

These books and accounting records are maintained at the
Company’s business address, Airfield House, Airfield Park,
Donnybrook, Dublin D04 CP49, Republic of Ireland.

Auditors
KPMG have indicated their willingness to continue in office in
accordance with Section 383 (2) of the Companies Act 2014.
Shareholders will be asked to authorise the Directors to fix
their remuneration.

On behalf of the Directors

Pat Plunkett
Chairman

11 April 2017

Tony O’Reilly
Chief Executive

Providence Resources P.l.c. | Annual Report | 2016 23

INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PROVIDENCE RESOURCES PLC

We have audited the Group and Company financial statements
(‘‘financial statements’’) of Providence Resources Plc for the year
ended 31 December 2016 which comprise the Consolidated
Income Statement, the Consolidated Statement of Comprehensive
Income, the Consolidated Statement of Financial Position and
Company Balance Sheet,
the Consolidated and Company
Statement of Changes in Equity, the Consolidated Cash Flow
Statement and the related notes. The financial reporting framework
that has been applied in their preparation is Irish law and International
Financial Reporting Standards (IFRS) as adopted by the European
Union and as regards the Company financial statements, as applied
in accordance with FRS 101 Reduced Disclosure Framework (“FRS
101”) and the provisions of the Companies Act 2014. Our audit was
conducted in accordance with International Standards on Auditing
(ISAs) (UK and Ireland).

Opinions and conclusions arising from our audit

1 Our opinion on the financial statements is unmodified

In our opinion:

•

the Group financial statements give a true and fair view of the
assets, liabilities and financial position of the Group as at
31 December 2016 and of its loss for the year then ended;

the Company balance sheet gives a true and fair view of the
assets, liabilities and financial position of the Company as at
31 December 2016;

the Group financial statements have been properly prepared in
accordance with IFRS as adopted by the European Union;

the Company financial statements have been properly
prepared in accordance with FRS 101; and

the Group financial statements and Company financial
statements have been properly prepared in accordance with
the requirements of the Companies Acts 2014.

2 Our conclusions on other matters on which we are

required to report by the Companies Act 2014 are
set out below

We have obtained all the information and explanations which we
consider necessary for the purposes of our audit.

In our opinion the accounting records of the Company were
sufficient to permit the financial statements to be readily and
properly audited and the financial statements are in agreement
with the accounting records.

In our opinion the information given in the Directors’ Report is
consistent with the financial statements.

3 We have nothing to report in respect of matters on

which we are required to report by exception

ISAs (UK & Ireland) require that we report to you if, based on the
knowledge we acquired during our audit, we have identified
that contains a material
report
information in the annual
inconsistency with either
the financial
that knowledge or
statements, a material misstatement of fact, or that is otherwise
misleading.

In addition, the Companies Act 2014 requires us to report to you
if, in our opinion, the disclosures of directors’ remuneration and
transactions required by Sections 305 to 312 of the Act are
not made.

24 Providence Resources P.l.c. | Annual Report | 2016

Basis of our report, responsibilities and restrictions on use

As explained more fully in the Statement of Directors’
Responsibilities set out on page 20, the Directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view and otherwise comply
with the Act. Our responsibility is to audit and express an opinion
on the financial statements in accordance with Irish law and
International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Financial Reporting
Council’s Ethical Standards for Auditors.

An audit undertaken in accordance with ISAs (UK & Ireland)
involves obtaining evidence about the amounts and disclosures
in the financial statements sufficient to give reasonable assurance
that the financial statements are free from material misstatement,
whether caused by fraud or error. This includes an assessment of:
whether the accounting policies are appropriate to the Group and
Company’s circumstances and have been consistently applied
and adequately disclosed; the reasonableness of significant
accounting estimates made by the Directors; and the overall
presentation of the financial statements.

In addition, we read all the financial and non-financial information
in the Annual Report to identify material inconsistencies with the
audited financial statements and to identify any information that is
apparently materially incorrect based on, or materially inconsistent
with, the knowledge acquired by us in the course of performing
the audit.
If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for
our report.

Whilst an audit conducted in accordance with ISAs (UK & Ireland)
is designed to provide reasonable assurance of identifying material
misstatements or omissions it is not guaranteed to do so. Rather
the auditor plans the audit to determine the extent of testing
needed to reduce to an appropriately low level the probability that
the aggregate of uncorrected and undetected misstatements
does not exceed materiality for the financial statements as a
whole. This testing requires us to conduct significant audit work on
a broad range of assets, liabilities, income and expense as well as
devoting significant time of the most experienced members of the
audit team, in particular the engagement partner responsible for
the audit, to subjective areas of the accounting and reporting.

Our report is made solely to the Company’s members, as a body,
in accordance with Section 391 of the Companies Act 2014. Our
audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume
responsibility to anyone other
than the Company and the
Company’s members as a body, for our audit work, for this report,
or for the opinions we have formed.

Conall O’Halloran
for and on behalf of
KPMG
Chartered Accountants, Statutory Audit Firm
1 Stokes Place
St. Stephen’s Green Dublin 2
D02 DE03

11 April 2017

CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2016

Continuing operations

Administration and legal expenses

Pre-licence expenditure

Impairment of exploration and evaluation assets

Operating loss

Finance income

Finance expense

Loss before income tax

Income tax expense

Loss for the financial year

Loss per share (cent) – total

Basic and diluted loss per share

The total loss for the year is entirely attributable to equity holders of the company.

(cid:1) Financial Statements

Note

2,9

2016
€’000

2015
€’000

(3,688)

(61)

(15,095)

(18,844)

(1,741)

(20,546)

—

(6,437)

(856)

(5,787)

(13,080)

(11,091)

(24,137)

—

(20,546)

(24,137)

(5.80)

(19.57)

Providence Resources P.l.c. | Annual Report | 2016 25

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2016

Loss for the financial year

OCI items that can be reclassified into profit or loss:
Foreign exchange translation differences

Total income recognised in other comprehensive income from continuing operations

Total comprehensive expense for the year

Note

2016
€’000

2015
€’000

(20,546)

(24,137)

1,994

7,178

(18,552)

(16,959)

The total comprehensive expense for the year is entirely attributable to equity holders of the company.

26 Providence Resources P.l.c. | Annual Report | 2016

(cid:1) Financial Statements

Note

2016
€’000

2015
€’000

89,276

98,211

102

192

168

296

89,570

98,675

255

31,403

31,658

2,174

6,518

8,692

121,228

107,367

71,452

623

25,694

623

247,918

226,998

13,815

1,398

11,821

3,586

(223,888)

(199,780)

111,318

68,942

7,783

7,424

7,783

—

2,127

9,910

7,424

18,289

12,712

31,001

38,425

121,228

107,367

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016

Assets

Exploration and evaluation assets

Property, plant and equipment

Intangible assets

Total non-current assets

Trade and other receivables

Cash and cash equivalents

Total current assets

Total assets

Equity

Share capital

Capital conversion reserve fund

Share premium

Foreign currency translation reserve

Share based payment reserve

Retained deficit

Total equity attributable to equity holders of the company

Liabilities

Decommissioning provision

Total non-current liabilities

Loans and borrowings

Trade and other payables

Total current liabilities

Total liabilities

Total equity and liabilities

On behalf of the board

Pat Plunkett
Chairman

11 April 2017

Tony O’Reilly
Chief Executive

Providence Resources P.l.c. | Annual Report | 2016 27

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2016

Share
capital
€’000

Capital
reserve
fund
€’000

Share
premium
€’000

Foreign
currency
translation
reserve
€’000

Share
based
payment
reserve
€’000

Retained
deficit
€’000

Total
€’000

At 1 January 2016

25,694

623

226,998

11,821

3,586

(199,780)

68,942

Total comprehensive income
Loss for financial year

Currency translation

Total comprehensive income

Transactions with owners, recorded
directly in equity
Share based payments

Share options cancelled in year

Share options lapsed in year

Shares issued in year (note 16)

At 31 December 2016

—

45,758

71,452

Share
capital
€’000

—

20,920

—

1,994

—

(20,546)

—

1,994

(20,546)

(18,552)

—

142

(1,493)

(837)

—

1,493

837

142

—

(5,892)

60,786

623

247,918

13,815

1,398

(223,888)

111,318

Capital
reserve
fund
€’000

Share
premium
€’000

Foreign
currency
translation
reserve
€’000

Share
based
payment
reserve
€’000

Retained
deficit
€’000

Total
€’000

At 1 January 2015

18,151

623

210,230

4,643

4,282

(176,339)

61,590

—

7,178

—

(24,137)

—

7,178

(24,137)

(16,959)

—

16,768

—

(696)

—

696

—

623

226,998

11,821

3,586

(199,780)

—

24,311

68,942

—

Total comprehensive income
Loss for financial year

Currency translation

Total comprehensive income

Transactions with owners, recorded
directly in equity
Share options lapsed in year

Shares issued in year (note 16)

At 31 December 2015

—

7,543

25,694

28 Providence Resources P.l.c. | Annual Report | 2016

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2016

(cid:1) Financial Statements

Cash flows from operating activities

Loss after tax for the year

Adjustments for:
Depletion and depreciation

Amortisation of intangible assets

Impairment of exploration and evaluation assets

Finance income

Finance expense

Equity settled share payment charge

Foreign exchange

Change in trade and other receivables

Change in trade and other payables

Interest paid

Net cash outflow from operating activities

Cash flows from investing activities:
Interest received

Acquisition of exploration and evaluation assets

Acquisition of property, plant and equipment

Movement in restricted cash

Net cash used in investing activities

Cash flows from financing activities:
Proceeds from issue of share capital

Issued costs

Repayment of loans and borrowings

Net cash from financing activities

Net increase in cash and cash equivalent

Cash and cash equivalents at 1 January

Effect of exchange rate fluctuations on cash and cash equivalents

Cash and cash equivalents at 31 December

2016
€’000

2015
€’000

(20,546)

(24,137)

104

15,095

(39)

1,741

142

1,113

1,919

(10,585)

(1,266)

(12,256)

(3,982)

—

(3,943)

61,202

(416)

(19,633)

41,153

24,954

6,518

(69)

31,403

5,787

(34)

11,091

—

(2,684)

(287)

(521)

(4,204)

(14,938)

(7,746)

(484)

3,296

(4,900)

25,754

(1,443)

(3,671)

20,640

802

5,256

460

6,518

Providence Resources P.l.c. | Annual Report | 2016 29

NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS

1 Accounting policies

Reporting entity
Providence Resources P.l.c. (the “company”) is a company domiciled in Ireland. The Consolidated Financial Statements of the company
for the year ended 31 December 2016 are comprised of the financial statements of the company and its subsidiaries, together referred
to as the “Group”.

Basis of preparation
The Consolidated Financial Statements are presented in euro, rounded to the nearest thousand (€’000) except where otherwise
indicated. The euro is the functional currency of the parent company. The Consolidated Financial Statements are prepared under
the historical cost basis except for share options which are measured at grant date fair value, and derivative financial instruments
which are measured at fair value at each reporting date.

