When Providence Resources discovered the Barryroe oil field off the coast of Kinsale in early 2012, the market was ecstatic. That September shares traded for €7.08, valuing the company in the low billions. Geologists estimated there were 81 million barrels of oil at Barryroe, which is 80 per cent owned by Providence. The field’s oil is worth about €7 billion worth at today’s prices.

Ten years later, the oil is still in the ground, and the market looks to have given up on ever getting it out. Providence shares trade at 2p, for a market cap of £23 million. It’s down 99.7 per cent from the high in September 2012.

In 2019, its long-time CEO Tony O’Reilly Jr. left, and was replaced by industry veteran Alan Linn. And in May 2021, Providence approached the former KPMG partner Jimmy Menton about joining the board. 

Why Menton? In London, Menton had worked with North Sea oil and gas drillers. And more recently, he had served on the board of companies in need of restructuring. Menton also currently serves as chair of St Vincent’s Healthcare Group. 

“I thought to myself ‘there’s an element of unfinished business here’,” said Menton,“and I equally was aware of that it was a single project company. It was Barryroe or bust. I found that interesting.”

Within six months of joining the board as a non-executive director, Menton found himself executive chairman, when CEO Alan Linn resigned in October 2021. Linn had been in place for less than two years.

Why did Linn leave? “Alan [Linn] had been recruited by Pat Plunkett, who had served on the board for five years. Shortly after he left, Alan felt he wanted to do other things,” Menton said. 

Providence is clearly a company in trouble. Any company trading at a 99 per cent discount to its peak is in trouble. But Menton is determined to keep plugging away. The 81 million barrels of oil are still there, as confirmed by a second geological survey this year.

The bottleneck is government approval. Providence wants to drill an appraisal well, whose purpose is to thoroughly test the geology and make sure the oil can be recovered economically. 

To drill the appraisal well, Providence needs sign off of the Minister for the Environment, Climate and Communications — Green Party leader Eamon Ryan. 

Minister Ryan is, so far, refusing to sign off. That’s the first task. Should Providence win the Minister around, the next challenge is convincing shareholders to pour yet more money into the company – €65 million – to finance the well. 

Menton has found himself with a big job. “I never had as an objective that I would be an executive chair,” he said, “but needs must.”

In his first interview since taking the job, Menton talks about why he took the executive chair role, the turnaround project, the battle to secure government approval, and much more besides.

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Sean Keyes (SK): You have served on boards of companies in restructuring and turnaround situations. How does Providence compare?

Jimmy Menton (JM): It’s a very unstructured situation, uncertain outcomes, not business as usual. It’s going to have a binary outcome. In very simple terms, it’s either going to be a situation where once we get our regulatory risk sorted, you’re then back into economic risk – is there anything out there? Can you then exploit those assets, in the context of what’s going on in the world at the moment where you’ll have a very short window to monetize what are typically long-tail assets? 

I suppose the board’s perspective has been the strategy where you try and optimise a portion of the field as relatively quickly as you can, because you might not be able to monetize the rest of the field for all sorts of environmental, political and regulatory reasons. 

“You would prefer to convince any government and any minister that your case has merit. So the last thing you really want to be forced into is the situation where you look at your legal options.”

Jimmy Menton

SK: When they came to you with the offer of this role, you’re looking at a graph of the share price. And you see the company is down in 99 per cent from the high point. What are you thinking? How do you think you can turn it around? What do you think you can add? 

JM: What I could add is, trying to formulate the right strategy. To recalibrate our strategic objectives and put them out there. And be unequivocal about what you’re trying to do. And from that flows a series of actions, and work streams. So a lot of the work that we’ve done since August when we reconstituted the board has been under the radar because we are a public company. 

SK: To proceed with the appraisal well, you require the consent of one man, Minister Eamon Ryan. What’s the strategy for getting his signature?

JM: A couple of things. From a process perspective, our exploration licence expired. And you’re then allowed as the licence holder to apply for a lease undertaking. And that involves a sensible work programme, to be conducted over the life, the four-year-long lease undertaking, and to be able to demonstrate some competencies. 

We completed all of that process, which is evaluated by the geoscience regulatory office(GSRO), which is the filter, and presumably give a recommendation to the Minister to consent or not. And so we did all that. And we have been maintaining our request levels to the GSRO. Because I think it would be fair to say we’re been compliant. 

So you’re then back to the Minister giving consent. And the minister is the leader of the Green Party, whose ideology and clear policy is opposed to fossil fuels. So we accept that. However he is but one minister in a government that is responsible for a whole set of policies for the benefit of the citizens. 

