Providence Resources Annual Report 2017

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FY2017 Annual Report · Providence Resources

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WELCOME TO THE PROVIDENCE RESOURCES P.L.C.
ANNUAL REPORT 2017

CONTENTS

(cid:1) Business Review

2017 Operational Highlights

Chairman’s Remarks

C.E.O. – Operations Review

List of Assets

(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 Ireland.

Operating for over 30 years, the Company (and its

predecessor companies) has a well-established background

in the Irish oil and gas business, having worked closely with

many major international companies including ExxonMobil,

Repsol, Total, Eni, Petronas and Cairn Energy.

The Company is involved in a number of material exploration

prospects and appraisal projects in multiple basins around

the coast of Ireland.

Strategy

The Company’s strategy has been to assemble a material

equity position in a portfolio of assets combining existing

discoveries with new prospects to improve overall economics

whilst mitigating risk in order to generate value for the

Company and its shareholders.

• Focus on oil & gas exploration offshore Ireland

— Core focus on early stage exploration & appraisal

drilling opportunities in multiple basins

• Create a diversified and material exploration & appraisal

portfolio

• 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

• Evaluate new opportunities

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

2017 OPERATIONAL HIGHLIGHTS

2017 Operations

Appraisal Projects
● Barryroe Oil Project, North Celtic Sea Basin (SEL 1/11)

–
–

Farm-out discussions continued – Period of exclusivity granted
Extension to 1st phase of SEL 1/11 to July 2019 and overall license
extension of 2 years to July 2021

– New 3D seismic uplift provided significantly enhanced visualisation of

Barryroe reservoir interval

● Helvick & Dunmore Oil Projects, North Celtic Sea Basin (LU)

–
–

–

Awarded Lease Undertakings
Assigned 10% equity in Helvick to MFDevCo and 10% equity to
Lansdowne
Assigned 10% equity in Dunmore to MFDevCo

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

(FEL 2/14)
– Consented and drilled the 53/6-1 exploration well
–

First well to be consented under the new Irish Petroleum (Exploration
and Extraction) Safety Act 2015
Deepest water depth for any exploration well ever drilled offshore
North-West Europe

– No Lost Time Incidents (“LTI’s”)
–

Paleocene Druid Reservoir interval encountered within pre-drill depth
prognosis, but was water bearing
Lower Cretaceous Drombeg Reservoir interval encountered within pre-
drill depth prognosis, but was water bearing
53/6-1 exploration well plugged and abandoned in accordance with
pre-drill plan

–

Cairn Farm-in to 30% of FEL 2/14
–

Farm-in by Cairn where Cairn paid 45% (US$18.9 million) of 53/6-1
well costs, subject to a gross well cap of US$42 million, and thereafter
at 30% cost share

– Cairn also made a cash payment of US$2.82 million on a pro-rata

80/20 basis to Providence and Sosina

– Cairn agreed methodology for a contingency appraisal well carry on a
1.33 to 1 promote basis, subject to US$42 million gross well cap

Total option and Election to Farm-in to 35% of FEL 2/14
– Option agreed with Total to take a 35% working interest, via agreed

–

farm-in, exercisable post drilling of the 53/6-1 well
Total paid US$27 million to Providence & Sosina (US$21.6 million &
US$5.4 million, respectively)
Total subsequently exercised option to farm-in for 35% working
interest and operatorship

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

Technical work
– Generated calibrated Petroleum Systems Model (“PSM” c.48,000 km2),

which supports the potential of a working petroleum system

– Model demonstrated that Avalon could potentially access a total
hydrocarbon resource charge of c. 8.67 BBO and c. 21.43 TSCF
(equivalent to c. 12 BBOE)

Total farm-in to 50% of LO 16/27
–
–

Total farmed-in for 50% interest and operatorship
Total paid pro-rata share of past gross costs of c. US$0.175 million,
and in addition to its pro-rata share, pay 21.4% of the past and future
costs during the 2-year term of LO 16/27, subject to a gross cost cap
of US$1.33 million
In the event that the JV partners decide to drill an exploration well,
Total will pay 60% of the drilling costs, subject to a gross well cap of
US$42 million

–

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

–
–
–

Eni assumed operatorship
Providence equity increased to 26.846%
Licensed 1,800 km2 of 3D seismic data from CGG as part of their
Porcupine Basin multi-client 3D acquisition programme (acquired in
June 2017)

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

–

Prepared scope for 2018 site survey and future drilling

(cid:1) Business Review

● Kish Oil Prospect, Kish Bank (SEL 1/11)

– Ministerial consent granted to extend the 1st phase of SEL2/11 to
August 2018 and an overall extension of one year to the license term
to August 2020

2017 Financial Highlights
● Operating Loss for the period of €21.402 million versus €18.844 million in

2016
Loss of €20.419 million versus €20.546 million in 2016
Loss per share of 3.42 cents versus 5.80 cents in 2016
At December 31, 2017 total cash and cash equivalents were €19.603
million versus €31.403 million (at 31 December 2016)
The Company had no debt at December 31, 2017 (at 31 December 2016: 0)
The total issued & voting share capital comprises 597,658,958 ordinary
shares of €0.10 each

●
●
●

●
●

Board Changes

●

In June 2017, Dr. Angus McCoss joined the Board as a Non-Executive
Director

Post Year End Progress
● Barryroe Oil Project, North Celtic Sea Basin (SEL 1/11)

–

Through its wholly owned subsidiary, Exola DAC (“Exola”),
the
Company signed a Farm-out Agreement with APEC Energy Enterprise
Limited (“APEC”) in relation to SEL 1/11.
Under the terms of the Farm-out Agreement, in consideration for
APEC being assigned a 50% working interest in SEL 1/11:
–

incur an annual

APEC will be directly responsible for paying 50% of all the cost
obligations associated with the drilling of 3 vertical wells, plus any
associated side-tracks and well testing (hereinafter referred to as
the “Drilling Programme”);
APEC will provide a drilling unit and related operational services for
the Drilling Programme;
APEC will finance, by way of a non-recourse loan facility (the
“Loan”), the remaining 50% of all costs of the Barryroe Partners in
respect of the Drilling Programme;
The Loan, drawable against the budget for the Drilling Programme,
will
interest rate of LIBOR +5% and will be
repayable from production cashflow from SEL 1/11 with APEC
being entitled to 80% of production cashflow from SEL 1/11 until
the Loan is repaid in full;
Following repayment of the Loan, APEC will be entitled to 50% of
production cashflow from SEL 1/11 with Exola and Lansdowne
being entitled to 40% and 10% of production cashflow,
respectively.
Upon completion of the Drilling Programme, APEC will be able to
subscribe for warrants over 59.2 million shares in Providence at a
strike price of £0.12 per share (the “Warrants”). The Warrants,
representing circa 9.9% of the current issued share capital of
Providence, are exercisable for a period of 6 months following the
completion of the Drilling Programme.

–

Exola will act as operator for the Drilling Programme with technical
assistance being provided by the APEC Consortium; and,
After the completion of the Drilling Programme, APEC will have the
right to become operator for the development/production phase.
The closing of the Farm-out, which is expected to occur in Q3 2018,
is conditional on completion of all ancillary legal documentation
required to implement the terms of the Farm-out Agreement, and is
subject to the approval of the Minister of State at the Department of
Communications, Climate Action and Environment and the approval of
the Chinese government.

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

–

Dunquin South sub-sea site survey programme planned for Q3 2018

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

–

Extension of the first phase of the Frontier Exploration Licence to
March 2019

– High resolution 2D seismic acquisition and well exploration site survey

contract awarded to Gardline
Site survey to take place in Q3 2018
Farm-out process continues

–
–

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

–

Application to convert from LO to FEL status

Providence Resources P.l.c. | Annual Report | 2017 1

CHAIRMAN’S REMARKS

Leadership in the Irish Offshore

Dear Shareholder,

I am pleased to present
the 2017 Annual Report which
incorporates our financial results for the year and a detailed
summary of our activities during the year and into the early months
of 2018.

Following three very difficult years for the oil and gas sector, arising
from the sharp fall
in commodity prices, and a subsequent
contraction in exploration and development activity, 2017 saw the
beginnings of a recovery which gathered pace as the year
progressed. With the pickup in industry cash flows and the sharp
decline in operating costs, the industry is refocusing on reserve
replacement and the need to identify and execute new drilling
opportunities. Importantly for Providence, this has been reflected
in increased interest in the Irish offshore and improved scope for
farming out projects with credible technical and financial
characteristics.

Providence entered 2017 with a strong balance sheet following
the re-capitalisation in 2016 and with well advanced plans to drill
the high impact Druid and Drombeg exploration prospects. As a
result of a competitive farm-out process, we were successful in
attracting two high quality partners, Cairn Energy and Total, to join
the project on favourable financial terms. This allowed us to
financially de-risk the project and conserve our capital, whilst also
gaining access to the technical capabilities of proven global
explorers. The drilling project was a major undertaking for a
company of our size and its safe and efficient execution endorses
the project management capabilities of the Providence team and
the quality of our control and risk management systems. While the
outcome was commercially disappointing, valuable insights were
gained and post-well data analysis is ongoing.

Barryroe is a core asset in the Providence portfolio and our team
has been working hard to unlock the significant value opportunity
which this asset presents. Heretofore, we had been hampered in
progressing this project by the collapse in the farm-out market and
by our limited financial capability. Due to the persistence of the
team, and aided by the improvement in the M&A market, there
has been growing interest in the project from a number of parties.
As was recently announced, we signed a Farm-out Agreement
with a Chinese consortium to partner with us by financing a three
well drilling program (and associated side-tracks) to appraise the
asset. This is a transformational transaction for the Company as it
provides a comprehensive solution to financing and accelerating

the appraisal of what we believe will be a key value driver for
Providence in the coming years.

Recognising the changing environment in which we operate, your
Board and management undertook a detailed strategic review of
following which your Board
the business during the year
concluded that our strategy should continue to be exploration led
and primarily focused on the Irish offshore. We see the
combination of our portfolio, our partners and our people as the
key foundations of our business. In particular, we have significant
equity positions in a number of material prospects and projects,
have a small but very experienced team with a unique knowledge
of the Irish offshore, and have the proven skills to successfully
partner with global companies and independents alike.

We strengthened the Board during the year by the addition of
Angus McCoss as a Non-Executive Director. Angus brings a
wealth of experience of the exploration industry worldwide and
has already made an important contribution to the Board’s
deliberations. We have more recently undertaken a review of how
the Board should evolve and be refreshed as the business
develops and to ensure that we continue to meet best corporate
governance standards. This gives us a roadmap to plan and
develop oversight of the business in the coming years.

the most active and successful

In conclusion, I am very encouraged by the progress that has been
made at Providence in the past year and look forward to another
active year in 2018. The Irish offshore sector has attracted interest
international
from some of
explorers and will be a significant beneficiary of the recovery in
global exploration activity which is already underway. Supported
by this improving industry outlook, we are continuing to high grade
our asset portfolio, deepen our relationships with industry partners
and exploit our experience of the Irish offshore to maximise
opportunities to grow shareholder value. I look forward to reporting
on our progress in the coming year.

Finally, I would like to thank our staff and management team for
their diligence and hard work during the year. The commitment
and support of my fellow Board members is also very much
appreciated.

Pat Plunkett
Chairman

2 Providence Resources P.l.c. | Annual Report | 2017

C.E.O. – OPERATIONS REVIEW

Dear Shareholder,

As the Chairman stated in his remarks, the past year has been a
year of real progress across the entire Providence portfolio.

Over the past 12 months, we agreed 4 major commercial
transactions which not only endorsed our view of our assets, but
also provided significant incremental capital which bolstered the
financial resources of the Company.