The preparation of financial statements requires management to use judgements, estimates and assumptions that affect the application
of policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from those estimates. Estimates
and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised and in any future periods affected. Details of critical judgements are disclosed in the accounting policies.

Under the provisions of Section 304 of the Companies Act 2014, the parent company is not presenting a separate profit and loss
account. A loss of €15,929,000 (2015: €60,744,000) for the financial year ended 31 December 2016 has been dealt with in the
separate profit and loss account of the company.

The financial statements were authorised for issue by the Board of Directors on 11 April 2017.

Going concern
The Directors have considered carefully the financial position of the Group and, in that context, have prepared and reviewed cash flow
forecasts for the period to 31 May 2018. As set out further in the Chairman’s and Chief Executive’s statement the Group expects to
incur significant levels of capital expenditure in 2017 and 2018, consistent with its strategy as an exploration company. In this regard,
the Directors have considered both current and future expenditure commitments and also the options available to fund such
commitments, including further farm out arrangements, disposal of assets, and both equity and debt funding alternatives. Having
regard to current levels of funding in place, the proceeds due to be received from the recently announced farm out of Druid and
Drombeg, and the other options available, the Directors are satisfied that the Group will be in a position to fund this capital expenditure
programme as well as other planned exploration and operating activities. On this basis, the Directors are satisfied that it is appropriate
to prepare the financial statements on a going concern basis.

Statement of compliance
The group financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the
EU (EU IFRS).

Recent accounting pronouncements
The following are amendments to existing standards and interpretations that are affective for the Group’s financial year from 1 January
2016:
• Annual Improvements to IFRSs 2012-2014 cycle
•
•
•
•
•
•
•

IFRS 11: Accounting for acquisitions of interests in Joint Operations
IFRS 14: Regulatory Deferral Accounts
IAS 16: Property, Plant and Equipment and IAS 41: Bearer Plants
IAS 16 and 38: Acceptable methods of depreciation/amortisation
IAS 27: Equity method in Separate Financial Statements
IAS 1: Disclosure initiative
IFRS 10, IFRS 12 and IAS 28: Investment entities: Applying the consolidation exception.

The adoption of the above and interpretations and amendments did not have a significant impact on the Group’s Consolidated Financial
Statements.

New IFRSs and amendments
• Annual Improvements to IFRSs 2014-2016 cycle*
•
•
•
•
•
•

IFRS 15, ‘Revenue from Contracts with Customers’ (effective for the Group’s 2018 Consolidated Financial Statements)
IFRS 9, ‘Financial Instruments’ (effective for the Group’s 2018 Consolidated Financial Statements)
IFRS 16 ‘Leases’ (effective for the Group’s 2019 Consolidated Financial Statements)*
IFRS 2: Classification and measurement of share based payments*
IAS 7: Disclosure initiative*
IAS 12: Recognition of deferred tax assets for unrealised losses.*

* Not yet EU Endorsed

The Directors do not believe that any of the above standards will have a significant impact on Group reporting.

30 Providence Resources P.l.c. | Annual Report | 2016

(cid:1) Financial Statements

Basis of consolidation

The consolidated financial statements include the financial statements of Providence Resources Plc and its subsidiaries.

Subsidiaries are entities controlled by the Group. Control exists when the Group is exposed to or has the right to variable returns from
its involvement with the entity and has the ability to affect those returns through its power of the entity. In assessing control, potential
voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the
Consolidated Financial Statements from the date that control commences until the date that control ceases. Intra-group balances, and
any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the Consolidated Financial
Statements.

Judgements and estimates

Jointly controlled operations

Jointly controlled operations are those activities over which the Group exercises joint control with other participants, established by
contractual agreement. The Group recognises, in respect of its interests in joint operations, the assets that it controls, the liabilities that
it incurs, the expenses that it incurs and the share of the income that it earns from the sale of goods or services by the joint operation.

Preparation of financial statements pursuant to EU IFRS requires a significant number of judgemental assumptions and estimates to
be made. These impact on the income and expenses recognised both within the income statement and the statement of
comprehensive income together with the valuation of the assets and liabilities in the statement of financial position. Such estimates and
judgements are based on historical experience and other factors, including expectation of future events that are believed to be
reasonable under the circumstances and are subject to continual re-evaluation. It should be noted that the impact of valuation in some
assumptions and estimates can have a material impact on the reported results. The following are key sources of estimation uncertainty
and critical accounting judgements in applying the Group’s accounting policies.

Exploration and evaluation assets
The carrying value of exploration and evaluation assets was €89.3 million (2015: €98.2 million) at 31 December 2016. The Directors
carried out a review, in accordance with IFRS 6 “Exploration for and evaluation of mineral interests”, of the carrying value of these
assets and are satisfied that these are recoverable, acknowledging however that their recoverability is dependent on future successful
exploration efforts.

Decommissioning
The decommissioning provision amounts to €7.8 million (2015: €7.4 million) and represents management’s best estimate of the costs
involved in decommissioning the various exploration licence areas to return them to their original condition. These estimates include
certain management assumptions with regard to future costs, inflation rates and discount rates.

Going concern

Refer to page 30 for further details

Employee benefits

(i) Defined contribution plans

A defined contribution plan is a post–employment benefit plan under which an entity pays a fixed contribution into a separate entity
and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension
plans are recognised as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.
Prepaid contributions are recognised as an asset
reduction in future payments
is available.

that a cash refund or

to the extent

(ii) Share based payment transactions

The company’s “2005 Scheme”, “2009 Scheme” and “2016 Scheme” are equity-settled share based payment arrangements with
non-market performance conditions which fall within the scope of and are accounted for under the provisions of IFRS 2 – Share Based
Payment. Accordingly, the grant date fair value of the options granted under these schemes is recognised as a personnel expense with
a corresponding increase in the “Share based payment reserve”, within equity, over the vesting period. The fair value of these options
is measured using an appropriate option pricing model, taking into account the terms and conditions upon which the options were
granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest, except where
forfeiture is only due to share prices not achieving the threshold for vesting.

Providence Resources P.l.c. | Annual Report | 2016 31

NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

1 Accounting policies (continued)

Finance income and expenses

Finance income comprises interest income on funds invested. Interest income is recognised as it accrues, using the effective interest
method.

Finance expenses comprise interest or finance expense on borrowings, unwinding of any discount on provisions, and foreign exchange
movements in the retranslation of non-euro denominated liabilties. Borrowing costs are recognised in profit or loss using the effective
interest method.

Foreign currency

(i)

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates
of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the
functional currency at the exchange rate at that date. Foreign currency gains or losses are generally recognised in the income statement.
Gains and losses arising on loans are classified as part of finance costs.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional
currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are
recognised in the income statement, except for differences arising on the retranslation of available-for-sale equity instruments, which
are not deemed to be impaired, or a financial liability designated as a hedge of the net investment in a foreign operation (see (ii) below).

(ii) Foreign operations

The assets and liabilities of foreign operations are translated to euro at exchange rates at the reporting date. The income and expenses
of foreign operations are translated to euro at exchange rates at the dates of the transactions.

Foreign currency differences associated with the retranslation of foreign operations are recognised in other comprehensive income and
accumulated in the foreign currency translation reserve (FCTR). When a foreign operation is disposed of the relevant amount in the FCTR
is transferred to the income statement.

Income tax expense

Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that
it relates to items recognised directly in other comprehensive income, in which case it is recognised in other comprehensive income.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the
reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following
temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and
jointly controlled entities to the extent that they are unlikely to reverse in the foreseeable future. Deferred tax is measured at the tax rates
that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or
substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset
current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on
different tax entities, but they intend to settle current tax liabilities on a net basis or their tax assets and liabilities will be settled
simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary
difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.

Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the
profit or loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of
ordinary shares outstanding for the effects of all potentially dilutive ordinary shares.

Exploration and evaluation assets and development and production assets

The Group has adopted IFRS 6 “Exploration for and Evaluation of Mineral Resources” in preparing these financial statements.

32 Providence Resources P.l.c. | Annual Report | 2016

(cid:1) Financial Statements

(i)

Exploration and evaluation assets

Expenditure incurred prior to obtaining the legal rights to explore an area is written off to the income statement. Expenditures incurred
on the acquisition of a licence interest are initially capitalised on a licence by licence basis considering the degree to which the
expenditure can be associated with finding specific reserves. Exploration and evaluation expenditure incurred in the process of
determining exploration targets within licensed areas is also capitalised. No value is attributed to exploration licenses granted. These
expenditures are held undepleted within the exploration licence asset until such time as the exploration phase on the licence area is
complete or commercial reserves have been discovered.

Exploration and evaluation drilling costs are capitalised within each licence area until the success or otherwise of the well has been
established. Unless further evaluation expenditures in the licence area have been planned and agreed or unless the drilling results
indicate that hydrocarbon reserves exist and there is a reasonable prospect that these reserves are commercial, drilling costs are
written off. Internal costs are capitalised where it is evident that these costs are directly attributable to the evaluation or exploration of
those assets. Interest is capitalised within exploration and evaluation assets if it is directly attributable to the evaluation or exploration
of those assets.

Expenditure on exploration and evaluation assets is held undepleted within the exploration licence asset until such time as the
exploration phase on the licence area is complete or commercial reserves have been recognised, subject to any impairment losses
recognised. This is in accordance with IFRS 6, ‘Exploration for and Evaluation of Mineral Resources’.

(ii) Development and production oil and gas assets

Following appraisal of successful exploration wells and the establishment of commercial reserves, the related capitalised exploration
and evaluation expenditures are reclassified as development and production assets.

Subsequent expenditure is capitalised only where it either enhances the economic benefits of the development and production assets
or replaces part of the existing development and production assets. Any costs associated with the replacement of assets are expensed
to the income statement.

(iii) Depletion

The Group depletes expenditure on development and production assets on a unit of production basis, based on proved and probable
reserves on a licence by licence basis. Capitalised costs, together with anticipated future development costs calculated at price levels
ruling at the reporting date, are amortised on a unit of production basis.

Amortisation is calculated by reference to the proportion that production for the period bears to the total of the estimated remaining
commercial reserves as at the beginning of the period. Changes in reserves quantities and cost estimates are recognised prospectively.

(iv) Cash calls

The Group has shared interests in a number of licence areas. In cases where the Group acts as operator of these licence areas,
requests for cash from other partners, known as cash calls, are made in accordance with agreed budgets. These cash call amounts
are recognised as a credit to evaluation, exploration, development and production assets where appropriate to ensure that costs
capitalised reflect the Group’s interest only.

(v)

Impairment

Exploration and evaluation assets are reviewed regularly for indicators of impairment and costs are written off where circumstances
indicate that the carrying value might not be recoverable. In such circumstances, the exploration and evaluation asset is allocated to
development and production assets within the same cash generating unit and tested for impairment. Any such impairment arising is
recognised in the income statement for the period. Where there are no development and production assets, the impaired costs of
exploration and evaluation are charged immediately to the income statement.

