**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION        Washington, D.C. 20549**

**FORM 10-K**

*(Mark One)*

þ     Annual report pursuant toSection 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended        **December 31, 200****8**.

o     Transition report pursuant toSection 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from             to     .

Commission file number: **000-****30377**

**PROVIDENCE RESOURCES****, INC.**

(Exact name of registrant as specified in its charter)

| **TEXAS**(State or other jurisdiction of

incorporation or organization) | **06-1538201**

(I.R.S. Employer                    Identification No.) |
|--------------------------------------------------------------------------|-------------------------------------------------------------------------|

**5300 Bee Caves Rd, Bldg 1 Suite 240, Austin, Texas, 78746**

(Address of principal executive offices) (Zip Code)

**(512) 970-2888**

(Issuer’stelephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act:none.

Securities registered under Section 12(g) of the Exchange Act:common stock(title of class), $0.001 par value.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Actof 1933: Yes o No        þ.Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act:Yes o No þ.

Indicate by check markwhether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to        file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes þNoo.

Indicate by check mark ifdisclosure of delinquent filers in response to Item 405 of Regulation S-K isnot containedherein,and will not be contained, to        the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part IIIof this Form 10-Kor any amendment to this Form 10-Ko.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting companyas defined byRule 12b-2 of the Exchange Act: smaller reporting companyþ.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):Yes oNoþ.

The aggregate market value of theregistrant's common stock, $0.0001 par value, held by non-affiliates(52,166,820shares)was approximately $9,129,194based on the average closing bid and asked prices ($0.175) for the common stock on March 31, 2009.

AtMarch 31, 2009the number of shares outstanding of theregistrant's common stock, $0.0001 par value (the only class of        voting stock), was62,174,454.

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**TABLE OF CONTENTS**

**           **Page**    
**PART I.**
     Item       1.        Business  3  Item       1A.      Risk Factors  8  Item       1B.      Unresolved Staff Comments  12  Item       2.        Properties  13  Item       3.        Legal Proceedings  14  Item       4.        Submission of Matters to a Vote of Security Holders  14 
**PART II.**
     Item       5.        Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities  14  Item       6.        Selected Financial Data  18  
Item       7.        Management's Discussion and Analysis of Financial Condition and Results of Operations
  18  Item       7A.     Quantitative and Qualitative Disclosures about Market Risk  24  Item       8.        Financial Statements and Supplementary Data  24  Item       9.        Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  25  Item       9A.     Controls and Procedures (Item 9A (T))  25  Item       9B.     Other Information  26 
**PART III.**
     Item     10.      Directors, Executive Officers and Corporate Governance  26  Item     11.      Executive Compensation  30  Item     12.      Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters  32  Item     13.      Certain Relationships and Related Transactions, and Director Independence  33  Item     14.      Principal Accountant Fees and Services  33 
**PART IV.**
     Item     15.      Exhibits and Financial Statement Schedules  34                         Signatures  35    **

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**PART I**

**ITEM 1.     ****BUSINESS**

***As used herein the terms “******Company******,” “we,” “us,” and “our,” refer to Providence Resources, Inc.,        a Texas corporation, and our subsidiaries. All references herein to “Providence Exploration” refer to Providence Exploration, LLC, our wholly owned subsidiary, and its subsidiar******ies******.***

**Corporate History**

The Companywas incorporated under the laws of the State of Texas on February 17, 1993, as “GFB Alliance Services, Inc.” We have since undergone several name changes and on May 13, 1999, pursuant to an amendment to our articles of        incorporation, adopted the name “Healthbridge, Inc.” During early 2002 we acquired exclusive ownershipand intellectual property rights for amedicalwaste disposaltechnology. Prior to year end 2005 we        decided to discontinue all operations due to our inability to successfully commercialize this technology.

The Companycommitted to engage in the energy exploration business onNovember 18thof 2005with the execution of a letter of intent to acquire Providence Exploration, an oil and gas exploration company. The intent wasto fund Providence Exploration’s lease purchases and exploration activitiesin        anticipation of the intended acquisition. On April 10, 2006, the Companyexecuted a definitive share exchange agreement with Providence Exploration and itsmembership unit holders and a definitive note exchange agreementwith the holders of certain of Providence Exploration’s        promissory notes, which agreements ultimately resulted in the acquisition of Providence Exploration as a wholly owned subsidiary on September 29, 2006.On the acquisition of Providence Exploration we changed our name to “Providence Resources, Inc.”

The Company’s principal place of business is located at5300 Bee Caves Rd, Bldg 1 Suite 240, Austin, Texas, 78746, and our telephone number is(512) 970-2888.

