When assessing any long-running relationship or marriage, a useful exercise is to to count up the all years that the relationship has been in existence, and then ask yourself a simple question: how many of those years were good ones?
If the number of bad years outweighs the good, or if it appears there hasn’t been a good year for several years, then it is perfectly reasonable to question whether or not that relationship should continue.
Tony O’Reilly jnr has been the chief executive of Providence Resources since 2005. A dozen years is a long-term relationship, and practically a lifetime in the arena of publicly listed companies.
Following its latest drilling disappointment on Monday, Providence investors might be tempted to sit back and ask themselves that simple question: out of those 12 years with O’Reilly at the helm, how many have been good ones?
Exploration stocks are inherently white-knuckle rides. You don’t buy oil stocks for a steady dividend or to buttress a defensive investment strategy. You buy them for the craic, the one-in-a-thousand chance that it will strike pay dirt and make all the disappointments worthwhile.
But there is only so much disappointment that investors can reasonably be expected to take.
Providence hasn’t had a good year since 2012, and its share price has fallen about 98 per cent since. It has had plenty of promise, plenty of false dawns and plenty of excuses from the boardroom. But investors exist to make returns. And they have got nothing.
It is only fair to give a new leader a year or two to establish their own regime, before it becomes reasonable to judge them. So what has O’Reilly achieved at Providence since 2006 or 2007?
Over the past 10 or 11 years, the company has raised close to $250 million from investors, but has precious little to show for it. Over the same period O’Reilly has received about €6.2 million in salary payments, including €412,000 last year. For this outlay, investors have, again, almost nothing to show.
This cannot go on much longer.
