The Directors note that the Irish Government has stated that existing authorisations can continue to apply to progress through the licensing stages. This position is consistent with the recent legislative amendments made to the Petroleum and Other Minerals Development Act 1960 through the Climate Action and Low Carbon Development (Amendment) Act 2021.

In February 2021, the farmout agreement with SpotOn Energy Limited was extended to provide SpotOn with additional time to finalise project development funding. In April 2021, following SpotOn’s failure to meet key financing conditions, the agreement was terminated.

Providence immediately reassumed direct responsibility for progressing the development and recruited an experienced Oil & Gas team to refresh and optimise a phased development plan for the Barryroe field, with Providence as operator. This new team’s technical evaluation is nearing completion and includes independent contributions from specialist sub-surface, facilities, and drilling consultants. The aim is to prepare a phased project development plan which is operationally and economically robust. The results of this work will be incorporated into the full strategic review of the development potential of the Barryroe field to be completed in Q4 2021.

In February 2021 Providence Resources Plc subsidiary (Exola DAC) received consent to carry out a site survey. The survey is scheduled for October 2021.

• Other License Areas
  
  

Dragon, St. George’s Channel (SEL 1/07)
Under discussion with the regulatory authority.

Hook Head, North Celtic Sea (SEL 2/07)
Subject of a Lease Undertaking application.

Helvick/Dunmore Celtic Sea (Lease Undertaking)

Subject to work programme finalisation. Extension is under consideration by the regulatory authority.

Avalon – Southern Porcupine (FEL 2/19)
The relinquishment documentation is in process with the regulatory authority.

Dunquin – Southern Porcupine (FEL 3/04)
The relinquishment documentation is in process with the regulatory authority.

• Finance
  
  

Operating loss for the period was €1.065m versus €1.063m in the prior period.

Profit before tax for the period was €1.628m, due to a non-cash accounting gain in relation to the warrants revaluation (€3.155m net revaluation gain) which exceeded operating and administrative costs incurred in the period. The loss for the equivalent period was €9.247m (€7.764m net revaluation loss).

Basic/diluted profit per share of 0.18 cents and 0.14 cents versus loss in prior year of 1.30 cents for both basic and diluted.

As at 30 June 2021, total cash and cash equivalents was €3.645m versus €2.269m at 30 June 2020.

The Group had no debt as of 30 June 2021. (2020: Nil).

During the period 86,061,529 warrants at £0.03 were exercised raising c. €2.9m. The remainder of the warrants expired on the 6 May 2021. The warrants were issued as part of the May 2020 fund-raising. 177,973,004 warrants with an exercise price of £0.09 remain exercisable until 6 May 2022.

The total issued and voting share capital as of 30 June 2021 was 974,864,403 ordinary shares of €0.001 each.

4,500,000 share options were granted to both James Menton and Andrew Mackay on 24 May 2021.

4,500,000 share options were granted to both Peter Newman and Ann-Marie O’Sullivan on 18 August 2021.

Providence Resources Plc CEO, Alan Linn commented on the importance of the Barryroe development:

"It is widely recognised that gas will be an essential energy supply for decades to come, in order to underpin and complement the growth of renewable energy sources. With the decline of the Corrib Gas Field within a five-year period, we are focused on progressing our strategic plan for Barryroe as a matter of urgency. The successful development of Barryroe would secure an indigenous oil and gas supply for Ireland, without which 100% of Ireland's gas will be imported by 2031. At a time when much of Europe is experiencing difficulties with energy supply, a coherent transition strategy is critical to avoid the prospect of energy blackouts becoming a common occurrence.”

ABOUT PROVIDENCE RESOURCES
Providence Resources Plc is an Irish based Energy Company with oil and gas assets located offshore Ireland. Providence's shares are quoted on the AIM in London and Euronext Growth Market in Dublin. Further information on Providence can be found on www.providenceresources.com

PROVIDENCE RESOURCES P.l.c.
Condensed consolidated income statement
For the 6 months ended 30 June 2021

The total recognised profit/(loss) for the period is entirely attributable to equity holders of the Company.
The accompanying notes are an integral part of these condensed consolidated financial statements.