The main operational activity was the planning, consenting and
drilling of the 53/6-1 exploration well
in FEL 2/14. This drilling
targeting the Palaeocene Druid and Lower
programme,
Cretaceous Drombeg exploration targets, was a major
undertaking for the Providence team. Not only was this well the
deepest water depth well (water depth of 2,233 m) ever drilled by
any company in the offshore north-west Europe, but it was also
the first well to be drilled under the new Irish governmental
Petroleum Exploration and Extraction Safety Act 2015, which
required substantial additional permitting and consenting.

Following the refinancing of the business in 2016, we immediately
embarked on the operational and consenting programme to be
able to commence drilling in the summer of 2017. In September
2016, we hired LR Senergy to assist as our well management
company and in November 2016, we hired the harsh environment
IceMAX drillship from Stena. Over a period of 10 months, we
assembled a team of leading Irish and international subcontractors
to assist with the drilling programme.

At the same time, we managed a farm-out process with international
E&P companies for this drilling opportunity. This ultimately led to the
conclusion of 2 farm-out transactions, which generated over
US$45 million of incremental capital for the Company.

In March 2017, we signed a farm-out agreement with a subsidiary
of Cairn Energy, which saw Cairn take a 30% working interest in
the 53/6-1 exploration drilling programme on the basis that they
would fund 1.5 times their equity (up to a well cap of
US$42 million) and thereafter, at their 30% working interest. Cairn’s
involvement was not just financial as they also assisted us
operationally with their expertise.

In June 2017, we announced an option deal with a subsidiary of
Total, whereby Total paid Providence & Sosina (on a 80/20 basis,
respectively) US$27 million to have the right to take a 35% working
interest in FEL 2/14, such option to be exercised 60 working days
post
the 53/6-1 exploration well drilling
programme.

the completion of

The 53/6-1 exploration well spud on July 11, 2017 with the first
target reservoir interval, Druid, intersected within pre-drill prognosis
by the end of July. Unfortunately, as announced on August 4,
2017, the reservoir was found to be water wet. Drilling operations
then continued through September, when the Lower Cretaceous
interval was intersected (within pre-drill
Drombeg reservoir
prognosis) and was also found to be water bearing. With data
acquisition carried out and with the drilling operations safely
concluded, the well was plugged and abandoned in accordance
with pre-drill plans, and the rig went of hire on September 26,
2017.

The results of
the drilling programme were obviously very
disappointing but as a by-product, valuable data in terms of
regional geology, reservoir development and pressure regimes

(cid:1) Business Review

were obtained. As only the second wildcat exploration well ever
drilled in the southern Porcupine Basin, these data will be
particularly useful for any future planned drilling of the deeper
Diablo structure contained within FEL 2/14 or indeed other
Providence assets elsewhere within the basin. In December 2017,
Total confirmed their intention to exercise their option, resulting in
Total taking a 35% working interest and operatorship of FEL 2/14
with Cairn, Providence and Sosina retaining 30%, 28% and 7%
working interests, respectively.

As the Chairman stated, this was a significant undertaking for
Providence and I would like to sincerely extend our thanks to the
over 50 subcontracting companies in Ireland, the UK, the USA
and elsewhere involved in our programme. As the first well to be
approved under the new consenting regime, I would also like to
express our thanks to all the various Irish regulatory authorities
with whom we worked to ensure the safe operational and
environmentally benign drilling of this significant exploration well.

Whilst the 53/6-1 Druid/Drombeg well and associated farm-outs
were major operational achievements for the company, they were
by no means the only ones, and indeed, we also agreed two
further commercial deals on other assets.

In June 2017, we agreed another farm-out deal with a subsidiary
of Total, whereby Total took a 50% working interest in Licensing
Option (LO) 16/27, which contains the undrilled Paleocene Avalon
exploration prospect. LO 16/27 was awarded to Providence in the
last Irish Atlantic Margin Licensing Round, having been our
number one target in that round. It is therefore very encouraging
that Total endorsed our view by joining us on this license and it is
even more notable that, as just recently announced, the LO 16/27
partners (Total 50%, Providence 40% and Sosina 10%) have
applied to the Irish government to convert LO 16/27 to a Frontier
Exploration Licence. Under the terms of the farm-out agreement,
if the JV subsequently elect to drill an exploration well, Total will
provide a 1.2 to 1 well promote on the drilling of an exploration
well (up to a well cost cap of US$42 million) and thereafter, at
working interest levels.

The fourth major commercial deal agreed was the farm-out of a
50% working interest in SEL 1/11, Barryroe. On March 28, 2018
we announced a farm-out with APEC Energy Enterprise Limited
for the drilling of 3 wells and associated side-tracks and testing at
Barryroe. APEC, working in a strategic partnership with China
Oilfield Services Limited and JIC Capital Management Limited, will
take a 50% working interest in SEL 1/11 and will provide financing
to Providence and Lansdowne to fund their respective 40% and
10% working interests. This means that Providence and
Lansdowne have no upfront risk or capital exposure for the initial
appraisal drilling programme, which is designed to take Barryroe
to Final Investment Decision (FID) status. The loan financing is
charged at LIBOR +5%, is non-recourse and is only repayable
from Barryroe production cash flow.

Importantly, the involvement of this Chinese consortium provides
not only a fully funded drilling programme but it also creates a
roadmap to take this project, subject to the results of the drilling,
to project sanction and on to first oil. With the APEC consortium
having the right to take over operatorship post drilling, we now
have the operational and financial capabilities to move Barryroe
forward.

Providence Resources P.l.c. | Annual Report | 2017 3

C.E.O. – OPERATIONS REVIEW
(CONTINUED)

The last component of the farm-out to APEC is the granting of
warrants whereby APEC can subscribe for 59.2 million ordinary
shares in Providence, which is equivalent to 9.9% of the fully
issued share capital of the Company. However, these warrants,
priced at £0.12 per share, can only be exercised by APEC post the
completion of the drilling programme and if exercised, would
deliver incremental cash to Providence of circa US$10 million.

The closing of the Barryroe farm-out is subject to the conclusion
of ancillary documentation to affect the terms of the signed Farm-
out Agreement and is also subject to the consent of the Irish and
Chinese governments. Closing is expected in Q3 2018, at which
point there will be operational and planning/consenting ramp-up
to effect drilling in 2019, subject to normal regulatory consents.

Having concluded these four-major commercial deals, we still have
more to do and so we continue to work hard to advance other
assets within our portfolio.

At FEL 6/14, Newgrange, we were recently awarded a license
extension and we are now consenting and preparing for an
exploration well site survey, which is expected to be carried out in
Q3 2018. This survey is designed to get Newgrange to a drill ready
status such that an exploration well could be drilled as an
incremental well to a programme being carried out by either a
Providence consortium or another operator offshore Ireland
utilising rig share arrangements. And at the same time, we
continue to operate a farm-out process with international E&P
players, where I can confirm that there is good interest.

The other major recent operational activity has been at FEL 3/04,
Dunquin. FEL 3/04 contains two large Lower Cretaceous
carbonate reef build-ups, Dunquin North and Dunquin South.
Dunquin North was drilled in 2013 by an ExxonMobil
led
consortium comprising Eni, Repsol, Providence, Atlantic
Petroleum and Sosina. This well was drilled safely in the summer
of 2013 but it encountered a water bearing reservoir and so it was
plugged and abandoned. Whilst not commercially viable, the
results of the well were significant for the advancement of
exploration interest in the area as the well encountered a residual
low saturation oil accumulation that is interpreted to be the
breached remnant of a previous 1.2 BBOE oil accumulation. As
the first well drilled in the basin, it did, however, prove the southern
Porcupine Basin to be hydrocarbon bearing and this led, in part,
to the hugely successful Irish Atlantic Margin Licensing Round
which saw Licensing Options being awarded to major industry
players, including ExxonMobil/Statoil, Nexen-CNOOC, Eni/BP,
Woodside and Cairn.

Following a re-alignment of equity within the Dunquin JV
partnership, Eni took over operatorship with a 36.913% working
interest, with partners Repsol (33.557%), Providence (26.846%)
and Sosina (2.684%). During 2017, the JV elected to license newly
acquired 3D seismic data acquired over FEL 3/04 in 2017. The
purpose of these 3D seismic was to ascertain whether there were
clear differences between Dunquin North and Dunquin South and,

4 Providence Resources P.l.c. | Annual Report | 2017

in particular, to understand why breaching of oil had occurred at
Dunquin North.

Whilst the results of the 3D are confidential to the JV, shareholders
should note the recent release of new data on 2013 44/23-1
Dunquin North exploration well. At the recent AAPG European
Regional Conference in Lisbon earlier this month, four technical
for the first time,
papers were presented on Dunquin and,
previously unreleased Dunquin North well data (including reservoir
parameters, oil saturation levels etc.) were made public.
Confidentiality provisions of the JV currently limit any discussion on
what this could mean for Dunquin South, but further information
will be provided when appropriate.

the operational

Finally, details on the balance of the portfolio are included in the
remaining pages of
the
Company recorded a loss for the financial year of €20.419 million,
which includes a full impairment of the costs for the drilling of the
53/6-1 Druid/Drombeg exploration well. Cash on the balance sheet
at year end was €19.603 million and the Company had no debt.

review. Financially,

We are obviously very closely monitoring the proposals put
forward in the Climate Emergency Measures Bill 2018 and have
noted that this will be considered further at Committee level,
though no set timetable has been confirmed. Given our relative
geographical isolation and the fact that we currently import 100%
of our oil and c. 40% of our gas, energy supply & security is a very
big issue for Ireland. Whilst the National Mitigation Plan sets out a
plan for a lower carbon Ireland, to some, this is not sufficient, nor
quick enough. Ironically, it could be argued that this proposed bill
inadvertently highlights the significant issues regarding energy
policy in Ireland. These significant issues include security of energy
supply, the impact of Brexit, the lack of installed renewable energy
capacity, planning limitations, together with the fact that our
economy is heavily reliant on imported fossil fuels. As such a key
provider of energy, the oil & gas industry has an important role to
play and we will be working with the industry and other
stakeholder groups to ensure that this important national issue is
treated with the consideration that it deserves.

In summary, 2017 was a very busy year and 2018 is shaping up
to be equally busy. The four farm-out deals where critical deals for
the Company – they not only provided incremental capital to
advance our assets – but they have allowed the us to deliver on
our stated objectives, with clear third-party industry validation.

Finally, I would like to thank all of our stakeholders and to
acknowledge the enormous efforts of the Providence team and
the guidance and support of the Board of Directors.

Tony O’Reilly
Chief Executive

LIST OF ASSETS

(cid:1) Business Review

Ref

Licence

Issued

Asset

Operator

Partners

PVR %

Type

NORTH CELTIC SEA BASIN

SEL 1/11

SEL 2/07

Lease
Undertaking

2011

2007

2016

BARRYROE

HOOK HEAD

HELVICK

Providence*

APEC**, Lansdowne

80.00**

Oil discovery

Providence

Atlantic, Sosina

Providence

Atlantic, Sosina,
Lansdowne, MFDevCo

72.50

56.25

Oil and gas discovery

2016

DUNMORE

Providence

Atlantic, Sosina,
MFDevCo

65.25

Oil discovery

NORTHERN PORCUPINE BASIN

FEL 2/04

FEL 4/08

2004

2008

SPANISH POINT

Cairn

Providence, Sosina

SPANISH POINT NORTH Cairn

Providence, Sosina

SOUTHERN PORCUPINE BASIN

LO 16/27

FEL 2/14

2016

2014

AVALON

DIABLO

FEL 3/04

2004

DUNQUIN

GOBAN SPUR BASIN

Total

Eni

58.00

40.00

28.00

Oil and gas discovery

Oil and gas exploration

Providence, Sosina

Providence, Cairn,
Sosina

Providence, Repsol, Sosina 26.85

Oil exploration

FEL 6/14

2014

NEWGRANGE

Providence

Sosina

80.00

Oil and gas exploration

KISH BANK BASIN

SEL 2/11

2011

KISH BANK

Providence

100.00

Oil and gas exploration

ST GEORGE’S CHANNEL BASIN

SEL 1/07

2007

DRAGON

Providence

100.00

Gas discovery

* Held through wholly owned subsidiary, Exola DAC.
** Subject to Farm-out announced on March 28, 2018 whereby APEC Energy Enterprise Limited will take a 50% working interest in return for an agreed work programme. Subject

to closing, Providence’s stake (held through its wholly owned subsidiary, Exola DAC) will reduce to 40%.