(vi) Decommissioning costs and provisions

Provision is made for the decommissioning of oil and gas wells and other oilfield facilities. The cost of decommissioning is determined
through discounting the amounts expected to be payable to their present value at the date the provision is recorded and this calculation
is reassessed at each reporting date. The unwinding of the discount is reflected as a finance cost in the income statement over the
expected remaining life of the well. Changes in the decommissioning cost estimates are dealt with prospectively by recording an
adjustment to the provision and a corresponding adjustment to the related asset. The decommissioning provision is reviewed annually.

Providence Resources P.l.c. | Annual Report | 2016 33

NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

1 Accounting policies (continued)

Property, plant and equipment

Property, plant and equipment is measured at cost less accumulated depreciation and impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset. Depreciation is recognised on a straight line basis
over the estimated useful lives of the related assets.

The estimated useful lives for the current and comparative periods are as follows:

•

furniture and equipment

3-10 years

Intangible assets

Intangible assets are measured at cost less accumulated amortisation and impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset. Amortisation is recognised on a straight line basis
over the estimated useful lives of the related assets.

The estimated useful lives for the current and comparative periods are as follows:

•

capitalised software

3 years

Leased assets

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease
incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with original maturities of less than 90 days. Bank overdrafts that
are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash
equivalents for the purpose of the statement of cash flows.

Trade and other receivables

Trade receivables, which generally have 30 day terms, are recognised and carried at original invoice amount less an allowance for any
estimated shortfall in receipt. An estimate of any shortfall in receipt is made when there is objective evidence that a loss has been
incurred. Bad debts are written off when identified.

Trade and other payables

Subsequent to initial recognition, trade and other payables are measured at amortised cost.

Financial instruments

(i) Non-derivative financial instruments

Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings, and
trade and other payables.

Non-derivative financial instruments are recognised initially at fair value plus, for instruments not carried at fair value through the income
statement, any directly attributable transaction costs, except as described below. Subsequent to initial recognition, non-derivative
financial instruments are measured at amortised cost.

A financial instrument is recognised where the Group becomes a party to the contractual provisions of the instrument. Financial assets
are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial
asset to another party without retaining control or substantially all risks and rewards of the asset. Financial liabilities are derecognised
if the Group’s obligations specified in the contract expire or are discharged or cancelled.

Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to issue of ordinary shares and share options are
recognised as a deduction from retained earnings, net of any tax effects.

34 Providence Resources P.l.c. | Annual Report | 2016

(cid:1) Financial Statements

2 Operating segments

Operating segment information is presented in the consolidated financial statements in respect of the Group’s geographical segments
which represent the financial basis by which the Group manages its business. The Group has 2 principal reportable segments
as follows:

• UK exploration assets: oil and gas exploration assets in the UK

• Republic of Ireland exploration assets: oil and gas exploration assets in the Republic of Ireland

Group assets and liabilities include cash resources held by the Group, and corporate expenses include interest income earned and
other operational expenditure incurred by the Group. These areas are not within the definition of an operating segment.

Information regarding the results of each reportable segment is included below. Performance is measured based on segment result
and total asset value as included in the internal management reports that are reviewed by the Group’s board of Directors, who are
determined to be the chief operating decision maker (“CODM”), which management believe is the most relevant information when
evaluating the results of certain segments relative to other entities that operate within that industry. There are no significant inter
segment transactions.

Segment revenue

The group generated no revenues during the period.

Segment net loss for the year

Republic of Ireland — exploration assets

UK — exploration assets

Corporate expenses

Operating loss

Segment assets

Republic of Ireland — exploration assets

UK — exploration assets

US assets

Group assets

Total assets

Segment liabilities

Republic of Ireland — exploration related liabilities

UK — exploration related liabilities

US — liabilities

Group liabilities*

Total liabilities

* Related primarily to the group’s loan facility.

2016
€’000

2015
€’000

(15,028)

(67)

(3,749)

(18,844)

(3,946)

(1,841)

(7,293)

(13,080)

2016
€’000

2015
€’000

89,659

100,710

—

31,569

121,228

6,552

107,367

2016
€’000

2015
€’000

(9,598)

(19,634)

(64)

(1)

(247)

(9,910)

(14)

—

(18,777)

(38,425)

Providence Resources P.l.c. | Annual Report | 2016 35

NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

2 Operating segments (continued)

Capital expenditure

UK — exploration assets

Republic of Ireland — exploration assets, net of cash calls

Republic of Ireland — property, plant and equipment and intangible assets

Total capital expenditure, net of cash calls

Impairment charge

UK — exploration assets

Republic of Ireland — exploration assets

3 Administration expenses

Corporate, exploration and development expenses

Legal expenses

Foreign exchange loss

Total administration expenses for the year

Capitalised in Exploration and Evaluation assets (Note 11)

Total charged to the income statement

4 Finance income

Bank deposit interest income

5 Finance expense

Recognised in income statement:

Amortisation of arrangement fees and other amounts

Unwind of discount on decommissioning provision (Note 19)

Interest charge

Foreign exchange (gain)/loss on revaluation of loan, net

Interest charge on legal settlement, net1

Total finance expense recognised in income statement

Recognised in other comprehensive income:

Foreign currency differences on foreign operations

1 The interest credit arises on the resolution of the Transocean legal case.

36 Providence Resources P.l.c. | Annual Report | 2016

2016
€’000

3,915

—

3,982

15,028

15,095

2016
€’000

4,271

507

4,846

(1,158)

3,688

2016
€’000

1,643

359

1,093

(299)

(1,055)

1,741

2015
€’000

103

7,643

484

8,230

1,841

3,946

5,787

2015
€’000

3,783

2,127

1,550

7,460

(1,023)

6,437

2015
€’000

2,861

1,390

2,367

2,332

2,141

11,091

€’000

1,994

7,178

6 Income tax result

Current tax expense

Current year

Adjustment for prior years

Deferred tax result/charge

Origination and reversal of temporary differences

Effect of change in tax rates

Adjustment in respect of prior year

Total income tax result for year

(cid:1) Financial Statements

2016
€’000

2015
€’000

—

A reconciliation of the expected tax benefit computed by applying the standard Irish tax rate to the loss before tax to the actual tax
result is as follows:

Loss before tax

Irish standard tax rate

Tax credit at the Irish standard rate

Expenses not deductible for tax purposes

Losses unutilised

Other timing differences

Effect of different tax rates in foreign jurisdictions

Tax result for the year

7 Employee expenses and numbers

Wages and salaries

Social welfare costs

Defined contribution pension costs

Share-based payment expense (Note 22)

The following expenses, which are included in the above amounts, were capitalised during the year:

Wages and salaries

Share-based payment expense

2016
€’000

2015
€’000

(20,546)

(24,137)

12.5%

(2,568)

2,288

(28)

316

(8)

—

2016
€’000

1,499

162

171

142

12.5%

(3,017)

2,396

—

628

(7)

—

2015
€’000

1,693

180

196

—

1,974

2,069

2016
€’000

562

—

2015
€’000

756

—

The average number of persons employed during the year (including executive Directors) by activity was as follows:

Exploration and evaluation

Corporate management and administration

2016
Number

2015
Number

The Group contributes to an externally funded defined contribution scheme to satisfy the pension arrangements in respect of certain
management personnel.

The total pension cost charged for the year was €171,000 (2015: €196,000).

Providence Resources P.l.c. | Annual Report | 2016 37

NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

8 Directors’ remuneration and transactions with key management personnel

Directors’ emoluments are analysed as follows:

Executive

Tony O’Reilly

John O’Sullivan1

Sub-total

Non-Executive

Brian Hillery2

Lex Gamble3

James McCarthy4

Philip Nolan5

Philip O’Quigley

Pat Plunkett6

Sub-total

Total

Salaries and
other emoluments

2016
€’000

412

358

770

–

2015
€’000

494

373

867

–

770

867

Fees

Total

2016
€’000

2015
€’000

2016
€’000

2015
€’000

–

167

–

102

–

288

412

358

770

–

167

937

494

373

867

102

–

288

1,155

1 John O’Sullivan emoluments include pension contributions of €46,000 for 2016 (2015: €48,000).
2 Brian Hillery retired as Chairman on 26 May 2015.
3 Lex Gamble’s standard Directors’ fees for FY2015 were €45,000. His fee income disclosed for FY2015 above also includes travel expenses which were grossed up for

Irish tax purposes

4 James McCarthy resigned as Chairman on 1 October 2016.
5 Philip Nolan resigned as a director on 1 October 2016.
6 Pat Plunkett was appointed to the board as non-Executive Chairman on 1 October 2016.

Directors’ remuneration is fixed by the Remuneration Committee of the Board which is comprised solely of non-executive Directors of
the company.

Details of share options granted to the Directors during the year are disclosed in the Directors’ Report. In 2016, share based payments
expense were €86,000 (2015: €nil). Other than the share option schemes (Note 22), the group did not have any long term incentive
scheme in place for Directors. However, the remuneration committee is in the process of developing a long term incentive plan for the
executive Directors.

The emoluments of Mr. Tony O’Reilly include payments made to Kildare Consulting Limited under the terms of his employment contract
(Note 25).

There were no loans outstanding to any Director at any time during the year. Details of the Directors’ interests in shares and share
options are set out on pages 18 and 19.

Transactions with key management personnel comprising Directors and other senior management

Key management personnel compensation was as follows:

Wages, salaries and fees:

Executive Directors

Non-executive Directors

Other key management salaries

Social welfare costs

Defined contribution pension costs

Share-based payment expense

38 Providence Resources P.l.c. | Annual Report | 2016

2016
€’000

723

167

289

2015
€’000

819

288

403

1,179

1,510

111

—

1,436

1,707

(cid:1) Financial Statements

2016
€’000

177

104

15,095

167

770

2015
€’000

232

5,787

856

288

867

Statutory and other information

Auditor’s remuneration

Audit

Other assurance services, being audit of subsidiary entities

Taxation services

Operating lease rentals on property

Depreciation on property, plant and equipment

Amortisation of intangible assets

Impairment of evaluation and exploration assets

Pre-licence exploration expenditure

Directors’ emoluments

Fees

Salaries and other emoluments

10 Earnings per share

Earnings per share are calculated by dividing the loss attributable to equity holders of the company by the weighted average number
of ordinary shares in issue during the year.

Loss attributable to equity holders of the company

The weighted average number of ordinary shares in issue is calculated as follows:

In issue at beginning of year (‘000s)

Adjustments for shares issued in year (‘000’s)

Weighted average number of ordinary shares (‘000s)

Basic and diluted loss Per Share (cent)

Total
2016
€’000

Total
2015
€’000

(20,546)

(24,137)

2016

2015

140,077

214,374

354,451

Total
2016
€cent

64,649

58,689

123,338

Total
2015
€cent

(5.80)

(19.57)

There is no difference between the basic loss per ordinary share and the diluted loss per ordinary share for the current year as
all potentially dilutive ordinary shares outstanding are anti-dilutive in relation to continuing operations. There were 24,690,000
(2015: 1,198,000) anti-dilutive share options in issue at 31 December 2016.

