Exploration company Providence Resources has reported an operating loss for the year of just over €5.4m, an increase on the operating loss of €4.07m reported last year.

The loss is a result of higher administration expenses related to its drilling operations, including the Barryroe field off the Cork coast which has significant oil and gas potential.

Providence posted a pre-tax loss of €8.2m for the year to the end of December - which the company described as 'a landmark year'.

The company also paid down all its debt from the proceeds of the sale of its UK onshore assets. Over the past 18 months, Providence reduced its debt levels by about €75m and it said it is now debt free.

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“2012 was a truly transformational year for Providence, with the most notable event being the successful drilling and well testing on the Barryroe oil field in the Celtic Sea Basin, the first well in our multi-basin drilling campaign offshore Ireland,'' commented the company's chief executive Tony O'Reilly.

He said that the Barryroe test results in March came in far above all pre-drill expectations and the post-well analysis has confirmed the true potential of Barryroe.

Mr O'Reilly said that Providence had always believed in the material hydrocarbon prospectivity of offshore Ireland, adding that the success at Barryroe has firmly validated this view.

''We therefore feel extremely well placed to capitalise on the positive momentum that we have built up in 2012, and to firmly embrace the advances in technology, infrastructure, the fiscal regime and higher oil prices in order to unlock the hydrocarbon potential offshore Ireland,'' he added.