Providence Resources P.l.c. | Annual Report | 2017 5

LIST OF ASSETS
(CONTINUED)

Appraisal: North Celtic Sea Basin

Ireland

Helvick

Dunmore

Hook Head

Barryroe

Ireland

United
Kingdom

100 Km

France

SEL 1/11 – Barryroe Project
Through its wholly owned subsidiary Exola DAC, the Company
currently holds an 80% working interest in and is operator of
SEL 1/11 which contains the Barryroe oil accumulation, but this
working interest will be reduced to 40% subject to the closing of
the Farm-out Agreement signed with APEC Energy Enterprise
Limited as announced on March 28, 2018 (see below).

SEL 1/11 is located in the North Celtic Sea Basin, c. 50 km off the
south coast of Ireland, being is situated in c. 100 m water depth.
The licence is adjacent to the giant Petronas-operated Kinsale
Head Gas Field.

History
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 data, the
Company drilled the 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 m 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 gross 346 MMBOE REC.

6 Providence Resources P.l.c. | Annual Report | 2017

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.

In 2016, the Company updated on the resource potential of the
Upper C-Sand interval. The latest estimated GIIP within SEL 1/11
& OPL1 option area is now estimated at c. 400 BSCF. During
2017, the Barryroe partners were granted a 2-year extension to
the current phase of the Barryroe licence (SEL 1/11) to July 2019
as well as an extension to the term of the 2nd phase to July 2021.

Farm-out to APEC
In March 2018, the Company announced that it had signed a
Farm-out Agreement with APEC Energy Enterprise Limited in
relation to SEL 1/11. APEC is a privately owned Chinese company
which has a strategic partnership with China Oilfield Services Co.,
Ltd and JIC Capital Management Ltd for the investment and
development of offshore oil and gas opportunities worldwide
utilising Chinese drilling units, services and equipment.

Under the terms of the Farm-out Agreement, in consideration for
APEC being assigned a 50% working interest in SEL 1/11, the
following terms apply:

Commercial Terms

APEC will be directly responsible for paying 50% of all the cost
obligations associated with the drilling of 3 vertical wells, plus
associated side-tracks and well testing (hereinafter referred to as
the “Drilling Programme”);

APEC will provide a drilling unit and related operational services for
the Drilling Programme;

APEC will finance, by way of a non-recourse loan facility (the
“Loan”), the remaining 50% of all costs of the Barryroe Partners in
respect of the Drilling Programme;

incur an annual

The Loan, drawable against the budget for the Drilling Programme,
will
interest rate of LIBOR +5% and will be
repayable from production cashflow from SEL 1/11 with APEC
being entitled to 80% of production cashflow from SEL 1/11 until
the Loan is repaid in full;

Following repayment of the Loan, APEC will be entitled to 50% of
production cashflow from SEL 1/11 with Exola and Lansdowne
being entitled to 40% and 10% of production cashflow, respectively.

Operational Terms

Exola will act as operator for the Drilling Programme with technical
assistance being provided by the APEC Consortium; and,

After the completion of the Drilling Programme, APEC will have the
right to become operator for the development/production phase.

Closing

The closing of the Farm-out, which is expected to occur in
is conditional on completion of all ancillary legal
Q3 2018,
documentation required to implement the terms of the Farm-out
Agreement, and is subject to the approval of the Minister of State
at the Department of Communications, Climate Action and
Environment and the approval of the Chinese government.

(cid:1) Business Review

Subject to closing, the revised equity in SEL 1/11 will be Exola
(operator, 40%), APEC (50%) & Lansdowne (10%).

SEL 2/07 - Hook Head Project
The Company currently holds a 72.5% working interest in and is
operator of Hook Head which is located c. 60 km off the south
coast of Ireland and is situated in c. 70 m water depth. Currently
held under SEL 2/07,
the area is the subject of a Lease
Undertaking application with the Irish government.

History
SEL 2/07 was awarded to the Company and its partners in 2007.

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 current working interests in Hook Head are Providence
(72.5%), Atlantic (18.3%), and Sosina (9.2%)

Lease Undertakings - Helvick & Dunmore Projects
The Company currently holds a 56.25% working interest in and is
operator of Helvick which is located c. 40 km off the south coast
of Ireland and is situated in c. 75 m water depth. Previously held
under SEL 2/07, the area is now held under a Lease Undertaking
in conjunction with Dunmore. The working interests in Helvick are
Providence (56.25%), Atlantic (16.5%), Lansdowne (9%), Sosina
(8.25%) and MFDevCo (10%), with the Company acting as
operator.

The Company currently holds a 65.25% working interest in and is
operator of Dunmore which is located c. 40 km off the south coast
of Ireland and is situated in c. 70 m water depth. Previously held
under SEL 2/07, the area is now held under a Lease Undertaking
in conjunction with Helvick. The current working interests in
Dunmore are Providence (65.25%), Atlantic (16.5%), Sosina
(8.25%), and MFDevCo (10%) with the Company acting as
operator.

History
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.

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% working interest in the Helvick and
Dunmore discoveries.

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.

MFDevCO is continuing its work programme on Helvick and
Dunmore and the Company is awaiting details on its Hook Head
Lease Application.

Providence Resources P.l.c. | Annual Report | 2017 7

LIST OF ASSETS
(CONTINUED)

Appraisal: Northern Porcupine Basin

In May 2013, CEPIL entered into a farm in agreement with Cairn
Energy PLC whereby Cairn became operator with the objective
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%), Providence (32%), CEPIL (26%) and
Sosina (4%).

Spanish Point North

Spanish Point

In July 2014, the Company announced that the planned Spanish
Point appraisal well was delayed to 2015 due to rig refurbishment
issues with the selected rig.

In February 2015, the Company acquired 100% of the issued
share capital of CEPIL, effective from November 2014, thereby
to 58% in both
increasing the Company’s working interest
FEL 2/04 and FEL 4/08 for a nominal consideration of US$1.

In March 2015, planned drilling activity 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 2015/2016, the Company initiated a farm-out process for part
of its interests in FEL 2/04 and 4/08. Due to the challenging
economic conditions and re-assessed geological interpretation,
no farm-out was concluded and the JV Partners were unable to
sanction drilling.

As a result, the partners (led by the operator, Cairn) engaged in
discussions with the Irish regulatory authorities as to future status
– these discussions are ongoing. Accordingly, due to this
uncertainty on licence status, the Directors elected to impair the
carrying value of the Spanish Point assets in its 2016 year-end
accounts.

FEL 4/08 – Spanish Point North Prospects
The Company currently holds a 58% working interest in FEL 4/08
with Cairn (operator) and Sosina. FEL 4/08 lies adjacent to and
north of FEL 2/04.

Like FEL 2/04, this licence is also currently under discussion with
the Irish regulatory authorities as to future status.

Ireland

United
Kingdom

100 Km

France

FEL 2/04 – Spanish Point Prospect
The Company currently holds a 58% working interest in FEL 2/04
with Cairn (operator) and Sosina. The licence is located in the
Northern Porcupine Basin, c. 170 km off the west coast of
Ireland and situated in c. 400 m water depth. The Licence is
currently under discussion with the Irish regulatory authorities as
to future status.

History
FEL 2/04 was originally awarded to the Company (80%, operator)
and partner Sosina (20%) in 2004.

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, 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).

8 Providence Resources P.l.c. | Annual Report | 2017

(cid:1) Business Review

Exploration: Southern Porcupine Basin

Avalon

Dunquin

Ireland

United
Kingdom

100 Km

France

FEL 3/04 – Dunquin South Prospect
The Company currently holds a 26.846% working interest in FEL
3/04 with Eni acting as operator. The equity interests in FEL 3/04
are Eni (36.913%), Repsol (33.557%), Providence (26.846%) and
Sosina (2.684%).

The licence lies in the southern Porcupine Basin, c. 200 km off the
south-west coast and in c. 1,500 m water depth.

History
FEL 3/04 was originally awarded to the Company (80%, operator)
and partner Sosina (20%) in 2004.

In 2006, the Company agreed a farm-in with ExxonMobil, whereby
they assumed an 80% working interest in return for a pre-agreed
investment programme. This transaction reduced the Company’s
In 2006, the
working interest to 16% and Sosina’s to 4%.
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% working
interest, resulting in revised working interests of Providence (16%),
ExxonMobil
(40%) and Sosina (4%). Separately,
ExxonMobil assumed operatorship and moved the partnership to
the next phase of
the licence by formally making a well
commitment.

(40%), Eni

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%), Providence (16%) and Sosina (4%). In
2013, Atlantic Petroleum farmed into the licence resulting in final
pre-drill working interests of ExxonMobil (25.5%), Eni (27.5%),
Repsol (25%), Providence (16%), Atlantic (4%) and Sosina (2%).

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 m 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 m 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 m 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 estimated residual oil STOIIP of c. 600 MMBO.

ExxonMobil, the then operator, also carried out an assessment of
the other 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 would acquire
Atlantic’s 4% working interest for a nominal consideration.

In March 2016, the Company announced that Dunquin North
post-well technical studies were 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 Dunquin North well data suggests that the original
hydrocarbon column may have been significantly greater than the
previously reported 44 m and may have covered the entire 250 m
drilled interval. This new interpretation 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.

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. The purpose of this 3D is to distinguish
between the breached Dunquin North structure and the undrilled
Dunquin South structure.

This data is currently being assessed by the partnership.

Providence Resources P.l.c. | Annual Report | 2017 9

In June 2017, the Company agreed a farm-out with Total. In
consideration for Total taking a 50% working interest in LO 16/27,
Total agreed to pay:

• Pay its pro-rata share of past gross costs of c. US$0.175

million

•

In addition to its pro-rata share, pay 21.4% of the past and
future costs during the 2-year term of LO 16/27, subject to a
gross cost cap of US$1.33 million

Under the terms of the Farm-out Agreement, and subject to
Ministerial approval, Total would assume operatorship of LO 16/27
and any subsequent licensing authorisations issued.

In the event that the JV partners agree to convert LO 16/27 into a
Frontier Exploration Licence, and a subsequent decision is taken
to drill an exploration well, Total will pay 60% of the drilling costs,
subject to a gross well cap of US$42 million.

With ministerial approval being granted for the farm-out to Total,
the JV partnership elected to progress the LO 16/27 to Frontier
Exploration Licence status and an application has been submitted
to the Irish government.

LIST OF ASSETS
(CONTINUED)

Exploration: Southern Porcupine Basin

Avalon

Dunquin

Ireland

United
Kingdom

100 Km

France

LO 16/27 – Avalon Prospect
The Company currently holds a 40% working interest in LO 16/27
with Total acting as operator. The working interests in LO 16/27
are Total (50%), Providence (40%) and Sosina (10%). The licence
lies in the southern Porcupine Basin, c. 150 km off the west coast
and in c. 1,300 m water depth.

History
In 2016, the Company (80%) and its partner Sosina (20%) were
awarded Licensing Option 16/27 over a 1,324 km2 area. 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 m 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 sediment transport 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.