Providence Resources P.l.c. | Annual Report | 2016 39

NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

11 Exploration and evaluation assets

Cost and net book value

At 1 January 2015

Additions

Cash calls received in year

Administration expenses

Impairment charge

Foreign exchange translation

At 31 December 2015

Additions

Cash calls received in year

Administration expenses (note 3)

Impairment charge

Foreign exchange translation

At 31 December 2016

Republic of
Ireland
€’000

88,095

6,805

(166)

1,004

(3,946)

6,419

98,211

4,047

(1,285)

1,153

(15,028)

2,178

89,276

UK
€’000

1,638

—

(1,841)

100

—

(67)

—

Total
€’000

89,733

6,889

(166)

1,023

(5,787)

6,519

98,211

4,109

(1,285)

1,158

(15,095)

2,178

89,276

The exploration and evaluation asset balance at 31 December 2016 primarily relates to the Barryroe (€64.5 million), Dunquin
(€13.9 million), Druid/Drombeg (€8.1 million) and Newgrange (€1.7 million). The remaining €1.1 million relates to other license areas held
by the Group in the Republic of Ireland.

The Directors have assessed the current activities ongoing within exploration and evaluation assets and, noting the current forecast
price curve, have determined that an impairment charge of €15.1 million is required at 31 December 2016 in relation to specific licenses
including Spanish Point, Silverback, Cuchulain and Helvick as it is unlikely that further exploration and evaluation work will be undertaken
at this current time or that the licence has been relinquished.

The Directors recognise that the future realisation of the remaining exploration and evaluation assets is dependent on future successful
exploration and appraisal activities and the subsequent economic production of hydrocarbon reserves. They have reviewed current and
prospective plans for each of the licence areas and are satisfied that future exploration and evaluation activities are appropriate in light
of the carrying value of these assets.

12 Property, plant and equipment

Cost

At 1 January 2015

Additions in year

At 31 December 2015

Additions in year

At 31 December 2016

Depreciation

At 1 January 2015

Charge for year

At 31 December 2015

Charge for year

At 31 December 2016

Net book value

At 31 December 2016

At 31 December 2015

40 Providence Resources P.l.c. | Annual Report | 2016

Furniture and
equipment
€’000

493

171

664

—

664

462

496

562

102

168

13 Intangible assets

Cost

At 31 December 2015

Additions in year

At 31 December 2016

Amortisation

At 31 December 2015

Charge for year

At 31 December 2016

Carrying value

At 31 December 2016

At 31 December 2015

14 Trade and other receivables

VAT recoverable

Prepayments

Amounts due from joint operation partners

15 Cash and cash equivalents

Cash held in bank accounts

Cash and cash equivalents

(cid:1) Financial Statements

Capitalised
software
€’000

313

—

313

104

121

192

296

2015
€’000

2,058

2,174

2015
€’000

6,518

2016
€’000

125

255

2016
€’000

31,403

Included in the cash and cash equivalents balance are amounts totaling €Nil million (2015: €0.4million) held on behalf of partners in
jointly controlled operations.

16 Share capital and share premium

Authorised

Deferred shares of €0.011 each (a)

Ordinary shares of €0.10 each

Number
(’000)

€’000

1,062,442

986,847

11,687

98,685

(a) The deferred shares do not entitle the shareholder to receive a dividend or other distribution, do not entitle the shareholder to
receive notice of or vote at any general meeting of the company, and do not entitle the shareholder to any proceeds on a return of
capital or winding up of the company.

Providence Resources P.l.c. | Annual Report | 2016 41

NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

16 Share capital and share premium (continued)

On 14 July 2016 the company increased its authorised share capital by 100,000,000 ordinary shares of 0.10c each.

Issued

Deferred shares of €0.011 each

Ordinary shares of €0.10 each

At 1 January 2015

Shares issued during the year

At 1 January 2016

Shares issued during the year

At 31 December 2016

Total
number
000’s

1,062,442

64,649

75,427

140,076

457,582

597,658

Share
capital
€’000

11,687

6,464

18,151

7,543

25,694

45,758

71,452

Share
premium
€’000

5,691

204,539

210,230

16,768

226,998

20,920

247,918

On 14 July 2016 the Company issued 457,582,000 ordinary shares of nominal value €0.10 cent at €0.152 per share. The Company
raised gross proceeds of €66.7m. Share issue costs of €5.9m were recorded as a charge within retained reserves.

17 Reserves

The statement of changes in equity outlines the movement in reserves during the year. The reserves included within that statement are
further explained below:

(b)

(c)

The currency translation reserve comprises all foreign exchange differences from 1 January 2006, arising from the translation of
the net assets of the Group’s non-euro denominated operations, including translation of the profits of such operations from the
average exchange rate to the rate at the reporting date.

The share based payment reserve comprises the fair value of all share options which have been charged over the vesting period,
net of amounts relating to share options forfeited, exercised or
lapsed during the year, which are reclassified to
retained earnings.

18 Loans and borrowings

At 1 January 2015

Drawn down in year

Charged to income statement

Repaid in year

Foreign exchange

At 31 December 2015

31 December 2015

Drawdown in year

Charged to income statement (note 5)

Repaid in year

Foreign exchange

At 31 December 2016

Melody
Bank loan
facility
€’000

19,727

1,519

—

(3,646)

2,332

19,932

Melody
Bank loan
fees
€’000

(379)

(4,125)

2,861

—

Total
€’000

19,348

(2,606)

2,861

(3,646)

2,332

(1,643)

18,289

19,932

(1,643)

18,289

—

1,643

(19,633)

(299)

—

1,643

(19,633)

(299)

—

Under the Facility, Melody had security over all of the Group’s assets by way of the floating charge. The charge has now been satisfied.

42 Providence Resources P.l.c. | Annual Report | 2016

19 Decommissioning provisions

At beginning of year

Unwind of discount – continuing operations (Note 5)

Foreign exchange differences

At end of year

(cid:1) Financial Statements

2016
€’000

7,424

146

213

7,783

2015
€’000

6,034

603

787

7,424

Decommissioning costs are expected to be incurred over the remaining lives of the fields, which are estimated to be between
2016 and 2022. 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.

20 Deferred taxation
The group is not carrying a deferred tax asset of €24.9 million (2015: €24.5 million) which mainly relates to unutilised tax losses available
to carry forward, all of which arose in Ireland, on the basis that it is not probable that the group will have taxable profits available in future
periods against which this asset could be utilised.

The gross amount of unused tax loss carry forwards with their expiry dates, are as follows:

One year

Two years

Three years

Four years

Five years

More than five years

Total

2016
€’000

375

193

157

197

491

2015
€’000

1,977

375

193

157

197

197,693

199,106

192,845

195,744

Unutilised losses may be carried forward for 25 years from the date of the origination of the losses, but may only be offset against taxable
profits earned from the same trade.

21 Trade and other payables

Capital expenditure payable

Accruals

Other payables

22 Share schemes

The Group operates employee share schemes as follows:

2005 Scheme

All remaining outstanding options under the 2005 scheme expired during the year.

2016
€’000

—

1,589

538

2,127

2015
€’000

6,220

5,668

824

12,712

Providence Resources P.l.c. | Annual Report | 2016 43

NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

22 Share schemes (continued)

2009 Scheme

In 2009, the Directors adopted a share option scheme which also contains share growth performance criteria. The option price is the
market price immediately preceding the date of grant. The “2009 scheme” operates as an equity-settled share option scheme and the
options are granted subject to the following conditions:

(i)

(ii)

50% of total options granted are exercisable after one year from the date of grant provided that the market price of the company’s
shares has increased by a minimum of 25% and has maintained such increase over a period of three months prior to the exercise
of any option.

The remaining 50% of the total options granted are exercisable after a further year has elapsed provided the market price of the
company’s shares has increased by a minimum of 50% from date of grant and has maintained such increase over a period of
three months prior to the exercise of any option.

2,100,000 (2015: nil) options granted during 2016 under this scheme. The fair value of the options granted during the year was
estimated at €0.08 per share using the Black-Scholes option pricing model. The following key input assumptions were applied:

Volatility
Time period
Dividend yield
Risk free interest rate
Exercise price

65%
7 years
0%
(0.53%)
€0.14

At 31 December 2016, options over 2.489 million (2015: 1.198 million) shares remained outstanding at subscription prices ranging from
€0.142 to €6.13. These options expire at varying dates up to August 2023.

2016 LTIP Scheme

The “2016 LTIP scheme” operates as an equity-settled share option scheme and the options are granted subject to the following
conditions:

(i)

(ii)

50% of total options granted are exercisable after one year from the date of grant provided that the market price of the company’s
shares exceeds a price of €0.45 per share.

The remaining 50% of the total options granted are exercisable after a further year has elapsed provided the market price of the
company’s shares exceeds a price of €0.45 per share.

No option is exercisable more than three years after grant date and no option is exercisable within one year of grant.

22,600,000 options granted during 2016 under this scheme. The fair value of the options granted during the year was estimated at
€0.01 per share using the Black-Scholes option pricing model. The following key input assumptions were applied:

Volatility
Time period
Dividend yield
Risk free interest rate
Exercise price

61%
3 years
0%
(0.53%)
€0.45

44 Providence Resources P.l.c. | Annual Report | 2016

(cid:1) Financial Statements

Details of the movements of these share options outstanding during the year are as follows:

For the year ended 31 December 2016

At 1 January

2016

Granted during year

Expired during year

Cancelled during year

At 31 December 2016

Of which exercisable at year end

2016 scheme

2009 scheme

No of
share
options
000’s

—

22,600

(400)

—

22,200

—

Weighted
average
exercise
price
€

—

0.45

—

0.45

—

No of
share
options
000’s

1,198

2,100

(288)

(520)

2,490

—

Weighted
average
exercise
price
€

4.49

0.14

(3.80)

(4.85)

0.84

—

The total number of options outstanding at 31 December 2016 was 24,690,000 at exercise prices ranging from €0.142 to €6.13.

For the year ended 31 December 2015

At 1 January 2015

Granted during year

Expired during year

At 31 December 2015

Of which exercisable at year end

2005 scheme

2009 scheme

No of
Share
Options
000’s

—

(70)

—

Weighted
average
exercise
price
€

8.15

—

(8.15)

—

No of
share
options
000’s

1,358

—

(160)

1,198

—

Weighted
average
exercise
price
€

4.06

—

(4.23)

4.49

—

The total number of options outstanding at 31 December 2015 were 1,198,750. These had exercise prices ranging from €1.27 to €9.79.

The fair value charge recorded in the income statement in respect of the Group’s 2009 and 2016 share based schemes was €142,000
(2015: Nil):

The share based payment reserve comprises the fair value of all share options which have been charged over the vesting period, net
of amounts relating to share options which have been forfeited lapsed or exercised during the year, which are reclassified to retained
earnings.

23 Financial instruments

Financial risk management objectives, policies and processes

The Group has exposure to the following risks from its use of financial instruments:

(a)

Interest rate risk

(b) Foreign currency risk

(d) Credit risk

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.