PROVIDENCE RESOURCES P.l.c.
Consolidated statement of comprehensive income
For the 6 months ended 30 June 2021

The total comprehensive income/(expense) recognised for the period is entirely attributable to equity holders of the Company.
The accompanying notes are an integral part of these condensed consolidated financial statements.

PROVIDENCE RESOURCES P.l.c.
Consolidated statement of financial position
As at 30 June 2021

The accompanying notes are an integral part of these condensed consolidated financial statements.

PROVIDENCE RESOURCES P.l.c.
Consolidated statement of changes in Equity
For the 6 months ended 30 June 2021

PROVIDENCE RESOURCES P.l.c.
Consolidated statement of cash flows
For the 6 months ended 30 June 2021

The accompanying notes are an integral part of these condensed consolidated financial statements.

PROVIDENCE RESOURCES P.l.c.
Note 1 – Accounting Policies

General Information

Providence Resources P.l.c. (“the Company”) is a Company incorporated and domiciled in the Republic of Ireland. The registration number of the Company is 268662 and the address of the registered office is Paramount Court, Corrig Road, Sandyford Business Park, Dublin 18, D18 R9C7. The unaudited consolidated interim financial statements of the Company for the six months ended 30 June 2021 (the "Interim Financial Statements") include the Company and its subsidiaries (together referred to as the "Group"). The Interim Financial Statements were authorised for issue by the Directors on 30 September 2021.

Basis of accounting

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with the Group's last annual consolidated financial statements as at and for the year ended 31 December 2020 ('last annual financial statements'). They do not include all of the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements.

The 30 June 2021 figures and the 30 June 2020 comparative figures do not constitute statutory financial statements of the Group within the meaning of the Companies Act, 2014. The consolidated financial statements of the Group for the year ended 31 December 2020, together with the independent auditor’s report thereon, were filed with the Irish Registrar of Companies following the Company’s Annual General Meeting and are also available on the Company’s Website. The auditor’s report on those financial statements was unqualified and contains a “material uncertainty related to going concern” paragraph.

The condensed set of financial statements included in this half-yearly financial report has been prepared on a going concern basis as the Directors consider that the Group has adequate resources to continue in operational existence for the foreseeable future (See below for further details on the Directors assessment of going concern).

In preparing these interim financial statements, management has made judgements and estimates that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual report.

The Interim Financial Statements are presented in Euro, rounded to the nearest thousand, which is the functional currency of the Company and also the presentation currency for the Group’s financial reporting.

PROVIDENCE RESOURCES P.l.c.
Accounting Policies (continued)

Significant accounting policies (continued)

The significant accounting policies applied in these interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ending 31 December 2020.

Amendments to standards and interpretations which are effective for the Group from 1 January 2021 do not have a material effect on the results or financial posting in the interim financial statements as at and for the period ending 30 June 2021.

Going concern

The Group had net assets of €56.7m, including cash on hand of €3.6m as at 30 June 2021. It recognised a profit after taxation of €1.6m for the six month period as a result of a gain arising from the revaluation of warrants issued in 2020. The Directors have carefully considered the financial position of the Group and, in that context, have prepared the interim financial statements on a going concern basis.

The company raised approximately €2.9 million in equity in the period January to June 2021, through the conversion of 86,061,529 warrants of £0.03 each, which were issued as part of the May 2020 fundraising. The total conversion rate for these £0.03 warrants was 74.9%. There are 177,973,004 £0.09 further warrants in issue which expire on 6 May 2022.

The Group’s principal interest is the development of the Barryroe oil and gas Field. The Barryroe Standard Exploration Licence period continued up until the 13 July 2021. Prior to its expiry, having met all the conditions attaching to that Licence, the Group applied for the follow-on permit, being a Lease Undertaking, which is subject to government approval. The approval process is ongoing and the Directors anticipate that the Lease Undertaking will be granted. The Directors note that the Irish Government has stated that existing authorisations can continue to apply to progress through the licensing stages. This position is consistent with the recent legislative amendments made to the Petroleum and Other Minerals Development Act 1960 through the Climate Action and Low Carbon Development (Amendment) Act 2021.