10 Providence Resources P.l.c. | Annual Report | 2017

Exploration: Southern Porcupine Basin

Diablo

Ireland

United
Kingdom

100 Km

France

FEL 2/14 – Diablo Prospect
The Company currently holds a 28% working interest in FEL 2/14,
with partners Total, (operator), Cairn and Sosina. The licence lies
in the southern Porcupine Basin, c. 150 km off the west coast and
in c. 1,300 m water depth.

History
FEL 2/14 was originally awarded to the Company (80%) and
partner Sosina (20%) as LO 11/9 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. During 2016, the results of the Collaborative
Project confirmed the significant resource potential of Druid and
Drombeg and a decision was taken to advance a drilling
programme.

(cid:1) Business Review

Following a capital raise in July 2016, the Company accelerated
consenting and operational plans to drill an exploration well on
FEL 2/14 in summer 2017. Over this same period, the Company
operated a data room process for potential new co-venture
partners. This farm-out process resulted in the farm-out of equity
in FEL 2/14 to Cairn Energy, whereby Cairn took 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 US$42 million gross well
cost), after which the parties paid their costs according to their
equity share.

The Company subsequently agreed an option deal with Total
whereby Total had the right to take a 35% interest in FEL 2/14,
exercisable 60 working days after the completion of drilling, by
agreeing to pay an option fee to Providence and Sosina of gross
US$27 million.

In July 2017, the 53/6-1 exploration well was commenced drilling
operations using the Stena IceMAX drill-ship targeting the
Paleocene Druid Reservoir interval and the Lower Cretaceous
Drombeg Reservoir interval encountered. As announced in July
and September, both reservoirs were encountered within the pre-
drill depth prognosis, but both reservoirs were water bearing.
Accordingly, in accordance with the pre-drill plan, the 53/6-1
exploration well was plugged and abandoned.

In December 2017, Total exercised their option to farm-in for a
35% working interest and the assumption of operatorship, which
has now been approved by the Irish regulatory authorities.
Currently, post well studies are ongoing and the JV partners will
evaluate these data in the context of the underlying Diablo
exploration prospect.

Providence Resources P.l.c. | Annual Report | 2017 11

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. In 2016, the Irish government awarded multiple
Licensing Options in the surrounding southern Porcupine/Goban
Spur area – with notable licensees including 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. The results
supported top seal and reservoir presence for the 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 m.

In 2017, the Company elected to advance the preparations for
drilling of Newgrange and accordingly, the Company has applied
for consent to carry out an exploration well site survey, with
Gardline being awarded the contract to carry out such survey,
which is expected to commence in Q3 2018. Additionally, the
Company is running a farm-out data room process where there is
good industry interest.

LIST OF ASSETS
(CONTINUED)

Exploration: Goban Spur Basin

Newgrange

Ireland

United
Kingdom

100 Km

France

FEL 6/14 – Newgrange Prospect
The Company currently holds an 80% working interest
in
FEL 6/14, with partner Sosina. The licence lies in the Goban Spur
Basin, some 260 km off the south-west coast of Ireland, in
c. 1,000 m water depth.

History
FEL 6/14 was originally awarded to the Company (80%) and its
partner Sosina (20%) 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 Lower Cretaceous carbonate
play-type to the previously drilled Dunquin North residual oil
accumulation located in FEL 3/04.

The Newgrange prospect is located in c. 1,000 m water depth.
However, it is notable that the crest of the Cretaceous closure is
just c. 500 m 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 Newgrange
prospect
encountered
hydrocarbon shows in sands of Lower Jurassic age indicating the
presence of an active petroleum system.

and was drilled down-structure,

12 Providence Resources P.l.c. | Annual Report | 2017

(cid:1) Business Review

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

Recent Activity
The status of the licence is currently under review and discussion
with the regulatory authorities pending clarity on the Foreshore Act
and the ability of the Company to carry out its planned activities.

SEL 1/07 – Dragon Prospect
SEL 1/07 was awarded to the Company in February 2007 (100%),
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 authorisation with
the Irish regulator.

Kish Bank

Ireland

Dragon

Ireland

United
Kingdom

100 Km

France

SEL 2/11 – Kish Bank Prospect
The Company currently holds an 100% working interest in SEL
2/11, which lies c. 8 km offshore Dublin in c. 25 m water depth.

History
Licensing Option (LO) 08/2 was originally awarded to the
Company (50%) and Star Energy (Petronas, 50%) in 2008, with
the Company as operator.

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. This
Foreshore Licence was granted to the Company in October 2012.

In February 2013, the Company elected to voluntarily surrender
the Foreshore Licence when it became clear that there had been
a governmental transposition error in relation to the European EIA
Directive. In 2014, this transposition error was finally corrected but
further consultation is now ongoing regarding the application of
the Foreshore Act.

In January 2016, the Company assumed a 100% 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.

Providence Resources P.l.c. | Annual Report | 2017 13

BOARD OF DIRECTORS

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 Ph.D., 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 Director
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.

Dr. Angus McCoss, Ph.D. Non-Executive Director
Angus McCoss joined the Board as a Non-Executive Director in June 2017. Angus holds a Ph.D. in Structural Geology and is a member
of the Advisory Board of the industry-backed Energy and Geoscience Institute of the University of Utah. Angus is the Exploration
Director and main Board Director of Tullow Oil PLC, a leading independent oil & gas, exploration and production group, quoted on the
London, Irish and Ghanaian stock exchanges. Angus joined Tullow in 2006 following 21 years of wide-ranging exploration experience,
working primarily with Shell in Africa, Europe, China, South America and the Middle East. Angus held a number of senior positions at
Shell, including Regional Vice President of Exploration for the Americas and General Manager of Exploration in Nigeria.

14 Providence Resources P.l.c. | Annual Report | 2017

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
2017.

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
Section 327 of the Companies Act 2014 is contained in the
Chairman’s Remarks, the CEO – Operations Review and List of
Assets on pages 2 to 13.

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 2017
The Consolidated Income Statement
the year ended
31 December 2017 and the Consolidated Statement of Financial
Position at that date are set out on pages 24 and 26 respectively.
The loss for the year amounted to €20.419 million and net asset
at 31 December 2017 were €83.704 million. No dividends or
transfers to reserves are recommended by the Directors.

for

Important Events since the Year End
On 8 January 2018, the Company announced the appointment
of Mirabaud Securities Limited as joint broker to the Company.

On 28 March 2018, Exola DAC (”Exola”), a wholly owned
subsidiary of the Company, signed a Farm-out Agreement in
relation to SEL 1/11 (Barryroe) with APEC Energy Enterprise
Limited (“APEC”).

The closing of the Farm-out, which is expected to occur in Q3
is conditional on completion of all ancillary legal
2018,
documentation required to implement the terms of the Farm-out
Agreement, and is subject to the approval of the Minister of State
at the Department of Communications, Climate Action and
Environment and the approval of the Chinese government.

Under the terms of the Farm-out:

• APEC will take a 50% equity interest;

• APEC will be directly responsible for paying 50% of all the cost
obligations associated with the drilling of 3 vertical wells, plus
associated side-tracks and well
testing (the “Drilling
Programme”).

• APEC will provide a drilling unit and related operational

services for the Drilling Programme;

• APEC will finance, by way of a non-recourse loan facility (the
“Loan”), the remaining 50% of all costs of the Barryroe
Partners in respect of the Drilling Programme;

• The Loan, drawable against

for the Drilling
Programme, will incur an annual interest rate of LIBOR +5%
and will be repayable from production cashflow from SEL 1/11
with APEC being entitled to 80% of production cashflow from
SEL 1/11 until the Loan is repaid in full;

the budget

• Following repayment of the loan, APEC will be entitled to 50%
of production cashflow from SEL 1/11 with Exola and
Lansdowne being entitled to 40% and 10% pf production
cashflow, respectively;

(cid:1) Corporate Governance

• Upon completion of the Drilling Programme, APEC will be able
to subscribe for warrants over 59.2 million shares in
Providence at a strike price of £0.12 per share. The warrants
are exercisable for a period of 6 months following the
completion of the Drilling Programme.

• Exola will act as operator for the drilling programme with

technical assistance being provided by APEC; and

• After completion of the drilling programme, APEC will have the
right to become operator for the development/production
phase;

On 3 April 2018, the Company announced that Ministerial consent
was obtained to the extension of the first phase of FEL 6/14
(Newgrange) to March 2019. Subject to obtaining a regulatory
consent for the site survey, the JV Partners plan to conduct a 2D
seismic data and well site survey over the crest of the Newgrange
prospect in Q3 2018.

Directors
In June 2017, Dr. Angus McCoss was appointed as a Non-
Executive Director.

Mr. Lex Gamble and Mr. Philip O’Quigley both retire from the
Board by rotation and being eligible, offer themselves for re-
election. Dr. Angus McCoss, having been appointed in June 2017
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
€606,930 for 2017 (see 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 for a further duration of 2 years.

than the above,

Other
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.

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 follows:

31 December
2017
Or date of
appointment
if later

31 December
2016

9 May
2018

1,000,000

1,000,000 1,000,000

500,011

226,154

400,000

167,531

203,300

500,011

226,154

400,000

167,531

203,300

Directors

Pat Plunkett

Tony O’Reilly

Dr. John O’Sullivan

Lex Gamble

Philip O’Quigley

James McCarthy

Angus McCoss

Company Secretary

Criona Ryan

Providence Resources P.l.c. | Annual Report | 2017 15

DIRECTORS’ REPORT
(CONTINUED)

Details of outstanding options are as follows (correct as of May 9, 2018):

Directors

Pat Plunkett

Tony O’Reilly

Dr. John O’Sullivan

James SD McCarthy

Lex Gamble

Philip O’Quigley

Angus McCoss

Secretary

Críona Ryan

At 31 December
2016

At 31 December
2017

12,000,000

9,000,000

400,000

15,000

275,000

1,750,000

12,000,000

9,000,000

400,000

800,000

15,000

275,000

Price
(Euro)

0.17

0.45

0.17

0.45

0.17

0.45

0.17

Expiry
Date

June 2024

August 2019

June 2024

August 2019

June 2024

August 2019

June 2024

6.13

0.142

July 2019

August 2023

Based on the closing share price on 31 December 2017, 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 2017 was €0.0950 and the
range during the financial year was €0.0543 to €0.2300.

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)
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;

(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
8 May 2018),

provided in each case the power shall, unless revoked or
renewed by special resolution or the Constitution 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.

Compliance Policy Statement of Providence
Resources P.l.c.

in accordance with Section 225(2) of

The Directors,
the
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:

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

–

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;

16 Providence Resources P.l.c. | Annual Report | 2017

–

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 course of each financial year of
the Company the
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.

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.

liabilities,

The Directors are responsible for keeping adequate accounting
records which disclose with reasonable accuracy at any time the
assets,
financial position and profit or loss of the
Company and which enable them to ensure that the financial
the Group are prepared in accordance with
statements of
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

(cid:1) Corporate Governance

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 2019. As set out further in
the Chairman's Remarks and the Chief Executive's Operations
Review, the Group has sufficient funds to cover the levels of capital
expenditure in 2018 and 2019, 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 recently announced farm-out of Barryroe
which reduces the Group’s cost exposure, and the other options
available, the Directors are satisfied that the Group will be in a
position to fund the capital expenditure programme as well as
other planned exploration and operating activities. The Directors
forward in the Climate
have considered the proposals put
Emergency Measures Bill 2018 and have noted that this will be
considered further at committee level, though no set timetable has
been confirmed. Whilst this is subject to further deliberation, the
Board have considered the matter while preparing the cashflows
and the potential impact that this might have on the business. The
Directors concluded,
is currently
available, that the Group has sufficient funds available over the
next 12 months while the Bill is being further deliberated. On this
basis, the Directors are satisfied that it is appropriate to prepare
the financial statements on a going concern basis.

information that

taken all

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 2017.