The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits
and controls, and to monitor risks and adherence to limits.

Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.

The Group Audit Committee oversees how management monitors compliance with the Group’s risk management policies and
procedures and framework in relation to the risks faced.

Providence Resources P.l.c. | Annual Report | 2016 45

NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

23 Financial instruments

(a) Interest rate risk

The Group currently finances its operations through a mixture of shareholders’ funds, bank deposits and bank debt. Short term cash
funds are generally invested in short term interest bearing bank deposits. The Group did not enter into any hedging transactions with
respect to interest rate risk; however, the requirement for such instruments is kept under ongoing review.

The interest rate profile of these interest bearing financial instruments was as follows:

Variable rate instruments

Financial assets – cash and cash equivalents

Fixed rate instruments

Financial liabilities – loans and borrowings

2016
€’000

2015
€’000

31,403

6,518

—

19,932

Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points (‘bps’) in interest rates at 31 December 2016 and 31 December 2015 would have increased/(decreased)
the reported loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates,
remain constant.

31 December 2016

Variable rate instruments

31 December 2015

Variable rate instruments

(b) Foreign currency risk

Profit

OCI

100 bps
increase
€’000

100 bps
decrease
€’000

100 bps
increase
€’000

100 bps
decrease
€’000

233

(109)

(10)

—

The Group is exposed to currency risk on purchases, loans and bank deposits that are denominated in a currency other than the
functional currency of the entities of the Group.

It is Group policy to ensure that foreign currency risk is managed wherever possible by matching foreign currency income and
expenditure. During the years ended 31 December 2016 and 2015 the Group did not utilise either foreign currency forward contracts
or derivatives to manage foreign currency risk on future net cash flows.

The Group’s foreign currency risk exposure in respect of the principal foreign currencies in which the Group operates was as follows:

31 December 2016

31 December 2015

VAT recoverable

Other debtors

Euro
€’000

GBP
€’000

USD
€’000

–

Not
at risk
EUR
€’000

144

Total
€’000

217

Euro
€’000

GBP
€’000

USD
€’000

–

Cash and cash equivalents

53 16,754 12,652

1,944 31,403

1,266

3,438

Not at
risk
EUR
€’000

2,133

1,770

Total
€’000

2,138

6,518

Loans and borrowings

Trade and other payables

Total exposure

–

(230)

(45)

(1,852)

(2,127)

–

– (19,932)

(53)

(10,628)

(2,031)

(12,712)

53 16,588 12,616

274 29,531

1,217 (27,121)

1,908 (23,952)

46 Providence Resources P.l.c. | Annual Report | 2016

(cid:1) Financial Statements

The following are the significant exchange rates that applied against 1 euro during the year:

1 GBP

1 USD

Sensitivity analysis

Average rate

Spot rate

2016

2015

2016

2015

0.8226

1.1030

0.7242

1.1046

0.8562

1.0541

0.7340

1.0887

A 10% strengthening and weakening of the euro against the following currencies, based on outstanding financial assets and liabilities
at 31 December 2016 and 31 December 2015 would have increased/(decreased) the reported loss and equity by the amounts below
as a consequence of the retranslation of foreign currency denominated financial assets and liabilities at those dates. It is assumed that
all other variables, especially interest rates, remain constant in the analysis.

31 December 2016

GBP

USD

31 December 2015

GBP

USD

Profit/(loss)

Equity

10%
increase
€’000

10%
decrease
€’000

10%
increase
€’000

10%
decrease
€’000

(1,652)

(1,261)

1,652

1,261

(395)

2,986

395

(2,986)

721

(137)

516

(120)

(881)

168

(631)

147

Liquidity is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing
liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and
adverse conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group manages liquidity risk by regularly monitoring cash flow projections and rolling forecasts of expected cash flows against
actual cash flows. The nature of the Group’s exploration and appraisal activities can result in significant differences between expected
and actual cash flows. Consequently a conservative approach to cash forecasting is taken and appropriate contingency planning is
put in place to ensure that the Group can discharge its financial obligations as they fall due.

Contractual maturities of financial liabilities as at 31 December 2016 were as follows:

Item

Trade and other payables

Total

Carrying
amount
€’000

2,127

Contractual
cash
flows
€’000

2,127

6 months
or less
€’000

2,127

Contractual maturities of financial liabilities as at 31 December 2015 were as follows:

Item

Loan

Trade and other payables

Total

Carrying
amount
€’000

19,932

12,712

32,644

Contractual
cash
flows
€’000

20,723

12,712

33,435

6 months
or less
€’000

20,723

12,712

33,435

6 – 12
months
€’000

—

6 – 12
months
€’000

—

1 – 2
years
€’000

—

1 – 2
years
€’000

—

2 — 5
years
€’000

—

2 — 5
years
€’000

—

Providence Resources P.l.c. | Annual Report | 2016 47

NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

23 Financial instruments (continued)

(d) Credit risk

Credit risk is the risk of financial loss to the Group if a cash deposit is not recovered. Group deposits are placed only with banks with
appropriate credit ratings.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at 31 December
was:

Cash and cash equivalents

VAT recoverable

Other receivables

Maximum exposure to credit risk

(e) Fair values versus carrying amounts

2016
€’000

31,403

217

31,658

2015
€’000

6,518

2,138

8,692

Due to the short term nature of all of the Group’s financial assets and liabilities at 31 December 2016, the fair value equals the carrying
amount in each case.

(f) Capital management

The Group has historically funded its activities through a combination of share rights issues and placing and bank borrowings. The
Group’s capital structure is kept under review by the Board and it is committed to capital discipline and continues to maintain flexibility
for future growth, both organic and through acquisitions. The Board considers capital to comprise shareholders’ equity and long term
borrowings and endeavours to ensure an appropriate mix of equity and debt is maintained.

24 Commitments and contingencies

(a) Exploration and evaluation activities

The Group has capital commitments of approximately €26.1 million to contribute to its share of costs of exploration and, evaluation
activities during 2017.

(b) Operating leases

Total commitments under non-cancellable operating lease rentals, all of which relate to property, are as follows:

Payable:

Within one year

Between two and five years

After five years

Total operating lease commitments

€’000

230

362

—

592

From time to time, the Group is involved in other claims and legal actions which arise in the normal course of business. Based on
information currently available to the Group, and legal advice, the Directors believe such litigation will not, individually or in aggregate,
have a material adverse effect on the financial statements and that the Group is adequately positioned to deal with the outcome of any
such litigation.

Under the terms of the CEPIL acquisition agreement the group is required to make a payment of US$5m to the former shareholders
of CEPIL if a final investment decision is made to develop the Spanish Point asset. No provision has been recognised in the financial
statements at this stage as the asset is still at an exploration and evaluation stage and the final investment decision has not yet
been taken.

48 Providence Resources P.l.c. | Annual Report | 2016

(cid:1) Financial Statements

25 Related party transactions

Mr Tony O’Reilly has, through Kildare Consulting Limited, a company beneficially owned by him, a contract for the provision of service
to the company outside the Republic of Ireland effective May 2015. The amount paid under the contract in the year ended 31 December
2016 was €366,390 (2015: €448,500). The contract is of two years duration and is subject to one year’s notice period. It was renewed
1 April 2017.

26 Post balance sheet events

On 8 March 2017, the Company signed a Farm Out Agreement on FEL 2/14 (Druid & Drombeg) with Capricorn Ireland Limited, a
subsidiary of Cairn Energy Plc. Under the terms of the Farm Out, Capricorn will take a 30% equity interest in return for paying 45% of
the costs of the exploration well on Druid & Drombeg in 2017 (up to a gross cost cap of $42 million) and will make a payment of
$2.8 million on a pro rata basis to the Company and to Sosina. In the event that a subsequent appraisal well is drilled on FEL 2/14,
Capricorn will pay 40% of the costs of the proposed well (up to a gross cost cap of $42 million) and will have the option to take over
Operatorship. This transaction is subject to Ministerial consent and as a result of this transaction, the equity stakes in FEL 2/14 would
be Providence (56%), Cairn (30%) and Sosina (14%).

On 3 April 2017, the Company announced that it and fellow JV partners in FEL 3/04 (Dunquin) agreed to licence 1,800km2 of 3D from
CGG which is being acquired in 2017 as part of a multi-client 3D acquisition programme.

27 Approval of financial statements

The financial statements were approved by the Board of Directors on 11 April 2017.

Providence Resources P.l.c. | Annual Report | 2016 49

COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2016

Fixed assets

Oil and gas interests

Tangible assets

Financial assets

Intangible assets

Current assets

Debtors

Cash at bank and in hand

Creditors: amounts falling due within one year

Net current assets

Total assets less current liabilities

Provision for liabilities

Net assets

Capital and reserves

Called up share capital

Share premium

Capital conversion reserve

Share based payment reserve

Profit and loss account

Shareholders’ funds – equity

There are no recognised gains or losses other than those included in the profit and loss account.

On behalf of the board

Pat Plunkett
Chairman

11 April 2017

Tony O’Reilly
Chief Executive

Note

2016
€’000

2015
€’000

24,758

34,722

102

192

168

296

25,054

35,188

66,212

31,273

97,485

(2,415)

95,070

120,124

(6,265)

113,859

63,732

6,413

70,145

(30,389)

39,756

74,944

(6,084)

68,860

71,452

247,918

623

1,398

25,694

226,998

623

3,586

(207,532)

(188,041)

113,859

68,860

50 Providence Resources P.l.c. | Annual Report | 2016

STATEMENT OF CHANGES IN COMPANY EQUITY
AS AT 31 DECEMBER 2016

(cid:1) Financial Statements

At 1 January 2016

Total comprehensive income
Loss for financial year

Total comprehensive income
Transactions with owners, recorded directly in equity

Share based payments

Share option cancelled

Share options lapsed in year

Shares issued in year (note 9)

At 31 December 2016

At 1 January 2015

Total comprehensive income
Loss for financial year

Total comprehensive income

Transactions with owners, recorded directly in equity

Share options lapsed in year

Shares issued in year (note 9)

At 31 December 2015

Share
capital
€’000

Capital
reserve
fund
€’000

Share
premium
€’000

Share
based
payment
reserve
€’000

Retained
deficit
€’000

Total
€’000

25,694

623

226,998

3,586

(188,041)

68,860

—

45,758

71,452

—

20,920

—

(15,929)

142

—

142

(1,493)

(837)

—

1,493

837

—

(5,892)

60,786

623

247,918

1,398

(207,532)

113,859

Share
capital
€’000

Capital
reserve
fund
€’000

Share
premium
€’000

Share
based
payment
reserve
€’000

Retained
deficit
€’000

Total
€’000

18,151

623

210,230

4,282

(127,993)

105,293

—

7,543

25,694

—

16,768

—

(696)

—

(60,744)

696

—

24,311

68,860

623

226,998

3,586

(188,041)

Providence Resources P.l.c. | Annual Report | 2016 51

NOTES TO THE COMPANY FINANCIAL STATEMENTS

1 Accounting policies

Basis of preparation

These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework
(“FRS 101”).