The Company’s registered statutory office is located at 408 West 17th Street, Ste. 101, Austin, Texas 78701. 

**The Company**

***Oil and Gas Exploration in Val Verde County***         

On March 30, 2006, the Providence Explorationacquired approximately12,832 gross acres of oil and gas leasesover 57 square milesin Val Verde County, Texasfrom Global Mineral Solutions, L.P.The leases included underlying multiple oil and gas target zones delineated by prior seismic and drilling in the area, along a trend that has produced from multiple large gas fields, including the Gomez field, which has producedover10.6 trillion cubic        feet to date, the Brown Bassett, which has produced over 1.6 trillion cubic feet to date,and the JM Field, which has produced over 650 billion cubic feet to date.

*Seismic Exploration – Val Verde County Leases*

        On March 27, 2007Providence Explorationengaged TRNCO Petroleum Corporationto implement an I/O two recording system using the latest in state-of-the-art acquisition andprocessing parameters to generate high quality 3D seismic data from the Val Verde County leases. Dawson Geophysical Company was concurrently engaged to obtainthe actual 3D seismic data while Fairfield Industries Incorporated was subsequently engaged to interpret the data in concert with consulting geologists familiar with the geophysical applications of seismic data.The 3D seismic data collectedand interpretedilluminateddeep gas targets at depths ranging from 14,000 to 16,000 feet in the Ellenberger carbonate, in addition to targets within the Strawn carbonate and Pennsylvanian-Wolfcamp sandstone reservoirsat lesser depths.        Providence Exploration identified 25 prospective drilling locations within the Val Verde leases based on this information.

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*Elm Ridge Exploration Company LLC.*

On August 8, 2008 Providence Exploration closed a prospect participation and joint operating agreement dated July 31, 2008 with Elm Ridge Exploration Company, LLC (“Elm Ridge”) pursuant to which Elm Ridge acquired a 50% working interest in the Val Verde leases in exchange for $7.212 million dollars and        its commitment to carry Providence Exploration for an additional $2.0 million on the initial two wells to be drilled on the leases to the Ellenberger formation. On December 12, 2008 Providence Exploration reached an agreement with the owners of the Val Verde leases to extend the term of the leases over approximately 9,989 gross acres for an additional year in order to satisfy exploration obligations attached to the leases. Providence Exploration thenleased an additional 3,352 gross acres in Val VerdeCountythat are adjacent to the southern boundary of its initiallease position and lie within our 3D seismic coverage.The result being that Providence Exploration now holds up to a 50% working interest in 16,184 gross acres of oil and gas leases in Val Verde County.

*Drilling*

Providence Exploration and Elm Ridge have engaged R.K Ford & Associates, Inc. (“R.K. Ford”) to drill two wells to the Ellenberger formation to test the structure. Drilling ofthe initial        well,the Carson 10-1,startedon January 2, 2009. The drillreachedthe        Ellenberger at a depth of approximately 16,000 feet in early March of 2009. Providence Exploration is currently in the process of analyzing the logs pulled from the hole to determine the commercial viability of the Ellenberger and the Strawn formations at the given locations. The analysis is expected to be complete within the next six weeks.

R.K Ford has just commenced drilling on the second, the Carson 12-1, of the initial two wells to be drilled to test the Ellenberger formationwith results from this exploration activity expected within the next ten weeks.

***Oil and Gas Exploration in******Comanche and Hamilton Counties***

Providence Explorationconcluded the acquisition of approximately 7,374 acres of oil and gas leases in Comanche and Hamilton Countiespursuant to the terms of a definitive joint exploration        agreement with The Harding Company in November of 2005. The Harding Company acting as operator for the acquired leases completed a seismic data program to obtain geophysical data in order to identify prospective drill targets for a drilling program slated for that same year. Four wells were drilled on the Comanche County leasesnone of which indicated commercial quantitiesof gas. All four wells have since been abandoned and the Comanche County and Hamilton County leases in addition to attendant drilling expensesand development costs werefully impaired in the year ended December 31, 2008.

**Competition**

The oil and gas business in Texas is highly competitive. Companies with greater financial resources, existing staff and labor forces, equipment for exploration, and experience are in a better position than us to compete for leasesand        production. In addition, our ability to market any oil and gas which we might produce could be severely limited by our inability to compete with larger companies operating in the same area, which may be willing or able to offer oil and gas at alower price.

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The Companycompetesin Texas with over 1,000 independent companies and approximately 40 significant independent operators including Marathon Oil, Houston Exploration Company and Newfield        Exploration Company in addition to over 950 smaller operations with no single producer dominating the area. Major operators such as Exxon, Shell Oil, ConocoPhillips, Mobil and others that are considered major players in the oil and gas industry retain significant interests in Texas. 