The Board
The Board is made up of two Executive and five Non-Executive
Directors. Biographies of each of the Directors are set out on
page 14.

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 16 occasions during 2017. An agenda and
supporting documentation was circulated in advance of each
meeting.

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

trading and capital budgets,

Providence Resources P.l.c. | Annual Report | 2017 17

DIRECTORS’ REPORT
(CONTINUED)

Responsibility for certain matters is delegated to Board
Committees.

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.

All Directors receive regular Group management
financial
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,
Renumeration and Nomination 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 partner responsible for the external Audit is changed
every 5 years to ensure audit independence.

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.

18 Providence Resources P.l.c. | Annual Report | 2017

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
individuals are appropriately
rewarded relative to their
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
indicators, as well as a qualitative assessment of the
financial
individual’s performance.

Details of Directors’ remuneration for the current period are set
out in Note 8 on page 37 in the financial statements.

Nomination Committee
The Nomination Committee comprises 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.

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.

(cid:1) Corporate Governance

In 2017, the Company granted 3.75 million options over 3.75
million ordinary shares of €0.10 each in the Company, with effect
from 8 June 2017, with a strike price set at €0.17 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 Scheme. All other options granted or capable of being
granted are subject to the original provisions of the 2009 Scheme.

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.

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
Constitution 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

The total number of options granted under 2016 LTIP Scheme to
date is 22.6 million.

A review of the effectiveness of the system of internal control is
carried out annually, through the annual audit process. The Board

Providence Resources P.l.c. | Annual Report | 2017 19

Political Donations
There were no political donations during the year (2017 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

9 May 2018

Tony O’Reilly
Chief Executive

DIRECTORS’ REPORT
(CONTINUED)

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 May 9, 2018.

M&G Investment Management Limited

Pageant Holdings Limited

Merseyside Pension Fund

The Capital Group Companies, Inc.

Kite Lake Capital Management (UK) LLC

Goldman Sachs International

Marlborough Fund Managers Limited

BlackRock Inc.

Janus Henderson Group PLC

14.67%

11.04%

7.20%

5.90%

5.05%

4.86%

3.51%

3.98%

20 Providence Resources P.l.c. | Annual Report | 2017

(cid:1) Financial Statements

INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PROVIDENCE RESOURCES P.L.C.

1 Opinion: our opinion is unmodified

We have audited the financial statements of Providence Resources P.l.c. (“the Group”) for the year ended 31 December 2017 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
Statement of Cash Flows and the related notes, including the accounting policies in note 1. 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
(EU) 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.

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
2017 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 2017;

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

the Company financial statements have been properly prepared in accordance with FRS 101 issued by the UK's Financial Reporting
Authority as applied in accordance with the provisions of the Companies Act 2014; and

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

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (Ireland) (“ISAs (Ireland)”) and applicable law. Our
responsibilities are further described in the Auditor’s Responsibilities section of our report. We have fulfilled our ethical responsibilities
under, and we remained independent of the Group in accordance with, ethical requirements applicable in Ireland, including the Ethical
Standard issued by the Irish Auditing and Accounting Supervisory Authority (IAASA) as applied to listed entities. We believe that the
audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

2 Key audit matters: our assessment of risks of material misstatement

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements
and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those
which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.

In arriving at our audit opinion above, the key audit matters, in decreasing order of audit significance, were as follows:

Carrying value of Exploration and Evaluation (‘E&E’) assets

Refer to pages 29 to 33 (accounting policy) and page 39 (financial disclosures)

The key audit matter

How the matter was addressed in our audit

The carrying value of E&E assets as at 31 December 2017
is €74.831 million.

The assessment of the carrying value of E&E assets requires
management to exercise judgement and this judgement requires
consideration of a number of factors, including but not limited to,
an interpretation and assessment of the results of drilling and other
appraisal activities during the year, the group’s intention to proceed
with a future work programme for a prospect or licence, and an
assessment of the likely economic opportunity.

We evaluated management’s assessment of E&E assets with
reference to the criteria of IFRS 6: Exploration for and Evaluation
of Mineral Resources and the Group’s accounting policy.

The audit procedures we performed included, but were not limited
to, obtaining an understanding of the Group’s ongoing E&E activity
by interviewing executive and finance staff covering all key
licences, and gathering audit evidence to assess the value of E&E
assets carried forward. Such evidence included approved project
budgets, confirmations of ongoing appraisal activity and
communications with joint venture partners.

Where an asset has demonstrated indicators of impairment but
has been retained on the balance sheet, we have gathered
evidence to assess the status of current and future appraisal
activity, allocation of budget and any conclusion on commerciality.

Where an asset has been impaired we have reviewed evidence of
the impairment and we have challenged management on the
events that led to the impairment.

Providence Resources P.l.c. | Annual Report | 2017 21

INDEPENDENT AUDITOR’S REPORT
(CONTINUED)

How the matter was addressed in our audit (continued)

Based on evidence obtained we found that the judgements
exercised, and conclusions reached, by management are
appropriate.

Going concern assumption

Refer to page 29 (accounting policy)

The key audit matter

How the matter was addressed in our audit

The Group is dependent upon its cash resources and ability to
generate additional funds through further farm-out arrangements,
disposal of assets, and both equity and debt funding alternatives
in order to fund current and future expenditure commitments.

Our audit work has focused on evaluating and challenging the
reasonableness of the assumptions included in management’s
cash flow forecasts.

Our procedures included verifying the consistency of key inputs
financial and operational
relating to future costs to other
information obtained during our audit and performing sensitivity
analysis on management’s cash flow forecasts.

Management has concluded that the going concern basis remains
appropriate for a period of 12 months from the date of approval of
the 2017 Annual Report.

Based on evidence obtained, we found that the going concern
assumption remains appropriate.

3 Our application of materiality and an overview of the scope of our audit

The Group materiality that we used in the current year was €490k which is 0.5% of total Group assets. The Company materiality that
we used in the current year was €441k which is 0.4% of total Company assets.

Our audit scope included a full audit of all components which account for 100 per cent of the Group’s total loss before tax and net
assets.

Our audit of the Group and the Company was undertaken to the materiality levels specified above and was performed by a single
engagement team in Dublin.

4 We have nothing to report on going concern

We are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriate or there
is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period of at least twelve months
from the date of approval of the financial statements. We have nothing to report in these respects.

5 We have nothing to report on the other information in the annual report

The Directors are responsible for the other information presented in the Annual Report together with the financial statements. The
other information comprises the information included in the Directors’ Report. Our opinion on the financial statements does not cover
the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance
conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work,
the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that
work we have not identified material misstatements in the other information.

Based solely on our work on the other information;

• we have not identified material misstatements in the Directors’ report;

•

in our opinion, the information given in the Directors’ Report is consistent with the financial statements;

in our opinion, the Directors’ Report has been prepared in accordance with the Companies Act 2014.

6 Our opinions on other matters prescribed the Companies Act 2014 are unmodified

We have obtained all the information and explanations which we consider necessary for the purpose 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 Company’s statement of financial position is in agreement with the accounting records.

22 Providence Resources P.l.c. | Annual Report | 2017

(cid:1) Financial Statements

7 We have nothing to report on other matters on which we are required to report by exception

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.

8 Respective responsibilities

Directors’ responsibilities

As explained more fully in their statement set out on pages 15 to 20, the Directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group
and parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using
the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations,
or have no realistic alternative but to do so.

Auditor’s responsibilities

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of
assurance, but does not guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement
when it exists. Misstatements can arise from fraud, or error and are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on IAASA’s website at
https://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-a98202dc9c3a/Description_of_auditors_responsiblities_for_audit.pdf

9 The purpose of our audit work and to whom we owe our responsibilities

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 our 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

9 May 2018

Providence Resources P.l.c. | Annual Report | 2017 23

CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2017

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.

Note

2,9

2017
€’000

2016
€’000

(6,491)

(268)

(14,643)

(21,402)

1,116

(133)

(20,419)

—

(3,688)

(61)

(15,095)

(18,844)

(1,741)

(20,546)

—

(20,419)

(20,546)

(3.42)

(5.80)

24 Providence Resources P.l.c. | Annual Report | 2017

(cid:1) Financial Statements

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2017

Loss for the financial year

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

Total (expense)/income recognised in other comprehensive income from
continuing operations

Total comprehensive expense for the year

Note

2017
€’000

2016
€’000

(20,419)

(20,546)

(7,626)

1,994

(7,626)

(28,045)

1,994

(18,552)

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

Providence Resources P.l.c. | Annual Report | 2017 25

Note

2017
€’000

2016
€’000

74,831

89,276

102

192

74,981

89,570

7,660

19,603

27,263

255

31,403

31,658

102,244

121,228

71,452

623

71,452

623

247,918

6,189

1,502

13,815

1,398

(243,980)

(223,888)

83,704

111,318

6,956

—

11,584

18,540

7,783

—

2,127

9,910

102,244

121,228

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2017

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

9 May 2018

Tony O’Reilly
Chief Executive

26 Providence Resources P.l.c. | Annual Report | 2017

(cid:1) Financial Statements

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2017

Capital
conversion
reserve
fund
€’000

Share
capital
€’000

Foreign
currency
translation
reserve
€’000

Share
based
payment
reserve
€’000

Share
premium
€’000

Retained
deficit
€’000

Total
€’000

At 1 January 2017

71,452

623

247,918

13,815

1,398

(223,888)

111,318

Total comprehensive income
Loss for financial year

Currency translation

Total comprehensive income

Transactions with owners, recorded
directly in equity
Share based payments

Share options lapsed in year

—

(7,626)

—

(20,419)

—

(7,626)

(20,419)

(28,045)

—

431

(327)

—

327

431

—

At 31 December 2017

71,452

623

247,918

6,189

1,502

(243,980)

83,704

Capital
conversion
reserve
fund
€’000

Share
capital
€’000

Foreign
currency
translation
reserve
€’000

Share
based
payment
reserve
€’000

Share
premium
€’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

—

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

Providence Resources P.l.c. | Annual Report | 2017 27

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2017

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

Net cash used in investing activities

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

Share issue costs

Repayment of loans and borrowings

Net cash from financing activities

Net (decrease)/increase in cash and cash equivalents

Cash and cash equivalents at 1 January

Effect of exchange rate fluctuations on cash and cash equivalents

Cash and cash equivalents at 31 December

2017
€’000

2016
€’000

(20,419)

(20,546)

104

14,643

(1,116)

133

431

2,814

(7,405)

9,457

—

(1,291)

156

(8,015)

(27)

(7,886)

—

(9,177)

31,403

(2,623)

19,603

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

28 Providence Resources P.l.c. | Annual Report | 2017

NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS

(cid:1) 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 2017 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 €31,147,000 (2016: €15,929,000) for the financial year ended 31 December 2017 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 May 9, 2018.

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 2019.

As set out further in the Chairman's Remarks and the Chief Executive’s Operations Review the Group has sufficient funds to cover the
levels of capital expenditure in 2018 and 2019, 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 recently announced farm-out of Barryroe which reduces the Group’s cost exposure, and the
other options available, the Directors are satisfied that the Group will be in a position to fund the capital expenditure programme as well
as other planned exploration and operating activities. The Directors have considered the proposals put forward in the Climate Emergency
Measures Bill 2018 and have noted that this will be considered further at committee level, though no set timetable has been confirmed.
Whilst this is subject to further deliberation, the Board have considered the matter while preparing the cashflows and the potential impact
that this might have on the business. The Directors concluded, taking all information that is currently available, that the Group has sufficient
funds available over the next 12 months while the Bill is being further deliberated. 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
2017:

• Annual Improvements to IFRSs 2012-2014 cycle
•
•
•
•
•
•
•

IFRS 11: Accounting for Acquisitions of Interests in Joint Operations
IFRS 14: Regulatory Deferral Accounts
IAS 16 & IAS 38: Acceptable Methods of Depreciation/Amortisation
IAS 16: Property, Plant and Equipment and IAS 41: Bearer Plants
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 2014-2017 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.