In preparing these financial statements, the company applies the recognition, measurement and disclosure requirements of International
Financial Reporting Standards as adopted by the EU (“EU IFRS”), but makes amendments where necessary in order
to comply with the Companies Act 2014 and has set out below where advantage of the FRS 101 disclosure exemptions has
been taken.

In these financial statements, the company has adopted certain disclosure exemptions available under FRS 101. These include:

•

a cash flow statement and related notes;

• disclosures in respect of the compensation of key management personnel;

• disclosures in respect of transactions with wholly owned subsidiaries;

• disclosures in respect of capital management;

•

certain comparative information;

the effects of new but not yet effective IFRSs; and

an additional balance sheet for the beginning of the earliest comparative period following transition.

As the consolidated financial statements of Providence Resources Plc include the equivalent disclosures, the company has also taken
the exemption under FRS 101 available in respect of the following:

Certain disclosures required by IFRS 13 Fair Value Measurement and the disclosures required by IFRS 7 Financial Instrument
Disclosures; and

Certain disclosures required by IAS 36 Impairment of Assets.

These financial statements are presented in Euro, being the functional currency of the company. All financial information presented in
Euro has been rounded to the nearest thousand, except where otherwise stated.

The accounting policies applied in the Company only financial statements are consistent with the Group accounting policies as set out
on pages 30 to 34.

Going concern

Refer to basis of preparation of Consolidated Financial Statements information on the going concern on the Group and Company on
page 30.

Use of estimates and judgements

In preparing these financial statements management has made judgements, estimates and assumptions that affect application of the
company accounting policies and the reported amounts of assets, liabilities, income and expenses. Such estimates and judgements
are based on historical experience and other factors, including expectation of future events that are believed to be reasonable. Actual
outcomes may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively. There
are no significant judgements in these financial statements.

52 Providence Resources P.l.c. | Annual Report | 2016

(cid:1) Financial Statements

2 Oil and gas interests – exploration expenditure

The movement on expenditures, pending further evaluation are analysed as follows:

Cost

At 1 January 2016

Exploration and appraisal expenditure

Cash call received in year

Impairment charge

Administration expenses

At 31 December 2016

Ireland
2016

34,722

3,181

—

(14,196)

1,051

24,758

The exploration and evaluation asset balance at 31 December 2016 primarily relates to Dunquin (€13.9 million), and Druid/Drombeg
(€8.1 million) and Newgrange (€1.7 million) license areas. The remaining €1.1 million relates to other license areas held by the Company
in the Republic of Ireland.

The Directors have assessed the current activities ongoing within exploration and evaluation assets and have determined that an
impairment charge of €14.2 million is required at 31 December 2016 in relation to specific licenses including Spanish Point as it is unlikely
that further exploration and evaluation work will be undertaken.

Net spend including internal capitalised costs, on exploration and evaluation assets during the year amounted to €4.2 million, with the
majority of spend relating to the Druid/Drombeg (€2.4 million), Dunquin €0.3m (€0.5 million), Celtic Sea/Kish Bank Assets (€0.7 million)
and the Spanish Point license areas in the Porcupine basin (€0.6 million), Newgrange €0.2m.

The Directors have assessed the current activities ongoing within exploration and evaluation assets and have determined that no
additional impairment charge is required at 31 December 2016. The Directors recognise that the future realisation of these exploration
and evaluation assets is dependent on future successful exploration and appraisal activities and the subsequent economic production
of hydrocarbon reserves. They have reviewed current and prospective plans for each of the licence areas and are satisfied that future
exploration and evaluation activities are appropriate in light of the carrying value of these assets.

3 Tangible fixed assets

Cost

At 1 January 2016

Additions in year

At 31 December 2016

Depreciation

At 1 January 2016

Charge for year

At 31 December 2016

Net book value

At 31 December 2016

At 31 December 2015

Furniture and
equipment
€’000

619

—

619

451

517

102

168

Providence Resources P.l.c. | Annual Report | 2016 53

NOTES TO THE COMPANY FINANCIAL STATEMENTS
(CONTINUED)

4 Financial fixed assets

Investments in subsidiaries at start and end of year

At 31 December 2016, the company had the following principal subsidiaries, all of which are wholly owned:

Name

Providence Resources
UK Limited

Providence Resources
(NI) Limited

Registered Office/Country
of Incorporation

5th Floor, 6 St. Andrews Street,
London, EC4A 3AE, UK

C/O Geo.I.Maclain Solicitors,
Imperial Buildings, 72 High Street,
Belfast, BT1 2BE

Activity

Oil and gas exploration
and production

Providence Resources
(International) Limited

Craigmuir Chambers, P.O. Box 71,
Road Town, Tortola, British Virgin Islands

Holding company

P.R. UK Holdings Limited

5 Jubilee Place, London SW3 3TD, UK

Holding company

Providence Resources
(GOM No. 2) LLC

Providence Resources
(Holdings USA) LLC

Providence Resources
(Gulf) Limited

Exola Limited

Corporation Trust Centre, 1209 Orange
Street, Wilmington, Delaware, USA

Airfield House, Airfield Park, Donnybrook,
Dublin D04 CP49, Republic of Ireland

Providence Resources (US) Craigmuir Chambers, P.O. Box 71,
Holdings Limited

Road Town, Tortola, British Virgin Islands

Eirgas Limited

Craigmuir Chambers, P.O. Box 71,
Road Town, Tortola, British Virgin Islands

Oil and gas exploration
and production

Holding company

Oil and Gas exploration

Holding company

Chrysaor E&P Ireland
Limited

Airfield House, Airfield Park, Donnybrook,
Dublin D04 CP49, Republic of Ireland

Oil and Gas exploration

5 Intangible assets

Cost

At 31 December 2015

Additions in year

At 31 December 2016

Amortisation

At 31 December 2015

Charge for year

At 31 December 2016

Carrying value

At 31 December 2016

At 31 December 2015

54 Providence Resources P.l.c. | Annual Report | 2016

2016
€’000

Interest in
Ordinary
Share
Capital

100%

Software

313

—

313

104

121

192

296

6 Debtors

VAT

Prepayments

Amounts due from subsidiaries

Amounts due from joint operation partners

All of the above amounts fall due within one year.

(cid:1) Financial Statements

2016
€’000

134

65,954

66,212

2015
€’000

62,812

812

63,732

The recoverability of amounts due from subsidiaries is largely dependent on the future cash flows generated from the exploration and
evaluation assets owned by those entities. During the prior year the Directors recorded an impairment provision of c.€49 million against
the carrying value of intercompany receivables. The Directors are satisfied that the subsidiaries will generate sufficient cashflows from
these assets to repay the amounts due, net of the impairment provision to the parent company.

7 Creditors: amounts falling due within one year

Trade creditors

Accruals

Other creditors

Amounts owed to subsidiaries (a)

Bank loan

2016
€’000

422

1,473

—

520

—

2,415

Refer to Note 21 of consolidated financial statements for further details on amounts included within trade creditors.

(a) Amounts owed to subsidiaries are interest free and fall due on demand.

8 Provision for liabilities – Decommissioning

At 1 January

Unwind of discount

Disposal to subsidiary

Foreign exchange differences

Balance at 31 December

2016
€’000

6,084

—

181

6,265

2015
€’000

6,592

5,484

—

18,289

30,389

2015
€’000

4,945

495

—

644

6,084

Decommissioning costs are expected to be incurred over the remaining lives of the fields, which are estimated to be between 2017
and 2022. 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.

9 Share capital and share premium

See note 16 to the Group financial statements.

Providence Resources P.l.c. | Annual Report | 2016 55

NOTES TO THE COMPANY FINANCIAL STATEMENTS
(CONTINUED)

10 Commitments and contingencies

Exploration and evaluation activities

The company has capital commitments of approximately €25.6 million to contribute to its share of costs of exploration and, evaluation
activities during 2017.

Operating leases annual commitments exist under non-cancellable property leases expiring as follows:

Within one year

Between two and five years

Total

Contingencies

2016
€’000

193

235

428

2015
€’000

—

From time to time, the company is involved in other claims and legal actions which arise in the normal course of business. Based on
information currently available to the company, and legal advice, the Directors believe such litigation will not, individually or in aggregate,
have a material adverse effect on the financial statements and that the company is adequately positioned to deal with the outcome of
any such litigation.

Under the terms of the CEPIL acquisition agreement the company is required to make a payment of US$5 million to former shareholders
of CEPIL if a final investment decision is made to develop the Spanish Point asset. No provision has been recognised in the financial
statements at this stage as the asset is still at exploration and evaluation stage and the final investment decision has not yet been taken.

11 Statutory information

Auditor’s remuneration

2016
€’000

2015
€’000

During the year the company employed 13 people (2015: 14 people) and incurred payroll costs of €1.6 million (2015: €1.9 million).

The Group contributes to an externally administered defined contribution pension scheme to satisfy the pension arrangements in
respect of certain management personnel. The pension cost charged for the year was €171,000 (2015: €196,000).

12 Related party transactions

Mr Tony O’Reilly has, through Kildare Consulting Limited, a company beneficially owned by him, a contract for the provision of service
to the company outside the Republic of Ireland effective 1 May 2016. The amount paid under the contract in the year ended
31 December 2016 was €366,390. It is of two years duration and is subject to one year’s notice period. The contract was renewed
on 1 April 2017.

13 Post balance sheet events

Refer to Note 26 of the Consolidated Financial Statements for information on post balance sheet events.

14 Approval of financial statements

The financial statements were approved by the Board of Directors on 11 April 2017.

56 Providence Resources P.l.c. | Annual Report | 2016

NOTICE OF ANNUAL GENERAL MEETING

(cid:1) Investor Information

Notice is hereby given that the Annual General Meeting of Providence Resources P.l.c. will be held at Hilton Dublin, Charlemont Place
Dublin 2, D02 A893, Ireland, on Wednesday, 24 May 2017 at 10.00am for the purpose of considering, and if thought fit, passing the
following Resolutions of which Resolutions numbered (1) to (3) will be proposed as Ordinary Resolutions and Resolution numbered (4),
will be proposed as a Special Resolution.

Ordinary Resolutions

(1) To receive and consider the Directors’ Report and Financial Statements for the year ended 31 December 2016.

(2)

(a) To elect Mr. Pat Plunkett as a Director.

(b) To re-elect Mr. Tony O’ Reilly as a Director.

(3) To authorise the Directors to fix the remuneration of the Auditors.