We believe that the Companycan successfully compete against otherindependent companies by focusing ourefforts on minimizing corporate expenses and efficientlydevelopingcurrent lease interests. Otherwise, the Company hasa minimal competitive position in the oil and gas industry.

**Marketability**

 

The products that the Company intends to marketincluding oil and natural gasproductsare commodities purchased by many distribution and retail companies. Crude oil can be sold        whenever it is produced subject to transportation cost. Natural gas requires transportation from point of production to the purchaser by pipeline.         

The Company does not produce oil or gas products for market at this timeand will have to consider the construction of a natural gas pipeline to transport energy produced from its leases in Val Verde County in the event commercial quantities of natural gas are determined to exist        in situ.

**Patents, Trademarks, Licenses,****Franchises, Concessions, Royalty Agreements and Labor Contracts**

We currently have no patents, trademarks, licenses, franchises, concessions, or labor contract, exceptthe leases we have acquired for oil, gas and mineral interests do provide for the payment of royalties in the event production is realized.

**Governmental****and Environmental****Regulation          **

The Company’s oil and gas exploration, including future production and related operations are subject to extensive rules and regulations promulgated by federal and state agencies. Failure to comply with such rules and regulations can result in substantial penalties. The regulatory burden on the oil and gas industry adds to our cost of doing business and        affects our profitability. Because such rules and regulations are frequently amended or interpreted differently by regulatory agencies, we are unable to accurately predict the future cost or impact of complying with such laws. 

The Company’s oil and gas exploration and future production operations are and will be affected by state and federal regulation of gas production, federal regulation of gas sold in interstate and intrastate commerce, state and federal regulations governing environmental quality and pollution control, state limits on allowable rates of production by a well        or pro-ration unit and the amount of gas available for sale, state and federal regulations governing the availability of adequate pipeline and other transportation and processing facilities, and state and federal regulation governing the marketing of competitive fuels. For example, a productive gas well may be “shut-in” because of an over-supply of gas or lack of an available gas pipeline in the areas in which we may conduct operations. State and federal regulations        generally are intended to prevent waste of oil and gas, protect rights to produce oil and gas between owners in a common reservoir, control the amount of oil and gas produced by assigning allowable rates of production and control contamination of the environment. Pipelines are subject to the jurisdiction of various federal, state and local agencies. 

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Many state authorities require permits for drilling operations, drilling bonds and reports concerning operations and impose other requirements relating to the exploration and production of oil and gas. Such states also have ordinances, statutes or regulations addressing conservation matters, including provisions for the unitization or pooling of properties, the        regulation of spacing, plugging and abandonment of wells, and limitations establishing maximum rates of production from wells. Texas regulations do provide certain limitations with respect to our operations. 

****

**Environmental Regulation**

The recent trend in environmental legislation and regulation has been generally toward stricter standards, and this trend will likely continue. The Company does not presently anticipate that we will be required to expend amounts relating to future oil and gas production operations that are material in relation to our total capital expenditure program by reason of        environmental laws and regulations, but because such laws and regulations are subject to interpretation by enforcement agencies and are frequently changed by legislative bodies, we are unable to accurately predict the ultimate cost of such compliance for 2009. 

The Company is subject to numerous laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. These laws and regulations may require the acquisition of a permit before drilling commences, restrict the types, quantities and concentration of various substances that can be released into the        environment in connection with drilling and production activities, limit or prohibit drilling activities on certain lands lying within wilderness, wetlands, and areas containing threatened and endangered plant and wildlife species, and impose substantial liabilities for unauthorized pollution resulting from our operations. 

The following environmental laws and regulatory programs appear to be the most significant to our operations in 2009: 

***Clean Water and Oil Pollution Regulatory Programs***— The Federal Clean Water Act (“CWA”) regulates discharges of pollutants to surface waters. The discharge of crude oil and petroleum products to surface waters also is precluded by the Oil Pollution Act (“OPA”). Our operations are        inherently subject to accidental spills and releases of crude oil and drilling fluids that may give rise to liability to governmental entities or private parties under federal, state or local environmental laws, as well as under common law. Minor spills may occur from time to time during the normal course of our future production operations. We will maintain spill prevention control and countermeasure plans (“SPCC plans”) for facilities that store large quantities of crude        oil or petroleum products to prevent the accidental discharge of these potential pollutants to surface waters. 