Providence Resources P.l.c. | Annual Report | 2017 29

NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

1 Accounting policies (continued)

Basis of consolidation

The consolidated financial statements include the financial statements of Providence Resources P.l.c. 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 €74.8 million (2016: €89.3 million) at 31 December 2017. 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 €7.0 million (2016: €7.8 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 29 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 to the extent that a cash refund or reduction in future payments is available.

(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.

30 Providence Resources P.l.c. | Annual Report | 2017

(cid:1) Financial Statements

1 Accounting policies (continued)

Finance income and expenses

Finance income comprises interest income on funds invested and foreign exchange gains. 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 liabilities. 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.

Providence Resources P.l.c. | Annual Report | 2017 31

NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

1 Accounting policies (continued)

(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 (or invoices), 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.

32 Providence Resources P.l.c. | Annual Report | 2017

(cid:1) Financial Statements

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.

Providence Resources P.l.c. | Annual Report | 2017 33

NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

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.

2017
€’000

2016
€’000

(14,643)

(15,028)

—

(6,759)

(21,402)

(67)

(3,749)

(18,844)

2017
€’000

2016
€’000

82,641

19,603

89,659

31,569

102,244

121,228

2017
€’000

2016
€’000

(18,263)

(9,598)

(15)

—

(262)

(18,540)

(64)

(1)

(247)

(9,910)

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

Group assets

Total assets

Segment liabilities

Republic of Ireland – exploration related liabilities

UK – exploration related liabilities

US – liabilities

Group liabilities

Total liabilities

34 Providence Resources P.l.c. | Annual Report | 2017

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

Foreign exchange gain on decommissioning provision (Note 19)

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, net

Total finance expense recognised in income statement

(cid:1) Financial Statements

2017
€’000

—

8,015

8,042

2016
€’000

3,915

—

3,982

—

14,643

15,028

15,095

2017
€’000

5,431

2,932

8,388

(1,897)

6,491

2017
€’000

156

960

1,116

2017
€’000

—

133

—

133

€’000

2016
€’000

4,271

507

4,846

(1,158)

3,688

2016
€’000

—

2016
€’000

1,643

359

1,093

(299)

(1,055)

1,741

€’000

Recognised in other comprehensive income:
Foreign exchange translation differences on foreign operations

(7,626)

1,994

Providence Resources P.l.c. | Annual Report | 2017 35

NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

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

2017
€’000

2016
€’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

2017
€’000

2016
€’000

(20,419)

(20,546)

12.5%

(2,552)

2,171

304

—

2017
€’000

2,175

237

177

432

12.5%

(2,568)

2,288

(28)

316

(8)

—

2016
€’000

1,499

162

171

142

3,021

1,974

2017
€’000

1,535

—

2016
€’000

562

—

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

Exploration and evaluation

Corporate management and administration

2017
Number

2016
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 €177,000 (2016: €171,000).

36 Providence Resources P.l.c. | Annual Report | 2017

(cid:1) Financial Statements

8 Directors’ remuneration and transactions with key management personnel

Directors’ emoluments are analysed as follows:

Salaries and
other emoluments

Bonus
payments

2017
€’000

397

384

781

—

2016
€’000

412

358

770

—

2017
€’000

247

165

412

—

781

770

412

Fees

Total

2016
€’000

2017
€’000

2016
€’000

2017
€’000

—

100

261

—

167

644

549

1,193

—

100

261

1,454

2016
€’000

412

358

770

—

167

937

Executive

Tony O’Reilly

John O’Sullivan1

Sub-total

Non-Executive

Angus McCoss2

Lex Gamble

James McCarthy3

Philip Nolan4

Philip O’Quigley

Pat Plunkett5

Sub-total

Total

1 John O’Sullivan emoluments include pension contributions of €49,440 for 2017 (2016: €46,000).
2 Angus McCoss was appointed 1 June 2017.
3 James McCarthy resigned as Chairman on 1 October 2016.
4 Philip Nolan resigned as a Director on 1 October 2016.
5 Pat Plunkett was appointed 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.

Detail of share options granted to the Directors during the year are disclosed in the Directors’ Report. In 2017, share based payments
expense were €316,000 (2016: €86,000). 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 15 to 16.

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

2017
€’000

1,143

261

370

1,774

100

341

2016
€’000

723

167

289

1,179

2,306

1,436

Providence Resources P.l.c. | Annual Report | 2017 37

NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

9 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

Bonus

10 Earnings per share

2017
€’000

223

104

2016
€’000

177

104

14,643

268

15,095

261

781

412

167

770

—

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
2017
€’000

Total
2016
€’000

(20,419)

(20,546)

2017

2016

597,659

—

597,659

140,077

214,374

354,451

Total
2017
€cent

(3.42)

Total
2016
€cent

(5.80)

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 28,255,000
(2016: 24,690,000) anti-dilutive share options in issue at 31 December 2017.

38 Providence Resources P.l.c. | Annual Report | 2017

11 Exploration and evaluation assets

Cost and net book value

At 1 January 2016

Additions

Cash calls received in year

Administration expenses

Impairment charge

Foreign exchange translation

At 31 December 2016

Additions

Cash calls received in year

Administration expenses (note 3)

Impairment charge

Foreign exchange translation

At 31 December 2017

(cid:1) Financial Statements

Republic of
Ireland
€’000

UK
€’000

Total
€’000

98,211

4,047

(1,285)

1,153

(15,028)

2,178

89,276

55,971

(49,853)

1,897

(14,643)

(7,817)

74,831

—

98,211

4,109

(1,285)

1,158

(67)

(15,095)

—

2,178

89,276

55,971

(49,853)

1,897

(14,643)

(7,817)

74,831

The exploration and evaluation asset balance at 31 December 2017 primarily relates to the Barryroe (€57.3 million), Dunquin
(€15.6 million) and Newgrange (€1.8 million) licenses. The remaining €0.1 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 have determined that an
impairment charge of €14.6 million (2016: €15.1 million) is required at 31 December 2017.

The results of the 2017 drilling campaign on Druid/Drombeg resulted in the impairment of the licence as only trace hydrocarbons were
found and the well was not commercially viable. The Kish Bank licence was impaired, as it is unlikely that further exploration and
evaluation work will be undertaken.

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 2016
Additions in year
At 31 December 2016
Additions in year
At 31 December 2017

Depreciation
At 1 January 2016
Charge for year
At 31 December 2016
Charge for year
At 31 December 2017

Net book value
At 31 December 2017
At 31 December 2016

Furniture and
equipment
€’000

664
—
664
27
691

496
66
562
67
629

62
102

Providence Resources P.l.c. | Annual Report | 2017 39

NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

13 Intangible assets

Cost

At 31 December 2016

Additions in year

At 31 December 2017

Amortisation

At 31 December 2016

Charge for year

At 31 December 2017

Carrying value

At 31 December 2017

At 31 December 2016

14 Trade and other receivables

VAT recoverable

Other receivables

Prepayments

Amounts due from joint operation partners

15 Cash and cash equivalents

Cash held in bank accounts

Cash and cash equivalents

Capitalised
software
€’000

313

—

313

121

104

225

192

2016
€’000

–

125

255

2016
€’000

31,403

2017
€’000

560

130

6,911

7,660

2017
€’000

19,603

Included in the cash and cash equivalents balance are amounts totalling €Nil (2016: €Nil) 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.

40 Providence Resources P.l.c. | Annual Report | 2017

(cid:1) Financial Statements

16 Share capital and share premium (continued)

On 14 July 2016 the Company increased its authorised share capital by 763,715,692 ordinary shares of 0.10c each.

Issued

Deferred shares of €0.011 each

Ordinary shares of €0.10 each

At 1 January 2016

Shares issued during the year

At 1 January 2017

Shares issued during the year

At 31 December 2017

Total
number
000’s

1,062,442

140,077

457,582

597,659

—

Share
capital
€’000

11,687

14,007

25,694

45,758

71,452

—

Share
premium
€’000

5,691

221,307

226,998

20,920

247,918

—

597,659

71,452

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 €66.7 million. Share issue costs of €5.9 million 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 2016

Drawn down in year

Repaid in year

Foreign exchange

At 31 December 2016 and 31 December 2017

Melody
Bank loan
facility
€’000

19,932

—

(19,633)

(299)

—

Melody
Bank loan
fees
€’000

(1,643)

1,643

—

Total
€’000

18,289

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.

19 Decommissioning provisions

At beginning of year

Unwind of discount – continuing operations (Note 5)

Foreign exchange gain (Note 5)

Foreign exchange loss (Note 4)

At end of year

2017
€’000

7,783

133

–

(960)

6,956

2016
€’000

7,424

146

213

–

7,783

Decommissioning costs are expected to be incurred over the remaining lives of the fields, which are estimated to be between 2018
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 €25.0 million (2016: €24.9 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.

Providence Resources P.l.c. | Annual Report | 2017 41

NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

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

2017
€’000

193

157

197

491

4,004

194,579

199,621

2016
€’000

375

193

157

197

491

197,693

199,106

Unutilised losses may be carried forward indefinitely as long as oil production commences within 25 years from the date of the losses
originating.

21 Trade and other payables

Relevant contract tax

Accruals

Other payables

Amounts payable to joint operating partners

2017
€’000

4,372

2,079

1,798

3,335

11,584

2016
€’000

—

1,589

538

—

2,127

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.

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.

3,750,000 (2016: 2,100,000) options granted during 2017 under this scheme. The fair value of the options granted during the year
was estimated at €0.1032 (2016: €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

2017

65%

2016

65%

7 years

(0.22%)

€0.17

(0.53%)

€0.14

At 31 December 2017, options over 6.055 million (2016: 2.489 million) shares remained outstanding at subscription prices ranging from
€0.142 to €6.13. These options expire at varying dates up to June 2024.

22 Share schemes (continued)

2016 Scheme

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

42 Providence Resources P.l.c. | Annual Report | 2017

(cid:1) Financial Statements

(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

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

At 1 January 2017

Granted during year

Expired during year

At 31 December 2017

Of which exercisable at year end

2016 scheme

2009 scheme

No of
share
options
000’s

22,200

—

22,200

—

Weighted
average
exercise
price
€

0.45

—

0.45

—

No of
share
options
000’s

2,490

3,750

(185)

6,055

—

Weighted
average
exercise
price
€

0.84

0.17

(2.95)

0.36

—

The total number of options outstanding at 31 December 2017 was 28,255,000 at exercise prices ranging from €0.142 to €6.13.

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 were 24,690,000. These had exercise prices ranging from €0.142
to €6.13.

The fair value charge recorded in the income statement in respect of the Group’s 2009 and 2016 share based schemes was €431,000
(2016: €142,000).

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.

Providence Resources P.l.c. | Annual Report | 2017 43

NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

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.