Special Resolution

(4) That the Directors be and they are hereby empowered pursuant to Section 1022 and Section 1023(3) of the Companies Act 2014
to allot equity securities (within the meaning of Section 1023 of the Companies Act 2014) for cash as if the said Section 1022(1)
of the Companies Act 2014 did not apply to any such allotment, such power being limited to:

the allotment of equity securities in connection with or pursuant to any offer of equity securities open for a period fixed by the
Directors, by way of rights issue, open offer or otherwise (an “Offering”) to the holders of ordinary shares and/or any other
persons entitled to participate therein (including without limitation any holders of options under the Company’s share option
scheme(s) for the time being) in proportion (as nearly as may be) to their respective holdings of ordinary shares (or, as appropriate,
the number of ordinary shares which such other persons are for the purposes of such Offering deemed to hold) on a record
date fixed by the Directors (whether before or after the date of this meeting) and subject to such exclusions or other
arrangements as the Directors may deem necessary or expedient to deal with any legal or practical problems under the laws
of any territory or the requirements of any regulatory body or any stock exchange in any territory or in relation to fractional
entitlements or otherwise howsoever;

b. pursuant to the terms of any scheme for Directors and/or employees etc. of the Company and/or its subsidiaries; and

c. otherwise than pursuant to sub-paragraphs (a) and (b) above, having in the case of the relevant shares (as defined by the said
Section 1023 the allotment of equity securities up to a nominal aggregate amount equal to €5,976,589 (representing
approximately 10% of the issued share capital of the Company as at the close of business on 10 April 2017),

provided in each case the power shall, unless revoked or renewed by special resolution or the articles of association of the Company,
expire on the earlier of fifteen months from the date of passing this Resolution and the conclusion of the next annual general meeting
of the Company unless previously renewed, varied or revoked by the Company in general meeting, save that the Company may
before such expiry make an offer or agreement which would or might require equity securities to be allotted or issued after such
expiry and the Directors may allot equity securities (as defined by the said Section 1023) in pursuance of such offer or agreement
as if the power conferred hereby had not expired.

Dated 11 April 2017 By order of the Board

C. Ryan, Secretary, Airfield House, Airfield Park, Dublin D04 CP49, Republic of Ireland.

Providence Resources P.l.c. | Annual Report | 2016 57

NOTICE OF ANNUAL GENERAL MEETING
(CONTINUED)

Notes:

Entitlement to attend and vote
1. Pursuant to Section 1105 of the Companies Act 2014 and Regulation 14 of the Companies act 1990 (Uncertificated Securities) Regulations
1996, entitlement to attend and vote at the AGM and the number of votes which may be cast thereat will be determined by reference to
the Register of Members of the Company at 6.00 p.m. on the day which is two days before the date of the AGM (or in the case of an
adjournment as at 6.00 p.m. on the day which is two days before the date of the adjourned meeting). Changes to entries on the Register
of Members after that time shall be disregarded in determining the rights of any person to attend and vote at the AGM.

Appointment of proxies
2. A member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy as an alternate to attend, speak, ask
questions and vote instead of him/her/it and may appoint more than one proxy to attend on the same occasion in respect of shares held
in different securities accounts. A member acting as an intermediary on behalf of one or more clients may grant a proxy to each of its clients
or their nominees and such intermediary may cast votes attaching to some of the shares differently from other shares held by it. The
appointment of a proxy will not preclude a member from attending, speaking, asking questions and voting at the meeting or at any
adjournment thereof should the member subsequently wish to do so. A proxy need not be a member of the Company. If you wish to
appoint more than one proxy, please contact
to
clientservices@computershare.ie during normal business hours.

the Company, Computershare, by sending an email

the Registrars of

3. A Form of Proxy is enclosed with this Notice of Annual General Meeting. To be effective, the Form of Proxy duly completed and executed,
together with any original power of attorney or other authority under which it is executed or a copy of such authority certified notarially or
by a practicing solicitor in the Republic of Ireland, must be deposited by hand at the offices of the Company’s Registrar, Computershare
Investor Services (Ireland) Limited, Heron House, Corrig Road, Sandyford Industrial Estate, Dublin 18, Ireland, or returned by post to
Computershare Investor Services (Ireland) Limited, Heron House, Corrig Road, Sandyford Industrial Estate, Dublin 18, Ireland, in any case
so as to be received no later than 48 hours before the time appointed for the Annual General Meeting or any adjournment thereof or (in
the case of a poll taken otherwise than at or on the same day as the Annual General Meeting or adjourned Annual General Meeting) at
least 48 hours before the taking of the poll at which it is to be used. Any alteration to the Form of Proxy must be initialled by the person
who signs it.

In addition to Note 2 above, and subject to the Constitution of the Company, and provided it is received at least 48 hours before the time
appointed for the holding of the Annual General Meeting or any adjournment thereof or (in the case of a poll taken otherwise than at or on
the same day as the Annual General Meeting or adjourned Annual General Meeting) at least 48 hours before the taking of the poll at which
it is to be used, the appointment of a proxy may:

4.1. be submitted by fax to +353 (0)1 447 5572, provided it is received in legible form; or

4.2. be

submitted electronically,

voting website
www.eproxyappointment.com, entering the Control Number, SRN and PIN all located on the Proxy Form. Shareholders will be
required to have their Shareholder Reference Number (“SRN”) as printed on the face of the accompanying Form of Proxy. Full details
of the procedures, including voting instructions are given on the website; or

accessing the Company’s Registrar’s proxy

internet by

the

via

4.3. be submitted through CREST in the case of CREST members, CREST sponsored members or CREST members who have appointed
voting service providers. Submissions through CREST must be completed in accordance with the procedures specified in the CREST
Manual and received by the Registrar (under CREST agent ID 3RA50). The Company may treat as invalid a CREST Proxy Instruction
in the circumstances set out in Regulation 35(5)(a) of the CREST Regulations.

In the case of a corporation, the Form of Proxy must be either executed under its common seal, signed on its behalf by a duly authorised
officer or attorney, or submitted in accordance with Note 3 above.

Voting rights and total number of issued shares in the Company

6. As a member, you have several ways of exercising your vote: (a) by attending the Annual General Meeting in person; (b) by appointing a
proxy to vote on your behalf; or (c) by appointing a proxy via the CREST system if you hold your shares in CREST. In the case of joint holders
the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other
registered holders, and for this purpose seniority shall be determined by the order in which the names stand in the register of members of
the Company in respect of the joint holding.

7. The total number of issued Ordinary Shares on the date of this Notice of Annual General Meeting is 597,658,958 Ordinary Shares. On a
vote on a show of hands, every member present in person and every proxy has one vote (but no individual shall have more than one vote).
On a poll every member shall have one vote for every share carrying rights of which he is the holder.

8. Where a poll is taken at an Annual General Meeting any member, present in person or by proxy, holding more than one share is not obliged

to cast all his/her votes in the same way.

9. Ordinary resolutions are required to be passed by a simple majority of members voting in person or by proxy. Special resolutions are

required to be passed by a majority of not less than 75% of votes cast by those who vote either in person or in proxy.

10. On any other business which may properly come before the Annual General Meeting, or any adjournment thereof, and whether procedural
or substantive in nature (including without limitation any motion to amend a resolution or adjourn the meeting) not specified in this Notice
of Annual General Meeting, the proxy will act at his/her discretion.

Other resolutions
11. The Annual General Meeting is being convened to consider the specific resolutions as incorporated in this Notice of Annual General

Meeting. As a result it is not proposed that any other resolution would be considered at the meeting.

58 Providence Resources P.l.c. | Annual Report | 2016

(cid:1) Investor Information

GLOSSARY OF TERMS

“1C” Low estimate scenario of contingent resource

“2C” Best estimate scenario of contingent resource

“3C” High estimate scenario of contingent resource

“£” or “Pounds Sterling” Pounds Sterling, the lawful currency of the United Kingdom

“€” or “Euro” Euro, the lawful currency of Ireland

“AGM” the annual general meeting of the Company to be held at Hilton Dublin, Charlemont Place, Dublin 2, D02 A893, Ireland at
10.00 a.m., on Wednesday, 24 May 2017, including any adjournment thereof, and notice of which is set out herein

“AIM” AIM, a market operated by the London Stock Exchange

“AIM Rules” the AIM rules for Companies published by the London Stock Exchange in May 2014 (as amended) governing the
admission to and the operation of AIM

“AVO” amplitude variation with offset

“BBO” billion barrels of oil

“BBOE” billions of barrels of oil equivalent

“BCF” billion cubic feet of gas

“BML” below mud line

“BOE” Barrels of Oil Equivalent (6,000 cubic feet of gas equals 1 barrel of oil equivalent)

“BOEPD” barrels of oil equivalent per day

“BOPD” barrels of oil per day

“Cenkos” Cenkos Securities Plc

“CEPIL” Chrysaor Exploration and Production Ireland Limited

“Contingent Resources” resources that are potentially recoverable but not yet considered mature enough for commercial development
due to technological or business hurdles

“CPR” Competent Person’s Report

“E&P” exploration and production

“Facility” shall have the meaning ascribed thereto in the Chairman and Chief Executive’s Statement in this document

“FEL” Frontier Exploration Licence

“FID” final investment decision

“GIIP” gas initially in place

“HIIP” hydrocarbons initially in place

“LU” Lease Undertaking

“Licensing Option” or “LO” an undertaking to grant an Exploration Licence issued under Section 7(1) of the Petroleum
and Other Minerals Development Act, 1960

“London Stock Exchange” or “LSE” London Stock Exchange plc

“Melody” Melody Business Finance LLP

“MDBRT” measure depth below rotary table

“MMBC” million barrels of condensate

“MMBO” million barrels of oil

Providence Resources P.l.c. | Annual Report | 2016 59

GLOSSARY OF TERMS
(CONTINUED)

“MMBOE” million barrels of oil equivalent

“Order” shall have the meaning ascribed thereto in the Chairman and Chief Executive’s Statement in this document

“Pmean” the Pmean value is the average of the numbers

“Prospective Resources” quantities of petroleum which are estimated to be potentially recoverable from oil and gas deposits identified
on the basis of indirect evidence but which have not yet been drilled

“SEL” Standard Exploration Licence

“STOIIP” stock tank oil initially in place

“US$” or “U.S. Dollar” or “$” United States Dollars, the lawful currency of the US

60 Providence Resources P.l.c. | Annual Report | 2016

CORPORATE INFORMATION

Board of Directors

Pat Plunkett
(Non-Executive Chairman), appointed 20161,2,3,4

Tony O’Reilly
(Chief Executive), appointed 2005
(Non-Executive Director), appointed 1997

Dr John O’Sullivan
(Technical Director), appointed 2010

James S.D. McCarthy
(Non-Executive Director), appointed 20051,2,3,4

Lex Gamble
(Non-Executive Director), appointed 20051,2,3,4

Philip O’Quigley
(Non-Executive Director), appointed 20121,3,4
(Executive Director), appointed 2008

1 Non-Executive

2 Member Audit Committee

3 Member Remuneration Committee

4 Member Nomination Committee

Secretary and Registered Office

Críona Ryan
Providence Resources P.l.c.
Airfield House
Airfield Park Dublin
D04 CP49
Ireland
www.providenceresources.com
T: +353 1 219 4074
F: +353 1 219 4006

Registrar

Computershare Investor Services (Ireland) Limited
Heron House
Corrig Road
Sandyford Industrial Estate
Dublin
D18 Y2X6
Ireland

Nominated Adviser

Cenkos Securities Limited
6-7-8 Tokenhouse Yard
London
EC2R 7AS
United Kingdom

Irish Stockbrokers

J&E Davy
Davy House
48/49 Dawson Street
Dublin
D02 PY05
Ireland

UK Stockbrokers

Cenkos Securities Limited
6-7-8 Tokenhouse Yard
London
EC2R 7AS
United Kingdom

Principal Bankers

Allied Irish Banks Plc

Auditors

KPMG
Chartered Accountants and Registered Auditors
1 Stokes Place
St. Stephen’s Green
Dublin
D02 DE03
Ireland

Financial PR

Murray Consultants Dublin
40 Lower Baggot Street
Dublin
D02 Y793
Ireland

Powerscourt Media London
1 Tudor Street
London
EC4Y OAH
United Kingdom

Providence Resources P.l.c.