***Clean Air Regulatory Programs***— The Company’soperations are subject to the federal Clean Air Act (“CAA”), and state implementing regulations. Among other things, the CAA requires all major sources of hazardous air pollutants, as well as major sources        of certain other criteria pollutants, to obtain operating permits, and in some cases, construction permits. The permits must contain applicable Federal and state emission limitations and standards as well as satisfy other statutory and regulatory requirements. The 1990 Amendments to the CAA also established new monitoring, reporting, and recordkeeping requirements to provide a reasonable assurance of compliance with emission limitations and standards. Providence Explorationcurrently obtains construction and operating permits for our compressor engines; we are not presently aware of any potential adverse claims in this regard. 

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***Waste Disposal Regulatory Programs***— The Company’s operations will generate and result in the transportation and disposal of large quantities of produced water and other wastes classified by EPA as “non-hazardous solid wastes”. The EPA is currently considering the adoption of stricter        disposal and clean-up standards for non-hazardous solid wastes under the Resource Conservation and Recovery Act (“RCRA”). In some instances, EPAhas already required the clean-up of certain non-hazardous solid waste reclamation and disposal sites under standards similar to those typically found only for hazardous waste disposal sites. It also is possible that wastes that are currently classified as “non-hazardous” by EPA,        including some wastes generated during our drilling and production operations, may in the future be reclassified as “hazardous wastes”. Because hazardous wastes require much more rigorous and costly treatment, storage, transportation and disposal requirements, such changes in the interpretation and enforcement of the current waste disposal regulations would result in significant increases in waste disposal expenditures. 

 

******

***The Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”)***—         CERCLA, also known as the “Superfund” law, imposes liability, without regard to fault or the legality of the original conduct, on certain classes of persons who are considered to have caused or contributed to the release or threatened release of a “hazardous substance” into the environment. These persons include the current or past owner or operator of the disposal site or sites where the release occurred and companies that transported disposed or arranged for        the disposal of the hazardous substances under CERCLA. These persons may be subject to joint and several liabilities for the costs of cleaning up the hazardous substances that have been released into the environment and for damages to natural resources. The Companyis not presently aware of any potential adverse claims in this regard. 

***Texas Railroad Commission***— The State of Texas has promulgated certain legislative rules pertaining to exploration, development and production of oil and gas that are administered by the Texas Railroad Commission. The rules govern permitting for new drilling, inspection of wells, fiscal responsibility of        operators, bonding wells, the disposal of solid waste, water discharge, spill prevention, liquid injection, waste disposal wells, schedules that determine the procedures for plugging and abandonment of wells, reclamation, annual reports and compliance with state and federal environmental protection laws. We believe that we will function in compliance with these rules. 

We believe that all of our operations are in substantial compliance with current applicable federal, state and local environmental laws and regulations and that continued compliance with existing requirements will not have a material adverse effect our financial position, cash flows or results of operations. There can be no assurance, however, that current        regulatory requirements will not change, currently unforeseen environmental incidents will not occur or past non-compliance with environmental laws or regulations will not be discovered. 

**Employees**

The Company currently has only one employeesince we rely on an independent operatorand related contractorsto assist us in managing our interests in oil and gas leases in Val Verde County. Wealsorely onconsultants, attorneys, and accountants to assist us in the development of our business.

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**Reports to Security Holders**

The Company’s annual report contains audited financial statements. We are not required to deliver an annual report to security holders and will not automatically deliver a copy of the annual report to our security holders unless a request is made for such delivery. We file all of our required reports and        other information with the Securities and Exchange Commission (the “Commission”). The public may read and copy any materials that are filed by the Company with the Commission at the Commission’s Public Reference Room at 100 FStreet, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the        Commission at 1-800-SEC-0330. The statements and forms filed by us with the Commission have also been filed electronically and are available for viewing or copy on the Commission maintained Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission. The Internet address for this site can be found at        *http://www.sec.gov*.

**ITEM 1A.     RISK FACTORS**

The Company’soperations and securities are subject to a number of risks. Below we have identified and discussed the material risks that we are likely to face. Should any of the following risks occur, they will adversely affect our operations, business, financial condition and/or operating results as well as the future trading        price and/or the value of our securities.

**Risks Related to the Company’s Business**

 

***The Company has a history of operating losses and such losses may continue in the future.***

        Since the Company’s inception in 1993, our operations have resulted in a continuation of losses. We will continue to incur operating losses until such time as we begin producing oil and gas revenue, which may or may not eventuate. Should the Company fail to produce oil and gas revenue we may continue to operate at a loss and might never become profitable.         

***The Company has a history of uncertainty about continuing as a going concern.***

        The Company’s audits for the periods ended December 31, 2008and December 31, 2007expressed substantial doubt as to its ability to continue as a going concern duetothe lack of revenue generating activities andthe accumulation of significant losses of $44,357,352as of December 31, 2008. Unless we are able to overcome our dependence on financings and begin to generate revenue from operations, our ability to continue as a going concern will be in        jeopardy.