(a) Interest rate risk

The Group currently finances its operations through a mixture of shareholders’ funds and bank deposits. 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

2017
€’000

2016
€’000

19,603

31,403

—

Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points (‘bps’) in interest rates at 31 December 2017 and 31 December 2016 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 2017

Variable rate instruments

31 December 2016

Variable rate instruments

Profit

OCI

100 bps
increase
€’000

100 bps
decrease
€’000

100 bps
increase
€’000

100 bps
decrease
€’000

134

(89)

233

(109)

—

44 Providence Resources P.l.c. | Annual Report | 2017

(cid:1) Financial Statements

23 Financial instruments (continued)

(b) Foreign currency risk

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 2017 and 2016 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 2017

31 December 2016

GBP
€’000

—

560

6,109

USD
€’000

—

6,860

8,440

Not
at risk
EUR
€’000

181

Total
€’000

7,601

Euro
€’000

—

GBP
€’000

—

USD
€’000

—

Not at
risk
EUR
€’000

144

Total
€’000

217

5,008 19,603

53 16,754 12,652

1,944 31,403

(565)

(3,698)

(7,321) (11,584)

—

(230)

(45)

(1,852)

(2,127)

6,104 11,602

(2,073) 15,679

53 16,588 12,616

274 29,531

Euro
€’000

—

VAT recoverable

Other debtors

Cash and cash equivalents

Trade and other payables

Total exposure

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

2017

2016

2017

2016

0.7764

1.1368

0.8226

1.1030

0.8872

1.1993

0.8562

1.0541

A 10% strengthening and weakening of the euro against the following currencies, based on outstanding financial assets and liabilities
at 31 December 2017 and 31 December 2016 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 2017

GBP

USD

31 December 2016

GBP

USD

Profit/(loss)

Equity

10%
increase
€’000

10%
decrease
€’000

10%
increase
€’000

10%
decrease
€’000

(610)

(808)

610

808

(1,652)

(1,261)

1,652

1,261

474

(129)

721

(137)

(580)

157

(881)

168

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.

Providence Resources P.l.c. | Annual Report | 2017 45

NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

23 Financial instruments (continued)

Contractual maturities of financial liabilities as at 31 December 2017 were as follows:

Item

Trade and other payables

Total

Carrying
amount
€’000

11,584

Contractual
cash
flows
€’000

11,584

6 months
or less
€’000

11,584

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

Item

Trade and other payables

Total

(d) Credit risk

Carrying
amount
€’000

2,127

Contractual
cash
flows
€’000

2,127

6 months
or less
€’000

2,127

6 – 12
months
€’000

—

6 – 12
months
€’000

—

1 – 2
years
€’000

—

1 – 2
years
€’000

—

2 — 5
years
€’000

—

2 — 5
years
€’000

—

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

2017
€’000

2016
€’000

19,603

31,403

7,601

27,263

217

31,658

Due to the short term nature of all of the Group’s financial assets and liabilities at 31 December 2017, 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 €6.8 million to contribute to its share of costs of exploration and evaluation
activities during 2018.

(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

46 Providence Resources P.l.c. | Annual Report | 2017

2017
€’000

227

146

—

373

2016
€’000

330

362

–

592

(cid:1) Financial Statements

24 Commitments and contingencies (continued)

From time to time the Group is involved in other claims and legal actions which arise in the normal course of business. There are
currently no claims or legal actions taking place at this point in time by the Group.

Under the terms of the CEPIL acquisition agreement the Group is required to make a payment of US$5 million 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.

25 Related party transactions

(a) 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 April 2017. The amount paid under the contract in the year
ended 31 December 2017 was €606,930 (2016: €366,390). The contract is of two years duration and is subject to one year’s
notice period.

26 Group transparency

Licence

2017

Spanish Point

Spanish Point North

Corporate**

Total Ireland

Licence

2016

Druid/Drombeg

Kish Bank

Corporate**

Total Ireland

Licence
number

FEL 2/04

FEL 4/08

Licence
number

FEL 2/14

SEL 2/11

Licence
fees
€’000

—

296

Licence
fees
€’000

140

242

401

PIP
fees
€’000

101

143

345

PIP
fees
€’000

—

147

CRU
fees
€’000

—

CRU
fees
€’000

—

Total
€’000

101

439

641

Total
€’000

101

140

340

581

** Corporate is the consolidated total of all our Irish licences where the total of each licence payment in the year is less than €100,000.

The Irish Transparency Act came into force on the 1 January 2017. This required companies operating in the extractive sector to
publicly disclose payments made to National Governments. The regulation implements Chapter 10 of EU Accounting Directive
(2013/34/EU).

The payments disclosed are based on where the obligation arose which in our case is Ireland. Payments are disclosed by license
where the aggregate of the payment in the year exceeds €100,000 otherwise they are combined into a corporate level payment which
consolidated all the smaller payments.

All of the payments disclosed in accordance with the Directive have been made to National Governments, covering both direct and
indirect payments.

The payments type covered by this disclosure are

a) Licence fees
b) PIP fees
c) CER/CRU fees

Licence fees

Licence fees cover the costs associated with holding each of our licences. These cover rental fees, assignment fees, Expand Offshore
Group Fees, Prospective Licence and any application fees.

Providence Resources P.l.c. | Annual Report | 2017 47

NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

26 Group transparency (continued)

PIP (Petroleum Infrastructure Programme) fees

The PIP (Petroleum Infrastructure Programme) was set up by the Petroleum Affairs Division in 1997.

PIP fees have to be paid as part of the granting of a Frontier Exploration Licence. The company is a private company that undertakes
research programmes around the Ireland.

The overall aim of PIP is to promote hydrocarbon exploration and development in Ireland.

The research under the programme goes beyond normal licence specific work and is designed not to duplicate work carried out by
other groups or commercial entities.

John O’Sullivan is a Director of PIPCO RSG CLG.

CRU (Commission for Regulation of utilities)/CER (Commission of Energy Regulation)

CRU is the renamed CER. It is Ireland’s independent energy and water regulator with responsibilities for economic, customer protection
and safety.

The CRU reviews all exploration, appraisal and production activities in Ireland to ensure that they meet the highest international
safety standards.

27 Post balance sheet events

On 28 March 2018, the Group through its subsidiary Exola DAC signed a Farm-out Agreement on SEL 1/11 with APEC Energy
Enterprise Limited (APEC). Under the terms of the Farm-out, APEC will take a 50% interest in the licence and pay 50% of the costs
associated with the drilling programme.

APEC will fund Exola's and Lansdowne's 50% interest by means of a non-recourse loan facility to cover their costs in the Barryroe
drilling programme.

The Loan, drawable against the budget for the Drilling Programme, will
interest rate of LIBOR +5% and will be
repayable from production cashflow from SEL 1/11 with APEC being entitled to 80% of production cashflow from SEL 1/11 until the
Loan is repaid in full

incur an annual

Following repayment of the Loan, APEC will be entitled to 50% of production cashflow from SEL 1/11 with Exola and Lansdowne being
entitled to 40% and 10% of production cashflow, respectively.

Exola will act as operator for the Drilling Programme with technical assistance being provided by the APEC Consortium. After the
completion of the Drilling Programme, APEC will have the right to become operator for the development/production phase.

The Farm-out Agreement is conditional on completion of all ancillary legal documentation required to implement the terms of the Farm-
out Agreement, and is subject to the approval of the Minister of Communications, Climate Action and Environment and the approval
of the Chinese government. In addition, the details of and schedule for the Drilling Programme are subject to further ongoing technical
discussions between the Consortium, Exola and Lansdowne. Subject to closing, the revised equity in SEL 1/11 will be Exola (operator,
40%), APEC (50%) & Lansdowne (10%).

28 Approval of financial statements

The financial statements were approved by the Board of Directors on May 9, 2018.

48 Providence Resources P.l.c. | Annual Report | 2017

COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2017

Fixed assets

Oil and gas interests

Tangible assets

Financial assets

Intangible assets

Total non-current assets

Current assets

Debtors

Cash at bank and in hand

Total current assets

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

(cid:1) Financial Statements

Note

2017
€’000

2016
€’000

17,619

24,758

102

192

17,771

25,054

66,737

19,542

86,279

(15,666)

70,613

88,384

(5,241)

83,143

66,212

31,273

97,485

(2,415)

95,070

120,124

(6,265)

113,859

71,452

247,918

623

1,502

71,452

247,918

623

1,398

(238,352)

(207,532)

83,143

113,859

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

9 May 2018

Tony O’Reilly
Chief Executive

Providence Resources P.l.c. | Annual Report | 2017 49

STATEMENT OF CHANGES IN COMPANY EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2017

At 1 January 2017

Total comprehensive income
Loss for financial year

Total comprehensive income
Transactions with owners, recorded directly in equity

Share based payments

Share options lapsed in year

At 31 December 2017

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

Capital
conversion
reserve
fund
€’000

Share
capital
€’000

Share
premium
€’000

Share
based
payment
reserve
€’000

Retained
deficit
€’000

Total
€’000

71,452

623

247,918

1,398

(207,532)

113,859

—

(31,147)

431

(327)

—

327

431

—

71,452

623

247,918

1,502

(238,352)

83,143

Capital
conversion
reserve
fund
€’000

Share
capital
€’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

—

142

(1,493)

(837)

—

(15,929)

—

1,493

837

142

—

(5,892)

60,786

623

247,918

1,398

(207,532)

113,859

50 Providence Resources P.l.c. | Annual Report | 2017

NOTES TO THE COMPANY FINANCIAL STATEMENTS

(cid:1) 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 P.l.c. 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 29 to 33.

Going concern

Refer to basis of preparation of consolidated financial statements information on the going concern on the Group and Company on
page 29.

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. The
details and critical judgments are disclosed in the Group accounting policies.

Providence Resources P.l.c. | Annual Report | 2017 51

NOTES TO THE COMPANY FINANCIAL STATEMENTS
(CONTINUED)

2 Oil and gas interests – exploration expenditure

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

Cost

At 1 January 2017

Exploration and appraisal expenditure

Cash call received in year

Impairment charge

Administration expenses

At 31 December 2017

Ireland
2017

24,758

55,684

(49,780)

(14,670)

1,627

17,619

The exploration and evaluation asset balance at 31 December 2017 primarily relates to Dunquin (€15.6 million) and Newgrange
(€1.8 million) license areas. The remaining €0.2 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 €14.7 million is required at 31 December 2017.

Net spend, including internal capitalised costs, on exploration and evaluation assets during the year amounted to €7.5 million, with the
majority of spend relating to the Druid/Drombeg (€5.5 million), Dunquin €1.7 million and Newgrange €0.1 million. €0.2 million related
to costs for Dalkey, Spanish Point and Centic Sea licence fees.

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 2017. 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 2017

Additions in year

At 31 December 2017

Depreciation

At 1 January 2017

Charge for year

At 31 December 2017

Net book value

At 31 December 2017

At 31 December 2016

52 Providence Resources P.l.c. | Annual Report | 2017

Furniture and
equipment
€’000

619

646

517

584

102

(cid:1) Financial Statements

4 Financial fixed assets

Investments in subsidiaries at start and end of year

At 31 December 2017, 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) DAC

Exola DAC

Chrysaor E&P Ireland DAC

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

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

Oil and gas exploration
and production

Holding company

Oil and Gas exploration

5 Intangible assets

Cost

At 31 December 2016

Additions in year

At 31 December 2017

Amortisation

At 31 December 2016

Charge for year

At 31 December 2017

Carrying value

At 31 December 2017

At 31 December 2016

2017
€’000

Interest in
Ordinary
Share
Capital

100%

Software

313

—

313

121

104

225

192

Providence Resources P.l.c. | Annual Report | 2017 53

NOTES TO THE COMPANY FINANCIAL STATEMENTS
(CONTINUED)

6 Debtors

VAT

Prepayments

Other receivables

Amounts due from subsidiaries

Amounts due from joint operation partners

All of the above amounts fall due within one year.

2017
€’000

122

560

59,101

6,898

66,737

2016
€’000

134

–

65,954

66,212

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. 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

Relevant contracts tax

Trade creditors

Accruals

Amounts due to joint operating partners

Amounts owed to subsidiaries (a)

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

8 Provision for liabilities – Decommissioning

At 1 January

Unwind of discount

Decrease in decommissioning provision

Foreign exchange differences

Balance at 31 December

2017
€’000

4,372

1,788

1,987

3,335

4,184

15,666

2017
€’000

6,265

—

(251)

(773)

5,241

2016
€’000

—

422

1,473

—

520

2,415

2016
€’000

6,084

—

181

6,265

9 Share capital and share premium

See note 16 to the Group financial statements.