We focused up to the back end of November, on getting our strategic intent. Because to engage in some political advocacy campaign, in the light of COP26 wouldn’t have been the smartest thing in the world to do. And also, we need to be clear in our own minds as a board with the management team, as to what we’re going to offer our investors in terms of strategy. So by late December, the direction of travel was well established. So we have really taken the only tools in our kitbag out, which is to inform politicians in the first instance, across government parties, of why we think the optimisation of Ballyroe is an important element in not just security of supply, but import substitution over the transition phase over the next 10 years. And I think the validation of that is that our strategy goes out to a 10-year horizon, rather than a thirty-year horizon, which doesn’t preclude the latter. 

So we like to think we live in the real world where we’re not climate change deniers, we fully accept that. But we believe that within an Irish context – and inter connectors, Corrib, all the stuff that we will read about in papers – that we have an important role to play strategically in the broader energy policy for this country. I think that in the light of recent events, and as we sit here today, the rules are being completely rewritten.

You’d wonder whether we’ll ever get to a situation where we have 100 per cent renewable energy, even over the next 25 years

Jimmy Menton

SK: Is the minister within his rights not to consent to the lease? 

JM: You would prefer to convince any government and any minister that your case has merit. So the last thing you really want to be forced into is the situation, where you look at your legal options, and you phone, Mr. or Mrs. solicitor. 

So you could talk of a number of things. One is, you could seek a mandamus order to compel him to give the decision. But you’re then down the rabbit hole. If you were refused the lease undertaking, you could go to a different door in the Four Courts and seek a judicial review. Take your chances on that. 

Over the past few months, and pre those dreadful events in Ukraine, there were a number of stories whereby a big major in Europe was contemplating litigation against the regulatory authorities for the cancellation of licences, and looking for three and four billion in damages. There’s also there is also a live case which went to mediation between the Italian government and an energy company, where it went to mediation. And there’s been silence on that, and the suspicion is that the mediator has come down on the side of the energy company. 

But while all those points are relevant, for me, they miss the bigger, bigger, bigger picture, which is – there’s a fundamental realignment of global energy policy. I did a lot of work in the 90s for Bord Gáis on a consultancy basis when I was in Anderson’s advising them on the deregulation of the market. And the inter connector was being built with Scotland. And the whole scenario then was, ‘well, okay, we have the Kinsale gas field. We have inter connectors coming. So that answers our security of supply issues.’ And that wasn’t an unreasonable perspective of viewpoint at that point. But fast forward 25 years, you’ve got Brexit. We have arrangements with the UK sovereign government for the use of that inter connector. But do we really want to roll the dice, in that type of security situation?

SK: When will it not make sense to explore an additional field and push down the price of oil and gas, and increase the amount of carbon in the atmosphere? When is it appropriate to stop drilling new wells?

JM: Given our position as an island, given the perspective of our arrangements for the importation of gas, given the execution of capacity for renewables – because we all want to get there is no argument about that. But what is certain is that we need energy now, and we need it over the next 10 years. And we need a certain modicum of oil and gas. Not Russian resources, but Irish resources of oil and gas. 

To throw out an illustration of that, we reckon that, for the segment, we would hope to displace 20 per cent of the oil requirements if you’re looking at oil. So not only do you have surety of supply, you have displacement, and you halve the carbon footprint of importing that oil. 

The economics of energy

Jimmy Menton. PIC: Bryan Meade

SK: And the economics of renewables are currently very attractive, because they’re complementary to our existing setup, especially natural gas. Because natural gas has a quality where you can switch the plants on and off when you need to, as your renewable generation rises and falls with the weather. But in the absence of gas plants, you end up having to build massive redundancy in your renewables, which causes them to get much more expensive. 

JM: You’d wonder whether we’ll ever get to a situation where we have 100 per cent renewable energy, even over the next 25 years. Though never say never. But I don’t see what the downside is of saying ‘we don’t want an 80 million barrel deposit off our shore’. 

[Eamon Ryan] is but one minister in a government that is responsible for a whole set of policies for the benefit of the citizens. 

Jimmy Menton

And could you visualise a situation where the EU has an energy policy for all the constituent member states, which says ‘yes, we’re not diminishing our intent or objective about renewable energy? But you need that’s a baseline factor of 20 per cent’. So when the wind doesn’t blow, or the sun doesn’t shine, you have 20 per cent over here to flick a switch. And it comes in and makes sure that your country is powered. 