***The Company has a limited operating history as an oil and gas exploration company.***

        The Company acquired Providence Exploration on September 29, 2006, which company first began oil and gas explorationduring the fourth quarter of 2005. As such, our limited operating history in the oil and gas exploration sector provides an inadequate track record from which to base future projections of success.

***The Company cannot represent that it will be successful in continuing operations.***

        The Company has not, to date, generated revenue from operations and may not generate revenue over the next twelve months. Should the Company be unable to realize revenue over the next twelve months, it will be forced to continue to raise capital to remain in operation. We have no commitments for the provision of additional capital and can offer no assurance that such capital will be available as necessary to sustain operations.

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**Risks Related to the Oil and Gas Industry**

 

***Oil and natural gas drilling and producing operations involve risks which could result in net losses.***

        Drilling activities are subject to many risks, including the risk that no commercially productive reservoirs will be discovered. Wells which we drill may not be productive, and, thus, we may not be able to recover all or any portion of our investment in such wells. Drilling for oil and natural gas may involve unprofitable efforts, not only from dry wells, but also from wells that are productive but do not produce sufficient net reserves to return a profit after deducting drilling,        operating and other costs. The seismic data and other technologies which we use do not allow us to know conclusively prior to drilling a well that oil or natural gas is present or may be produced economically. The cost of drilling, completing and operating a well is often uncertain, and cost factors can reduce the feasibility of a project to produce a profit. Further, our drilling operations may be curtailed, delayed or canceled as a result of numerous factors,        including: 

|  | ·      | unexpected drilling conditions; |
|--|----------------------------------------|---------------------------------|

|  | ·      | title problems; |
|--|----------------------------------------|-----------------|

|  | ·      | pressure or irregularities in formations; |
|--|----------------------------------------|-------------------------------------------|

|  | ·      | equipment failures or accidents; |
|--|----------------------------------------|----------------------------------|

|  | ·      | adverse weather conditions; |
|--|----------------------------------------|-----------------------------|

|  | ·      | compliance with environmental and other governmental requirements; and |
|--|----------------------------------------|------------------------------------------------------------------------|

|  | ·      | cost of, or shortages or delays in the availability of, drilling rigs, equipment and services. |
|--|----------------------------------------|------------------------------------------------------------------------------------------------|

Our operations are subject to all the risks normally incident to the operation and development of oil and natural gas properties and the drilling of oil and natural gas wells, including:

|  | ·      | encountering well blowouts; |
|--|----------------------------------------|-----------------------------|

|  | ·      | cratering and explosions; |
|--|----------------------------------------|---------------------------|

|  | ·      | pipe failure; |
|--|----------------------------------------|---------------|

|  | ·      | fires; |
|--|----------------------------------------|--------|

|  | ·      | formations with abnormal pressures resulting in uncontrollable flows of oil and natural gas; |
|--|----------------------------------------|----------------------------------------------------------------------------------------------|

|  | ·      | brine or well fluids; and |
|--|----------------------------------------|---------------------------|

|  | ·      | release of contaminants into the environment and other environmental hazards and risks. |
|--|----------------------------------------|-----------------------------------------------------------------------------------------|

The nature of these risks is such that some liabilities including environmental fines and penalties could exceed our ability to pay for the damages. We could incur significant costs due to these risks that could result in net losses.         

***The Company is subject to federal, state and local laws and regulations which could create liability for personal injuries, property damage, and environmental damages.  ***

 

Exploration and development, exploitation, production and sale of oil and natural gas in the United States is subject to extensive federal, state and local laws and regulations, including complex tax laws and environmental laws and regulations. Existing laws or regulations, as currently interpreted or reinterpreted in the future,        or future laws or regulations could harm the Company’s business, results of operations and financial condition. We may be required to make large expenditures to comply with environmental and other governmental regulations. Matters subject to regulation include oil and gas production and saltwater disposal operations and our processing, handling and disposal of hazardous materials, such as hydrocarbons and naturally occurring radioactive materials, discharge permits for drilling        operations, spacing of wells, environmental protection, reports concerning operations, and taxation. Under these laws and regulations, we could be liable for personal injuries, property damage, oil spills, discharge of hazardous materials, reclamation costs, remediation, clean-up costs and other environmental damages.