The Directors have carefully considered the financial position of the Group and have prepared cashflow forecasts for the next 12 months, considering both current and future expenditure commitments and the options available to fund such commitments, including equity funding and other financing options in the twelve month period from the date of approval of these interim financial statements. In making their cashflow forecasts, including the primary underlying assumptions, being the granting of the Barryroe Lease Undertaking on terms and conditions that are acceptable along with the completion of an appropriate fund raising in the period for the proposed Barryroe work programme, the Directors believe that the Group will have sufficient funds available over the next 12 months to meet all its commitments as they fall due.

The Directors have considered the matters set out above and determined that the assumptions of the grant of the Barryroe Lease Undertaking and the related raising of additional funding in the next 12 months represents a material uncertainty that may cast significant doubt upon the Group’s ability to continue as a going concern, and the Directors note that the Group may, as a consequence, be unable to continue realising its assets and discharge its liabilities in the normal course of business.

PROVIDENCE RESOURCES P.l.c.

Going concern (continued)

The Directors, after making enquiries and considering the uncertainties described above, have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable
future. The Directors anticipate that an appropriate financing exercise will be successfully completed and note that the Group has continued to have the strong support of its shareholders.

For these reasons, the Directors have adopted the going concern basis in preparing the interim financial statements which do not include any adjustments that would be necessary if this basis were subsequently adjudged to be inappropriate.

Note 2 – Administration Expenses

Note 3 – Finance Expense

*The €0.6m finance expense arises on the £0.03 warrants instruments exercised during the period from 1 January 2021 to 5 May 2021. The £0.6m is a non-cash items and reflects the difference between the fair value of the instrument exercised and the price paid by the warrant holder to acquire the instrument.

PROVIDENCE RESOURCES P.l.c.
Note 4 – Finance Income

*The €3.7m of finance income is a non-cash item and relates to a fair value gain on the Group’s warrants instruments. €3.1m of this gain relates to the release of the unexercised £0.03 warrants which expired on 5 May 2021, the balance of €0.6m reflects the movement in the assumptions underpinning the £0.09 warrant valuations.

Note 5 – Exploration and evaluation assets

The exploration and evaluation asset balance as at 30 June 2021 relates to the Group’s Barryroe interest.

Note 6 – Trade and other receivables

PROVIDENCE RESOURCES P.l.c.
Note 7 – Share Capital and Share Premium

On 5 May 2020, the Company issued 177,973,004 Ordinary Shares as part of a placing and subscription agreement which raised c. €3.1m from security instruments before expenses. Each of these security instruments comprised of one Ordinary Share of €0.001, one £0.03 warrant and one £0.09 warrant.

On issuance, a fair value of €1.9m was attributed to the Ordinary Shares (share capital / share premium outlined above) and €1.2m to the Warrant instruments based on the effective share price at that date. In line with the Group’s accounting policies these Warrants are presented as financial liabilities (note 10).

The holder of each warrant can exercise its rights under the instrument which allows that holder to convert the warrant into one ordinary share, with a par amount of €0.001, by payment of the exercise price of £0.03 or £0.09, as applicable. The warrants are non-transferrable.

During the period from January 2021 to June 2021, 86,061,529 £0.03 warrants were converted in Ordinary Shares raising an additional €2.9m for the company. The £0.03 warrants expired on the 6 May 2021. The £0.03 warrants were issued as part of the fund raising in 2020.
PROVIDENCE RESOURCES P.l.c.
Note 8 – Trade and other payables

Note 9 – Decommissioning provision

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.

PROVIDENCE RESOURCES P.l.c.
Note 10 - Warrants

On 5 May 2020, the Company raised c. €3.1m by the issue of security instruments with each security instrument comprising one ordinary share, with a par amount of €0.001, one £0.03 warrant (expires in May 2021) and one £0.09 warrant (expires in May 2022). The fair value of the warrants was calculated using Black Scholes model. The following key input assumptions were applied to the initial valuation on issuance of these instruments:

The c. €3.1m raised before expenses, from previous and new shareholder investors, for the security instruments in May 2020 was considered the transaction price fair value. The split of this fair value on issuance of these security instruments, based on a placing effective share price of €0.01068, was €0.531m for the £0.03 Warrants, €0.622m for the £0.09 Warrants and €1.901m for the Ordinary Shares (split between share capital and share premium account (note 7)).