Airfield House
Airfield Park
Donnybrook
Dublin
D04 CP49
Ireland

T: +353 1 2194074
F: +353 1 2194006

Floor 3
5 Jubilee Place
London
SW3 3TD
United Kingdom

info@providenceresources.com
www.providenceresources.com

Attendance Card

Please bring this card with you to the meeting and present it at shareholder registration/accreditation.

The Chairman of Providence Resources P.l.c. (‘the Company’) invites
you to attend the Annual General Meeting of the Company to be held
at Hilton Dublin, Charlemont Place, Dublin 2, DO2 A893 which has
been convened for 10 a.m. on 24 May 2017.

Shareholder Reference Number

Form of Proxy – Annual General Meeting (‘AGM’) of Providence Resources P.l.c. to be held on 24 May 2017 at 10 a.m.

@ Cast your Proxy online...It’s fast, easy and secure!

www.eproxyappointment.com
You will be asked to enter the Control Number, Shareholder Reference Number (SRN) and PIN shown
opposite and agree to certain terms and conditions.

Control Number: 914358

SRN:

PIN:

To view the Annual Report online visit www.providenceresources.com

To be effective, all votes must be lodged at the office of the Company’s registrars at: Computershare lnvestor Services (Ireland) Limited, P. O. Box 954,
Heron House, Corrig Road, Sandyford Industrial Estate, Dublin 18 by 22 May 2017 at 10 a.m.

Explanatory Notes:
1.

A member entitled to attend and vote is entitled to appoint a proxy to attend, speak, ask questions and vote
on his or her behalf at the Meeting or any adjourned Meeting. A member may appoint more than one proxy
to attend, speak, ask questions and vote at the Meeting or any adjourned Meeting in respect of shares held
in different securities accounts. A member acting as an intermediary on behalf of one or more clients may
grant a proxy to each of its clients or their nominees provided each proxy is appointed to exercise rights
attached to different shares held by that member. The appointment of a proxy will entitle the proxy to attend,
speak, ask questions and vote on the member’s behalf at the relevant meeting or at any adjournment of
such meeting. A proxy need not be a member of the Company. If you wish to appoint more than one proxy,
an additional proxy form(s) may be obtained by contacting the Registrar’s helpline on +353 (1) 447 5590 or
you may photocopy the reverse only of this form. Please indicate in the box next to the proxy holder’s name
(see reverse) the number of shares in relation to which they are authorised to act as your proxy. Please also
indicate by ticking the box provided if the proxy instruction is one of multiple instructions being given. If left
blank your proxy will be deemed to be authorised in respect of your full voting entitlement (or if this proxy form
has been issued in respect of a designated account for a shareholder, the full voting entitlement for that
designated account). All forms must be signed and should be returned in the same envelope. Where a poll
is taken at the AGM, a shareholder, present in person or proxy, holding more than one share is not required
to cast all their votes in the same way.

To be effective, the Form of Proxy duly completed and executed, together with any original power of attorney
or in the case of a corporate shareholder any authority under which it is executed or a copy of such authority
certified notarially or by a solicitor practising in the Republic of Ireland, must be deposited with the Registrars
of the Company, by post to Computershare Investor Services (Ireland) Limited, P.O. Box 954, Heron House,
Corrig Road, Sandyford Industrial Estate, Dublin 18, Ireland or so as to be received no later than 48 hours
before the time appointed for the Meeting or any adjourned Meeting or (in the case of a poll taken otherwise
than at or on the same day as the Meeting or any adjourned Meeting) at least 48 hours before the taking of
the poll at which it is to be used. Any alteration to the form must be initialled by the person who signs it.

Alternatively, subject to the Articles of Association of the Company and provided it is received not less than
48 hours before the time appointed for the holding of the Meeting or any adjourned Meeting or (in the case
of a poll taken otherwise than at or on the same day as the Meeting or any adjourned Meeting) at least 48
hours before the taking of the poll at which it is to be used, the appointment of a proxy may also be submitted
by telefax to +353 (1) 447 5572, provided it is received in legible form.

This Form of Proxy must (i) in the case of an individual member be signed by the member or his/her attorney;
or (ii) in the case of a body corporate be executed either under its common seal or signed on its behalf by a
duly authorised officer or attorney in accordance with note 2 above.

In the case of joint holders, the vote of the senior holder who tenders a vote, whether in person or by proxy,
shall be accepted to the exclusion of the vote(s) of the other joint holder(s) and for this purpose seniority will
be determined by the order in which the names stand in the register of members in respect of the joint holding.

If you desire to appoint a proxy other than the Chairman of the Meeting or any adjourned Meeting, please
insert the proxy’s name in block capitals in the space provided and delete the words “the Chairman of the
Meeting or” (see reverse).

A proxy need not be a member of the Company but must attend the relevant meeting in person to represent
you.

Please indicate how you wish your proxy to vote by marking the appropriate box. You may direct your proxy
to vote “For”, “Against”, to “Withhold” your vote or give him/her “Discretion” to vote as he/she wishes by
marking as appropriate. If no such specific instructions are given, the proxy will vote or withhold your vote at
his/her discretion. A vote withheld is not a vote in law and will not be counted in the calculation of the
proportion of votes “For” and “Against” the resolutions.

On any other business which may properly come before the Meeting or any adjourned Meeting and whether
procedural and/or substantive in nature (including any motion to amend a resolution or adjourn the Meeting)
not specified in the Notice of the Meeting or this Form of Proxy, the proxy will act at his/her discretion.

Alternatively, you may also appoint a proxy:

10. The completion and return/submission of this Form of Proxy will not preclude a member from attending and

(a) electronically by accessing the Registrar’s website www.eproxyappointment.com. Details of the

voting in person.

requirements are set out in the box above; or

(b) through CREST, if you are a CREST member, CREST sponsored member or CREST member who has
appointed a voting service provider(s). Transmission of CREST proxy instructions must be authenticated
in accordance with Euroclear UK & Ireland Limited’s specifications as set out in the CREST Manual and
received by the Registrar (ID 3RA50);

provided that your proxy appointment is received not later than 10 a.m. on 22 May 2017 (or in the case of
an adjournment, 48 hours before the time of the adjourned meeting). To appoint more than one proxy please
contact the Registrar on +353 1 447 5590. For the purpose of receipt of the appointment of a proxy through
CREST, the time of receipt will be taken to be the time (as determined by the timestamp generated by the
CREST system) from which the Registrar is able to retrieve the message by enquiry to CREST in the manner
prescribed by CREST. The Company may treat as invalid a proxy instruction in the circumstances set out in
Regulation 35(5)(a) of the Companies Act, 1990 (Uncertificated Securities) Regulations, 1996.

11.

If you are appointing a proxy other than the Chairman of the Meeting (or any adjourned Meeting) or any
other officer of the Company, please provide him/her with the Attendance Card attached hereto to facilitate
his/her attendance.

12. Pursuant to Section 1105 of the Companies Act 2014 and Regulation 14 of the Companies Act 1990
(Uncertificated Securities) Regulations 1996, entitlement to attend and vote at the AGM and the number of
votes which may be cast thereat will be determined by reference to the Register of Members of the Company
at 6.00 p.m. on the day which is two days before the date of the AGM (or in the case of an adjournment as
at 6.00 p.m. on the day which is two days before the date of the adjourned meeting). Changes to entries on
the Register of Members after that time shall be disregarded in determining the rights of any person to attend
and vote at the AGM.

13. The address on the Proxy Form is how your address appears on the Register of Members. If this information
is incorrect please ring the Registrar’s helpline on +353 (1) 447 5590 to request a change of address form
or go to www.investorcentre.com to use the online Investor Centre service.

S R N :

Kindly Note: This form is issued only to the addressee(s) and is specific to the
unique designated account printed hereon. This personalised form is not transferable
between different (i) account holders; or (ii) uniquely designated accounts. The
Company and Computershare Investor Services (Ireland) Limited accept no liability
for any instruction that does not comply with these conditions.

Poll Card To be completed only at the AGM if a Poll is called.

Ordinary Resolutions
1. To receive and consider the Directors’ Report and Statement of Accounts for year ended 31 December 2016.

For

Against Withheld

Vote

(a) To elect Mr. Pat Plunkett as a Director.

(b) To re-elect Mr. Tony O'Reilly as a Director.

3. To authorise the Directors to fix the remuneration of the auditors.

Special Resolution
4. To authorise the Directors to allot equity securities for cash.

Signature

Form of Proxy
Please use a black pen. Mark with an X
inside the box as shown in this example.

I/We hereby appoint the Chairman of the Annual General Meeting OR the following person

Please leave this box blank if you have selected the Chairman. Do not insert your own name(s).

as my/our proxy to attend, speak and vote in respect of my/our full voting entitlement* on my/our behalf on any matter at the Annual General Meeting of
Providence Resources P.l.c. and any adjournment thereof to be held at Hilton Dublin, Charlemont Place, Dublin 2, DO2 A893 which has been convened
for 10 a.m. on 24 May 2017. I/We direct that my/our vote(s) be cast on the specified resolution as indicated by an X in the appropriate box.

* For the appointment of more than one proxy, please refer to Explanatory Note 2 (see front).

Please tick here to indicate that this proxy appointment is one of multiple appointments being made.

Ordinary Resolutions
1. To receive and consider the Directors’ Report and Statement of Accounts for year ended 31 December 2016.

For

Against Withheld

Vote

(a) To elect Mr. Pat Plunkett as a Director.

(b) To re-elect Mr. Tony O’Reilly as a Director.

3. To authorise the Directors to fix the remuneration of the auditors.

Special Resolutions

4. To authorise the Directors to allot equity securities for cash.

I/we would like my/our proxy to vote on the resolutions proposed at the Meeting as indicated on this form. Unless otherwise instructed the proxy may vote as he or she
sees fit or abstain in relation to any business of the meeting or any adjournment thereof. I/we hereby confirm that I/we have read and agree to be bound by the Notes
overleaf (which are deemed comprised within the terms of this Form of Proxy).

Signature

Date

DD / MM / YY

In the case of a corporation, this proxy must be given under its
common seal or be signed on its behalf by an attorney or officer
duly authorised, stating their capacity (e.g. director, secretary).

E X T 0 5 9 7

1 1

P R V I