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***Shortages of oil field equipment******,******services******, or******qualified personnel******,******could******impact the Company’s operating results******.  ***

 

The demand for qualified and experienced field personnel to drill wells and conduct field operations, geologists, geophysicists, engineers and other professionals in the oil and natural gas industry can fluctuate significantly, often in correlation with oil and natural gas prices, causing periodic shortages. There have also been        shortages of drilling rigs and other equipment, as demand for rigs and equipment has increased along with the number of wells being drilled. These factors also cause significant increases in costs for equipment, services and personnel. Higher oil and natural gas prices generally stimulate increased demand and result in increased prices for drilling rigs, crews and associated supplies, equipment and services. We cannot be certain when or if we will experience these issues and these types        of shortages or price increases which could significantly decrease any profit margin, cash flow and operating results on any particular well or restrict our ability to drill additional wells.         ***The results of the Company’s current operations depend on the exploration and operational efforts of third parties.  ***

 

Exploration efforts through seismic exploration, processing and interpretation in Val Verde County have been provided by TRNCO Petroleum Corporation, Dawson Geophysical, Fairfield Industries, Sam Ting and Bill Purves. Exploration efforts through        drilling and operation in Val Verde County are being provided by R.K. Ford & Associates, Inc. Despite being experienced in their respective fields, our dependence on third parties to initiate, determine and conduct operations could impede our own prospect of success.

***Since o******il and natur******al gas prices are volatile,******any substantial decrease in        prices could cause the Company to con******tinue to operate at a loss even******in the event that we are successful in producing oil and gas.  ***

        Our future financial condition, results of operations and the carrying value of our oil and natural gas properties will depend primarily upon the prices we receive for production, if any. Oil and natural gas prices historically have been volatile and are likely to continue to be volatile in the future. Our cash flow from operations will be highly dependent on the prices that we expect to receive for oil and natural        gas. This price volatility also affects the amount of cash flow available for capital expenditures and our ability to borrow money or raise additional capital. The prices for oil and natural gas are subject to a variety of additional factors that are beyond our control. These factors include: 

|  | ·      | the level of consumer demand; |
|--|----------------------------------------|-------------------------------|

|  | ·      | the domestic supply; |
|--|----------------------------------------|----------------------|

|  | ·      | domestic governmental regulations and taxes; |
|--|----------------------------------------|----------------------------------------------|

|  | ·      | the price and availability of alternative fuel sources; |
|--|----------------------------------------|---------------------------------------------------------|

|  | ·      | weather conditions; and |
|--|----------------------------------------|-------------------------|

|  | ·      | market uncertainty. |
|--|----------------------------------------|---------------------|

These factors and the volatility of the energy markets generally make it extremely difficult to predict future oil and natural gas price movements with any certainty. Declines in oil and natural gas prices would not only reduce future revenue, but could reduce the amount of oil and natural gas that we can produce economically and,        as a result, could cause us to continue to operate at a loss. Should the oil and natural gas industry experience significant price declines, we may continue to operate at a loss even if we produce oil or gas.

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**Risks Related to the Company’s Stock**

***The Company may require additional capital funding.***

        The Company may require additional funds, either through equity offerings, debt placements or joint ventures to develop our operations. Such additional capital may result in dilution to our current shareholders. Our ability to meet long-term financial commitments may depend on future cash. There can be no assurance that future income will generate sufficient funds to enable us to meet our financial commitments.         

***The market for our stock is limited and our stock price may be volatile.***

        The market for our common stock has been limited due to low trading volume and the small number of brokerage firms acting as market makers. Because of the limitations of our market and volatility of the market price of our stock, investors may face difficulties in selling shares at attractive prices when they want to. The average daily trading volume for our stock has varied significantly from week to week and from month to month, and the trading volume often varies widely from day to        day.

***The Company******does not pay******cash******dividends.***

The Companydoes not pay cash dividends. We have not paid any cash dividends since inception and have no intention of paying any cash dividends in the foreseeable future. Any future dividends would be at the discretion of our board of directors        and would depend on, among other things, future earnings, our operating and financial condition, our capital requirements, and general business conditions. Therefore, shareholders should not expect any type of cash flow from their investment.

***We incur significant expenses as a result of the Sarbanes-Oxley Act of 2002, which expenses may continue to negatively impact our financial performance.***

 

We incur significant legal, accounting and other expenses as a result of the Sarbanes-Oxley Act of 2002, as well as related rules implemented by the Commission, which control the corporate governance practices of public companies. Compliance with these laws, rules and regulations, including compliance with Section 404 of the Sarbanes-Oxley Act of 2002, as        discussed in the following risk factor, has substantially increased our expenses, including legal and accounting costs, and made some activities more time-consuming and costly. Further, expenses related to our compliance may increase in the future, as legislation affecting smaller reporting companiescomes into effect that may negatively impact our financial performance to the point of having a material adverse effect on our results of operations and        financial condition.