I think any simple analysis would say that has to come from either oil or gas or nuclear. But it has to come from somewhere. So I just find, trying to explain how I feel about this mixture of frustration… and I accept the ideological perspective or the Minister, but I think it’s misplaced over the next 10 years. Specifically, vis a vis our situation as a nation, our non-renewable energy sources over the next 10-plus years. And it could be extraordinarily damaging to society. Forget about the shareholders and Providence. 

SK: There’s a much bigger pitch at play here. The Minister is one person you need to convince. Your shareholders need to be convinced too. What are their concerns? 

JM: When I talk to our big shareholders. They’ve been disillusioned with recent experiences over the last two, or four years, particularly with APEC. And most recently with SpotOn, irrespective of the merits or otherwise, of either of those two deals. But they’re definitely disillusioned with the outcomes. So clearly, they have a very healthy scepticism, as I would have had if I was them, about what our strategy is. And our strategy is that we need an appraisal well. Which is potentially a call on their capital, that they wouldn’t have been asked for, for the past four years. 

So I think they’re processing that information against that backdrop. And I think they’re certainly very focused on the lease because otherwise, the conversation becomes very academic. So, I say to you, ‘Sean, great news. I got the lease undertaking in the post this morning’. So you say ‘Oh, that’s great news’. So the next conversation isn’t about the lease undertaking anymore. It’s about economics. What’s the risk, what are the rewards? You’re looking for a lot of money to drill in an appraisal well, over and above the standard price. What have you done to make sure you hit those timelines? I would summarise by saying, once we have the lease undertaking dealt with, we’re ready to go with all those other arguments. Whether we win those arguments with our new shareholders, who’s to know?

I accept the ideological perspective of the Minister, but I think it’s misplaced over the next 10 years.

Jimmy Menton

SK: And your last update to the market was on the fourth of February. Which was just before everything kicked off. How has how have things changed as a result of Russia’s invasion of Ukraine?

JM: We are in heavy communication with people we think need to understand our perspective, who in turn have political influence to shape government policy and change it. We could wallpaper this place with articles written, or statements made, by the CRU, or ESRI that are arguing for the need for LNG terminals. And what I want to do is to make sure that Barryroe is included in that discussion. I mean, an LNG terminal – we know you can import LNG gas, but you have to have a terminal. So it’s much more concrete and definitive than signing a piece of paper and seeing what happens with the appraisal well. So let me say we are getting a very positive reaction to our messages that are articulated around a 10 plus year horizon than a 35-year horizon.

Political battles

SK: For Providence, the big bottleneck is not geological, it’s not economic, it’s political. And in the last two months, politics have started to shift. What arguments are politicians getting more receptive to?

JM: I think it’s around energy security and energy displacement. Put in the context of the transition. Nobody is saying, nor are we, that we need to park climate targets. But we had a number of these conversations, by the way before Ukraine. And that includes MEPs, as well as TDs, from government parties (non-Green). And they say the discussions in January or in February, were around ‘well I hear your Jimmy, but mood music wouldn’t be great if I put my head above the parapet about that. And now I remember speaking to one MEP, who had said, when we chatted to them, ‘that’s going to be a hard sell’. And now I see publicly the same individual advocating vociferously for energy supply solutions. I think also there’s a bit of a Dublin-Cork split here as well. Because there’s an appreciation across the business community and the political community in Cork that the energy industry has been good to Cork. It’s been good for the country. It’s been good for the infrastructure, blah, blah, blah.

SK: What’s Sinn Féin’s view on Barryroe?

JM: Well, it’s very difficult – and I mean this without any sense of sarcasm or otherwise – it’s difficult to understand what their policy is on fossil fuels. In terms of a transition. Because that has come up in conversation with some of my UK board members. They see Sinn Féin in the poll and ask, ‘what’s their view? It’s difficult to understand whether they’re against the likes of Barryroe, or an LNG terminal, or whether they’re neutral on it, or they’re positive.

SK: You’re playing politics at a high level, trying to convince senior ministers. What message do you have for ordinary people who are skeptical about oil and gas?

JM: I wouldn’t try to argue against my 26-year-old twin daughters and say dad is a climate denier, I would say this is a highly complex situation. What Greta Thunberg has done has clinched the argument that we need a carbon-neutral world. There’s no going back from that. The debate is when do you get there, and how quickly do you get there? Because of the costs associated with that. And I just think that this debate with young people gets lost. Because they don’t want to do detail. But this is a detailed highly complex situation. 

SK: You found yourself unexpectedly in the top job at a publicly-traded company. Is it a time sink?

JM: It has been. I’ve been very, very busy. And I do have other responsibilities as chair of St Vincents Hospital trust. So it has stretched the elastic a bit. But it’s been very interesting. 

This conversation has been lightly edited for clarity.