*Providence boss Tony O’Reilly jnr has been offered a generous stock option package if he can revive the oil company’s ailing fortunes.

Under a new management incentive scheme, announced this week, Mr O’Reilly was granted an option on 12 million shares, equating to a 1.8 per cent stake in the company.

The option can only be activated, however, if the share price reaches 45 cent, which is four times the current market rate. If the shares hit that price and he was to exercise all his options, it would cost the Providence CEO €5.4 million.

The financial benefit to Mr O’Reilly and his fellow directors would come with any advance in the Providence share price above the 45 cent level.

Providence shares have been in freefall on the back of crashing oil prices and the company’s failure to secure a farm-out deal for its flagship Barryroe prospect off the Cork coast.

In London, where its main listing is held, the company’s shares have lost more than 98 per cent of their value since 2012, falling from a high of 707.5p to the current rate of 10p.

Shareholders also saw their holdings diluted by a recent $74 million capital raise, which was used to pay off debts and settle a legal dispute with drilling services firm Transocean.

The new share scheme is designed to incentivise management to secure farm-out deals on its Irish prospects.

Under the scheme, technical director John O’Sullivan was granted an option on nine million shares which, at the 45 cent strike price, would require him to invest up to €4.05 million in the company’s stock.

Providence chairman James McCarthy and fellow directors Lex Gamble, Philip O'Quigley and Philip Nolan were also granted options on an additional 400,000 shares each.

“For management to create shareholder value, Tony O’Reilly and John O’Sullivan must now deliver in terms of a farm-out or potential sale of the company,” Merrion analyst Darren McKinley said.

“Yesterday’s announcement on the change of terms to the management incentive scheme would suggest that it is firmly in his interest to deliver,” he said.

Despite the company's troubles, its recent capital raise in London was significantly oversubscribed. The increased investor appetite was linked to a report by oilfield services firm Schlumberger, which pointed to an increased likelihood of a significant oil find at Providence's Druid/Drombeg oil field off the west cost.

The additional capital has also bought the company more time to negotiate a farm-out deal at Barryroe.

* This article was amended on August 11th