Beef magnate Larry Goodman has agreed a €40 million funding deal with oil and gas explorer Barryroe Offshore Energy in an effort to secure a long sought-after Government lease to progress work on its key prospect off the Cork coastline.
Mr Goodman’s Vevan Unlimited vehicle owns more than 16 per cent of the Dublin-listed company, which was known as Providence Resources until it was renamed in September after its prized Barryroe field.
The funding line is by way of redeemable secured convertible loan notes that would cover the cost of drilling an appraisal well at the Barryroe site, which was found a decade ago to have more than 300 million barrels of recoverable oil.
A spokeswoman declined to comment on the terms of the loan notes. However, if Barryroe did not refinance the facility in the future and the notes converted into equity, Mr Goodman could end up with a majority stake in the company based on where its shares are currently trading.
While Barryroe’s shares jumped almost 45 per cent on Tuesday on news of the funding agreement, that only brought its market value to €53.6 million.
The backstop is aimed at addressing concerns at the Department of the Environment, Climate and Communications about Barryroe’s ability to finance drilling at the Barryroe field. Following long delays in assessing the application that was made in April last year, the department informed Barryroe last month that it had not yet demonstrated sufficient financial capability to be awarded the lease undertaking.
“Since then, the board has engaged with its major shareholders, and the company is pleased to confirm that it has substantially agreed a funding arrangement with its existing shareholder Vevan Unlimited Company to underwrite all of the expected funding required to undertake the work programme proposed in the Lease Undertaking Application,” Barryroe said on Tuesday.
“Subject to ministerial consent, once the lease undertaking is in place, we will rapidly move to commence preparations for drilling operations,” said Alan Curran, who took over as Barryroe chief executive in July.
“Well planning and the optimal weather window indicates this is now likely to be in 2024. I would like to take this opportunity to thank all of our shareholders for their continuing support.”
These new funds are currently held in a solicitor’s client account to Vevan’s order and are available to be drawn down in accordance with the terms of the loan note, Barryroe said.
Investors in Providence have seen three Barryroe development partnership deals come to nothing in the decade since the field was found in 2012 to have more than 300 million barrels of recoverable oil. The latest was abandoned in April last year, prompting the company, which has an 80 per cent stake in the Barryroe licence, to say that it would proceed alone.
“Barryroe is a vital strategic asset for Ireland. Given the size of the resource, it is the single most important asset to address clear national energy security concerns,” said Davy analyst Colin Grant.
“Ireland imports 100 per cent of its oil and 70 per cent of its gas, which will increase to 100 per cent by around 2030. We consider this to be an indefensible energy policy, particularly given the changing geopolitical landscape.”
Mr Goodman built up his 16.1 per cent stake in Barryroe in the 16 months to late June.