***Our internal controls over financial reporting may not be considered effective in the future, which could result in a loss of investor confidence in our financial reports and in turn have an adverse effect on our stock price.***

  

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 we are required to furnish a report by our management on our internal controls over financial reporting. Such report must contain, among other matters, an assessment of the effectiveness of our internal controls over financial reporting as of the end of the        year, including a statement as to whether or not our internal controls over financial reporting are effective. This assessment must include disclosure of any material weaknesses in our internal controls over financial reporting identified by management. If we are unable to continue to assert that our internal controls are effective, our investors could lose confidence in the accuracy and completeness of our financial reports, which in turn could cause our stock price to        decline.

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***The Company******’s shareholders may face significant restrictions on their stock.***

The Company’s stock differs from many stocks in that it is a “penny stock.” The Commission has adopted a number of rules to regulate “penny stocks” including, but not limited to, those rules from the Securities Act as follows:         

3a51-1     which defines penny stock as, generally speaking,those securities which are not listed on either NASDAQ or a national securities exchange and are priced under $5, excluding securities of issuers that have net tangible assets        greater than $2 million if they have been in operation at least three years, greater than $5 million if in operation less than three years, or average revenue of at least $6 million for the last three years;

15g-1     which outlines transactions by broker/dealers which are exempt from 15g-2 through 15g-6 as those whose commissions from traders are lower than 5% total commissions;

15g-2      which details that brokers must disclose risks of penny stock on Schedule 15G;

15g-3      which details that broker/dealers must disclose quotes and other information relating to the penny stock market;

15g-4      which explains that compensation of broker/dealers must be disclosed;

15g-5      which explains that compensation of persons associated in connection with penny stock sales must be disclosed;

15g-6      which outlines that broker/dealers must send out monthly account statements; and

15g-9     which defines sales practice requirements. 

 

Since the Company’s securities constitute a “penny stock” within the meaning of the rules, the rules would apply to us and our securities. Because these rules provide regulatory burdens upon broker-dealers, they may affect the ability of shareholders to sell their securities in any market that may develop; the        rules themselves may limit the market for penny stocks. Additionally, the market among dealers may not be active. Investors in penny stock often are unable to sell stock back to the dealer that sold them the stock. The mark-ups or commissions charged by the broker-dealers may be greater than any profit a seller may make. Because of large dealer spreads, investors may be unable to sell the stock immediately back to the dealer at the same price the dealer sold the stock to the investor.        In some cases, the stock may fall quickly in value. Investors may be unable to reap any profit from any sale of the stock, if they can sell it at all. 

Shareholders should be aware that, according to Commission Release No. 34-29093 dated April 17, 1991, the market for penny stocks has suffered from patterns of fraud and abuse. These patterns include: 

|  | ·      | control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; |
|--|----------------------------------------|-------------------------------------------------------------------------------------------------------------------------|

|  | ·      | manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; |
|--|----------------------------------------|---------------------------------------------------------------------------------------------------------------------|

|  | ·      | “boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons; |
|--|----------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and |
|--|----------------------------------------|--------------------------------------------------------------------------------------------|

|  | ·      | the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses. |
|--|----------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ITEM 1B.     UNRESOLVED STAFF COMMENTS**

Not applicable.

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**ITEM 2.     ****PROPERT****IES**

**Oil and Gas****Properties**

The Company holds up to a 50% working interest inapproximately 16,184 gross acres or approximately 8,092 net acres of oil and gas leases located in Val Verde County, Texas.         

***Drilling Activity***

Over the last three fiscal years, Providence Exploration drilled no productive wells fourexploratory wellsComanche County, Texaspursuant to our joint exploration agreement with The        Harding Company, all ofwhich failed to produce economically recoverably quantities of oil or gasand have since been abandoned.

Subsequent to the year ended December 31, 2008,Providence Exploration engaged R.K. Ford to drillthefirst of two exploratory wells to the Ellenberger formationunderlying our Val Verde Countyleases.We are currently analyzing drill results from        this first well to the Ellenberger that includes an evaluation of prospective secondary productiontargets in the Strawn and Pennsylvanian Wolfcamp/Canyon Sands.

The second of the two exploratory wells to drill to the Ellenberger formation is currently underway.

Providence Exploration is not in the process of installing waterfloods, performing pressure maintenance operations, or performing any other related operations of material importance.

***Delivery Commitments***

Providence Explorationhas nocontracts to provide a fixed and determinable quantity of oil or gas.

***Undeveloped Acreage***

All acreage in which Providence Explorationmaintains an interest is to be considered undeveloped acreage.

