Providence Announces Half Yearly Interim Results

PRODUCTION

Singleton, Onshore UK

• Completion of two well development drilling programme
• Increase in audited oil reserve base by 44% to 7.7 MMBO (2P)
• Production levels for the period were down 7.5% to 92,631 BOPD (H1 2010: 100,168 BOPD) primarily due to interruptions caused by the conclusion of the 2010 drilling programme, which carried on into 2011
• Current production has been running at c. 900 BOEPD, close to end 2010 production target
• On target for increased production to 1,500 BOEPD within the next 2 years.
• Plan for drilling of next production well (X12) underway for Q4 2011 spud

Sale of Gulf of Mexico assets

• Consideration of up to $22 million: ($15 million cash received in March 2011 with the potential for a further $7 million deferred payment)
• Proceeds applied to debt reduction

DRILLING ACTIVITIES

• Announcement of multi-well drilling programme (from 2011 through 2013) covering both appraisal and exploration projects in six geological basins offshore Ireland. This will be the largest, multi-basin, offshore drilling programme in the history of the State. First drilling activities scheduled for October on the Barryroe oil discovery.

KEY APPRAISAL ACTIVITIES

Barryroe, North Celtic Sea Basin

• GSF Arctic II1 semi-submersible rig contracted for drilling operations on 48/24-J appraisal well, to commence next month
• 240 sq km 3D seismic survey acquired over Barryroe oil discovery. Fast-track seismic processing complete with interpretation and finalisation of well location ongoing
• Memorandum of Agreement with Shell to negotiate an oil off take sale and purchase agreement in relation to future potential oil production in the North Celtic Sea Basin

Spanish Point, Main Porcupine Basin

• Exercise of option by Chrysaor to increase its stake to 60.0% in FEL 2/04, with Providence and Sosina retaining 32.0% and 8.0%, respectively
• Well commitment given on FEL 2/04 by partners
• 220 sq km 3D seismic acquired over FEL 4/08, adjacent to the Spanish Point and Burren discoveries

Dragon, St George's Channel Basin

• Extension of first phase of SEL 1/07 to 31 December 2012
• Plans being finalised for a well to be drilled in 2012
• Out of Round Application for the adjacent UK seaward block 103/1 made to the UK Department of Energy and Climate Change, which includes the UK portion of the 103/1-1 Dragon gas discovery. The licence award decision is pending

ULYSSES, Kish Bank Basin

• AMEC Study confirmed ULYSSES gas storage concept is economically and technically feasible

KEY EXPLORATION ACTIVITIES

Dalkey Island, Kish Bank Basin

• Partners made exploration well commitment to Irish Government
• Foreshore licence application underway for 2012 drilling
• Geochemical study indicates presence of highly mature oil prone source rock

Dunquin, South Porcupine Basin

• Farm-in by Repsol to licence will lead to equity percentages of ExxonMobil (27.5%), ENI (27.5%), Repsol (25.0%), Providence (16.0%) and Sosina (8.0%)
• Drilling preparations ongoing with drill date announcement awaited from the operator

Rathlin, Rathlin Basin

• Formal award of Rathlin Island Licence PL 5/10 (onshore)
• Application pending for offshore licences in Rathlin Basin

KEY FINANCIAL ACTIVITIES

Share Placing

• Successful Placing of 16.096 million new ordinary shares in March 2011 at £2.55 per share, raising gross proceeds of £41.0 million (c.$65.7 million)

Debt Re-structuring

• New facility of $60 million arranged in July 2011 through innovative pre-paid oil swap transaction with Deutsche Bank AG, with the proceeds being used to repay the BNP Paribas reserve based lending facility and to fund the ongoing development plan at Singleton

Sale of AJE

• The Company has entered into a Heads of Agreement to divest its Nigerian subsidiary, which holds its interest in OML 113, to Jacka Resources Limited, an ASX-listed company, for a consideration of $16.0 million.

FINANCIAL INFORMATION - INTERIM REPORT

• Revenue from continuing operations of €5.717 million, down 4.4% (H1 2010: €5.977 million)
• Loss from operating activities amounted to €3.191 million (H1 2010: profit €2.007 million)
• Once off impairment charge of €4.4 million related to unfinished drilling at Singleton (X8v well)
• Loss before tax of €9.832 million (H1 2010: profit of €0.584 million)
• Loss for the period of €16.355 million (H1 2010: loss €1.222 million)
• 42.32 cent loss per share (H1 2010: loss 3.74 cent)
• Cash and cash equivalents at June 30th of €46.258 million (excludes restricted cash)

Commenting on today's results, Tony O'Reilly, chief executive of Providence, said: "The first six months of 2011 have been extremely busy for the Company and its partners as we prepare to commence the biggest concerted drilling programme ever carried out offshore Ireland. Providence's shareholders have waited patiently for this moment, and the forthcoming spudding of the first well in the programme, on the Barryroe oil discovery, is a momentous step forward that should not only unlock the value of this particular asset but should also trigger a complete industry re-appraisal of the Irish offshore. Given recent industry advances in technology and pricing, as well as Ireland's now established infrastructure and fiscal regime, the time has now come for Ireland's hydrocarbon potential to be realised. Providence, as the leading Irish based E&P company, with its extensive acreage position, outstanding technical capabilities and world class international partners, intends to be at the forefront of this realisation for its' shareholders."