On 30 June 2020, the warrants were fair valued using appropriate inputs including the closing share price on that day of €0.0448. The fair value movement being the difference between initial valuation and 30 June 2020 valuation in the amount of €7.764m going through the finance expense line in the income statement.

During 2020, 47,288,814 of the £0.03 warrants were exercised. There were a number of warrants transactions exercised in each of the months. The key assumptions used in the calculation of their fair value at the exercise date are included in the table below. The weighted average closing price was used to reflect the number of transactions in each month.

PROVIDENCE RESOURCES P.l.c.
Note 10 – Warrants (continued)

The fair value of the warrants exercised during the year 2020 is recognised as a finance expense of €2.02m in the income statement (see note 3) with a corresponding increase in share premium.

On 31 December 2020, the warrants were fair valued using appropriate inputs including the closing share price on that day of €0.055. The period of 18 months was used for the volatility calculation for the £0.09 warrants which would expire on 6 May 2022 and the £0.03 warrants which expire on 6 May 2021. The 4-month period for the £0.03 warrants was too short and would distort the volatility calculation as it is key component when calculating the fair value using Black Scholes. The fair value movement being the difference between the initial valuation and 31 December 2020 valuation in the amount of €5.56m is recorded as a finance expense in the income statement.

During 2021, there were 86,061,529 £0.03 warrants exercised before they expired on the 6 May 2021.

The fair value of the warrants exercised during the period to June 2021 is recognised as a finance expense of €0.61m in the income statement (see note 3) with a corresponding increase in share premium.

PROVIDENCE RESOURCES P.l.c.
Note 10 – Warrants (continued)

At 30 June 2021, the £0.09 warrants were fair valued. The assumptions are shown in the table below.

The table below shows the fair value movements.

PROVIDENCE RESOURCES P.l.c.
Note 11 – Earnings per share

There is a difference in the basic and dilutive profit for ordinary share in the period to 30 June 2021.

However, for prior period, there is no difference between the loss per ordinary share and the diluted loss per share for the reported periods as all potentially dilutive ordinary shares outstanding are anti-dilutive.

There were 39,927,000 (2020: 41,150,000) anti-dilutive share options and 177,973,004 (2020: 355,946,008) anti-dilutive warrants in issue as at 30 June 2021.

Note 12 – Share schemes

Share option schemes were introduced in August 1997 (expired August 2007), May 2005 (expired October 2015) and June 2009 (expired in June 2019) under which share options may be offered to employees, Directors and consultants. In addition, a long-term incentive plan was introduced in 2016. Options are recommended at a level to attract retain and motivate participants in the competitive environment in which the Group operates, The Remuneration Committee reviews and assesses proposals to grant share options to participants.

The Group operates the following employee share schemes:

2020 Scheme

In 2020, the directors adopted a share option scheme which contains certain performance criteria. No options can be issued after 10 years of the scheme. The option price is the market price immediately preceding the date of the grant. The “2020 scheme” operates as an equity-settled share option scheme and the options granted are subject to certain conditions. No option is exercisable more than seven years after grant date and no option is exercisable within one year of grant.

PROVIDENCE RESOURCES P.l.c.
Note 12 – Share schemes (continued)

The applicable criteria for the exercise of the options are;

(i) 33% of the total number of options granted are exercisable after one.


(ii) 33% of the total number of options granted are exercisable after two years.


(iii) The remaining 33% of the total number of options granted are exercisable after a further year has elapsed.

During the period, 9,000,000 share options were granted under the 2020 Share option scheme. The 9,000,000 options were granted to the Directors.

The total share based payments expense in the period to 30 June 2021 charged to the income statement was €156,000 (2020: €216,000).

Note 13 - Commitments

As at 30 June 2021, the Group has capital commitments of approximately €1.5m (30 June 2020: €0.3m) to contribute to its share of costs of exploration and evaluation activities.

Note 14 – Post Balance Sheet Events

Pat Plunkett resigned from the Board and chairman on 22 July 2021. James Menton was appointed chairman.

Ann-Marie O’Sullivan and Peter Newman were appointed to the Board on 23 July 2021.

There were 4,500,000 share options awarded to both Ann-Marie O’Sullivan and Peter Newman on the 18 August 2021.

There have been no other significant events since the balance sheet date which would require disclosure in or amendment of these interim financial statements.