54 Providence Resources P.l.c. | Annual Report | 2017

(cid:1) Financial Statements

10 Commitments and contingencies

Exploration and evaluation activities

The Company has capital commitments of approximately €5.7 million to contribute to its share of costs of exploration and evaluation
activities during 2018.

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

Within one year

Between two and five years

Total

Contingencies

2017
€’000

191

246

2016
€’000

193

235

428

From time to time the Company is involved in other claims and legal actions which arise in the normal course of business. There are
currently no claims or legal actions against the company at this point in time.

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

2017
€’000

2016
€’000

During the year the Company employed 14 people (2016: 13 people) and incurred payroll costs of €2.4 million (2016: €1.6 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 €177,000 (2016: €171,000).

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 April 2017. The amount paid under the contract in the year ended
31 December 2017 was €606,930. It is of two years duration and is subject to one year’s notice period.

13 Company transparency

Licence

2017

Corporate**

Total Ireland

Licence

2016

Druid/Drombeg

Kish Bank

Corporate**

Total Ireland

Licence
number

FEL 2/14

SEL 2/11

Licence
fees
€’000

189

Licence
fees
€’000

140

135

294

PIP
fees
€’000

254

PIP
fees
€’000

—

147

CRU
fees
€’000

—

CRU
fees
€’000

—

Total
€’000

443

Total
€’000

102

140

233

475

** Corporate is the consolidated total of all our Irish licences where the total of each licence payment in the year is less than €100,000.

Providence Resources P.l.c. | Annual Report | 2017 55

NOTES TO THE COMPANY FINANCIAL STATEMENTS
(CONTINUED)

13 Company transparency (continued)

All of the payments disclosed in accordance with the Directive have been made to National Governments, covering both direct and
indirect payments.

The payments type covered by this disclosure are

a) Licence fees
b) PIP fees
c) CER/CRU fees

Licence fees

Licence fees cover the costs associated with holding each of our licences. These cover rental fees, assignment fees, Expand Offshore
Group Fees, Prospective Licence and any application fees.

PIP (Petroleum Infrastructure Programme) fees

The PIP (Petroleum Infrastructure Programme) was set up by the Petroleum Affairs Division in 1997.

PIP fees have to be paid as part of the granting of a Frontier Exploration Licence. The company is a private company that undertakes
research programmes around Ireland

The overall aim of PIP is to promote hydrocarbon exploration and development in Ireland.

The research under the programme goes beyond normal licence specific work and is designed not to duplicate work carried out by
other groups or commercial entities.

John O’Sullivan is a Director of PIPCO RSG CLG.

CRU (Commission for Regulation of utilities)/CER (Commission of Energy Regulation)

CRU is the renamed CER. It is Ireland’s independent energy and water regulator with responsibilities for economic, customer protection
and safety.

The CRU reviews all exploration, appraisal and production activities in Ireland to ensure that they meet the highest international safety
standards.

14 Post balance sheet events

Refer to Note 27 of the consolidated financial statements for information on post balance sheet events.

15 Approval of financial statements

The financial statements were approved by the Board of Directors on May 9, 2018.

56 Providence Resources P.l.c. | Annual Report | 2017

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 the Clayton Hotel, Burlington Road,
Leeson Street Upper, Dublin 4, D04 A318, Ireland, on Thursday, 14 June 2018 at 11.00am 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 2017.

(2)

(a) To elect Dr. Angus McCoss as a Director.

(b) To re-elect Mr. Lex Gamble 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 8 May 2018),

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 9 May 2018 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 | 2017 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 | 2017

GLOSSARY OF TERMS

(cid:1) Investor Information

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

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

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

“1C” Low estimate scenario of contingent resource

“2C” Best estimate scenario of contingent resource

“3C” High estimate scenario of contingent resource

“AAPG” American Association of Petroleum Geologists

“AGM” the Annual General Meeting of the Company to be held at Clayton Hotel, Burlington Road, Leeson Street Upper, Dublin 4,
D04 A318, Ireland, on Thursday, 14 June 2018 at 11.00am, including any adjournment thereof, and notice of which is set out herein

“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

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

“AMLR” Atlantic Ireland Licencing Round

“APEC” APEC Energy Enterprise Limited

“Atlantic” Atlantic Petroleum (Ireland) Limited

“AVO” Amplitude versus Offset

“BBO” Billion barrels of oil

“BBOE” Billions of barrels of oil equivalent

“BCF” Billion cubic feet of gas

“BML” Below mud line

“Board” The Board of Directors of Providence Resources P.l.c.

“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

“BP” BP PLC, formerly British Petroleum

“Cairn” Capricorn Ireland Limited which is a wholly owned subsidiary of Cairn Energy PLC

“CAPEX” Capital expenditure

“CEPIL” Chrysaor Exploration and Production Ireland Limited

“CER/CRU” The Commission for Regulation of Utilities, formerly the Commission for Energy Regulation

“CODM” Chief operating decision maker

“Company” Providence Resources P.l.c.

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

“COSL” China Oilfield Services Limited

“CPR” Competent Person’s Report

“Cretaceous” Period in Mesozoic era, 154 – 66 million years ago

Providence Resources P.l.c. | Annual Report | 2017 59

GLOSSARY OF TERMS
(CONTINUED)

“DAC” Designated Activity Company

“DCCAE” Department of Communications, Climate Action and Environment

“E&E” Exploration and Evaluation

“E&P” Exploration and Production

“EIA” Environmental Impact Assessment

“Eni” Eni Ireland B.V.

“EPS” Earnings per share

“ESM” Enterprise Securities Market, a market operated by the Irish Stock Exchange

“EU IFRS” International Financial Reporting Standards as adopted by the EU

“Exola DAC” or “Exola” A wholly owned subsidiary of the Company

“ExxonMobil” ExxonMobil Exploration and Production Ireland (Offshore South) Limited

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

“FCTR” Foreign currency translation reserve

“FEL” A petroleum exploration licence vests in the holder the exclusive right of carrying out exploration for petroleum in a specific
licensed offshore area. A Frontier Exploration Licence is issued in respect of an area with special difficulties related to physical
environment, geology or technology – where such an area is specified and announced by the Minister for DCCAE as a ‘Frontier Area’.
This licence type is valid for a period of not less than 12 years and comprises a maximum of 4 phases

“FID” Final Investment Decision

“FOA” Farm-out Agreement

“Foreshore” The land and seabed between the high water of ordinary or medium tides (shown HWM on Ordnance Survey maps) and
the twelve-mile limit (12 nautical miles, 22.24 km)

“Gardline” A wholly owned subsidiary of Royal Boskalis Westminster N.V.

“GIIP” gas initially in place

“Group” The Company and its subsidiaries

“HIIP” hydrocarbons initially in place

“IAS” International Accounting Standards

“JIC” JIC Capital Management Limited

“Jurrasic” Period in Mesozoic era, 201 – 145 million years ago

“JV” Joint Venture

“KEL” PSE Kinsale Energy Limited

“Lansdowne” Lansdowne Celtic Sea Limited

“Lease Undertaking” A Lease Undertaking gives the Holder the right to a Petroleum Lease over that part of the area covered by the
Undertaking

“LIBOR” The London Inter-bank Offered Rate – The rate at which an individual Contributor Panel bank could borrow funds, were it to
do so by asking for and then accepting inter-bank offers in reasonable market size, just prior to 11.00 London time

“Licensing Option” or “LO” A Licensing Option gives the Holder the first right to an Exploration Licence over all or part of the area
covered by the Option

“London Stock Exchange” or “LSE” London Stock Exchange PLC

60 Providence Resources P.l.c. | Annual Report | 2017

(cid:1) Investor Information

“LTIP” Long-term incentive plan

“LU” A Lease Undertaking gives the Holder the right to a Petroleum Lease over that part of the area covered by the Undertaking

“M&A” Merger and Acquisition

“MDBRT” Measure depth below rotary table

“Melody” Melody Business Finance LLP

“Mesozoic” Era in Phanerozoic eon, 252 – 66 million years ago

“MFDevCo” Marginal Field Development Company (MFDEVCO) Limited

“MMBC” Million barrels of condensate

“MMBO” Million barrels of oil

“MMBOE” Million barrels of oil equivalent

“Nexen-CNOOC” Nexen Petroleum UK Limited

“OPEX” Operating expenditure

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

“P10” 10% probability that the quantities actually recovered will equal or exceed the high estimate

“P50” 50% probability that the quantities actually recovered will equal or exceed the best estimate

“P90” 90% probability that the quantities actually recovered will equal or exceed the low estimate

“PAD” Petroleum Affairs Division

“Paleocene” Epoch in Paleogene period, 66 – 56 million years ago

“PEES” Petroleum Exploration and Extraction Safety Act 2015

“PESGB” Petroleum Exploration Society of Great Britain

“Petronas” Petroliam Nasional Berhad, owner of PSE Seven Heads Limited and PSE Kinsale Energy Limited

“PIPCO RSG CLG” Petroleum Infrastructure Program, Rockall Study Group, Companly Limited by Guarantee

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

“Polarcus” Polarcus MC Limited

“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

“PSDM” Pre-Stack Depth Migration

“Purbeck” The Purbeck Group is a Late Upper Jurassic to Early Lower Cretaceous lithostratigraphic group (a sequence of rock strata)

“Q3” Third quarter of a year

“Repsol” Repsol Exploracion Irlanda, S.A.

“Schlumberger” Schlumberger Limited

“SEL” A petroleum exploration licence vests in the holder the exclusive right of carrying out exploration for petroleum in a specific
licensed offshore area. A Standard Exploration Licence is issued for a period of 6 years in respect of an area with water depths of up
to 200 metres

“Sosina” Sosina Exploration Limited

“SPE” Society of Petroleum Engineers

Providence Resources P.l.c. | Annual Report | 2017 61

GLOSSARY OF TERMS
(CONTINUED)

“Statoil” Statoil Exploration (Ireland) Limited

“STOIIP” Stock tank oil initially in place

“Total” Total E&P Ireland B.V.

“Triassic” Period in Mesozoic era, 252 – 201 million years ago

“Wealden” The Wealden Group is a Lower Cretaceous lithostratigraphic group (a sequence of rock strata)

“Woodside” Woodside Energy (Ireland) Pty Limited

62 Providence Resources P.l.c. | Annual Report | 2017

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

Dr Angus McCoss
(Non-Executive Director), appointed 20171

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 PLC
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 PLC
6-7-8 Tokenhouse Yard
London
EC2R 7AS
United Kingdom

Mirabaud Securities Limited
10 Bressenden Place
London
SW1E 5DH
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 Clayton Hotel Burlington Road, Leeson Street Upper, Dublin 4,
D04 A318 which has been convened for 11 a.m. on 14 June 2018.

Shareholder Reference Number

Form of Proxy – Annual General Meeting (‘AGM’) of Providence Resources P.l.c. to be held on 14 June 2018 at 11 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: 915070

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 12 June 2018 at 11 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, you may also appoint a proxy:

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

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 11 a.m. on 12 June 2018 (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.

S R N :

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

11.

voting in person.
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.

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 2017.

For

Against Withheld

Vote

(a) To elect Dr. Angus McCoss as a Director.

(b) To re-elect Mr. Lex Gamble 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 Clayton Hotel Burlington Road, Leeson Street Upper, Dublin 4, D04 A318 which has
been convened for 11 a.m. on 14 June 2018. 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 2017.

For

Against Withheld

Vote

(a) To elect Dr. Angus McCoss as a Director.

(b) To re-elect Mr. Lex Gamble 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 1 5 0 8

1 2

P R V I