Undeveloped acreage is considered to be those lease acres on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil and gas regardless of whether or not such acreage contains proved reserves. Undeveloped acreage should not be confused with undrilled acreage held by        production under the terms of a lease.

***Oil and Gas Reserves***

The existence of oil and gas reserves for our properties hadnot been determinedas of December 31, 2008. 

***Oil and Gas Titles***

As is customary in the oil and gas industry, we perform only a perfunctory title examination at the time of acquisition of undeveloped properties.  Prior to the commencement of drilling, in most cases, and in any event where we are the operator, a title examination is conducted and significant defects remedied before        proceeding with operations.  We believe that the title to our properties is generally acceptable to a reasonably prudent operator in the oil and gas industry.  The properties owned by us are subject to royalty, overriding royalty, and other interests customary in the industry, liens incidental to operating agreements, current taxes and other burdens, minor encumbrances, easements, and restrictions.  We do not believe that any of these burdens materially        detract from the value of the properties or will materially interfere with their use in the operation of our business.

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**Office****and Warehouse****Facilities**

The Company currently maintains limited office space in Austin, Texas at 5300 Bee Caves Road, Building 1Suite 240Austin,Texas, 78746 for which we pay no rent.         Providence Exploration maintained limited office space at100 Crescent Court, 7th Floor, Dallas, Texas, 75201until December of 2007 for which it paid no rent in the year ended December 31, 2007.Providence Exploration’s wholly owned subsidiary PDX Drilling I, LLC maintained warehouse space in Young County, Texas until December of 2006 for        which it paid $9,600 in rent for the year ended December 31, 2007. Webelievethat ourofficespace will be adequate for the foreseeable future. 

**ITEM 3.     LEGAL PROCEEDINGS**

On August 27, 2008 The Harding Company (“Harding”) filled a complaint in the District Court of the 160thJudicial District of Dallas County, Texas against the Company.        Harding seeks (i) amounts remaining due of $1,177,032 for drilling wells in Comanche and Hamilton Counties and $340,358 for the pipeline to these dry wells under the Joint Exploration Agreement dated October 1, 2005, as amended (ii) access to the seismic data from Val Verde County and its purported right to acquire an additional five percent of participation in the Val Verde leases        under the Agreement for Purchase and Sale dated February 21, 2006, as amended, and (iii) attorney’s fees.

On November 5, 2008, the Company, represented by Andrews Kurth, LLP, filed a counterclaim against Harding and an original claim against Abram Janz(“Janz”)that seeks damages for        fraud, negligent misrepresentation, breach of contract, and breach of fiduciary duty arising out of Harding’s and Janz’s solicitation of the Company to invest in a drillingand development venturein Comanche and Hamilton Counties. The Company seeks actual and exemplary damages for (i) the loss of itsinvestment under Joint Exploration Agreement, (ii) specific performance of the repurchase provision pertaining to Harding’s five percent participation in the Val Verde leases and (iii) attorney’s fees.The Company believes that it will be successful in its defense of the Harding claims and in pursuing its counterclaim against Hardingand Janz. 

**ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

No matters weresubmitted to a vote of the security holders, through the solicitation of proxies or otherwise, during the fourth quarter ended December 31, 2008.

**PART II**

**ITEM 5.     MARKET FOR COMMON EQUITY****,****RELATED STOCKHOLDER MATTERS****, AND ISSUER PURCHASES OF EQUITY        SECURITIES**

The Company’s common stock is quoted on the Over the Counter Bulletin Board, a service maintained by the Financial Industry Regulatory Authority, under the symbol “PVRS”. Trading in the common stock        over-the-counter market has been limited and sporadic and the quotations set forth below are not necessarily indicative of actual market conditions. These prices reflect inter-dealer prices without retail mark-up, mark-down, or commission, and may not necessarily reflect actual transactions. The high and low bid prices for the common stock for each of the quarters listed below are as follows:

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| ***Year***   | ***Quarter Ended*** | ***High*** | ***Low*** |
|--------------|---------------------|------------|-----------|
| **200****8** | December 31         | $0.25      | $0.11     |
|         | September 30        | $0.26      | $0.15     |
|         | June 30             | $0.29      | $0.15     |
|         | March 31            | $0.35      | $0.15     |
| **200****7** | December 31         | $0.23      | $0.08     |
|         | September 30        | $0.25      | $0.14     |
|         | June 30             | $0.33      | $0.14     |
|         | March 31            | $0.60      | $0.32     |

**Capital Stock**

The following is a summary of the material terms of the Company’s capital stock. This summary is subject to and qualified by our articles of incorporation and bylaws.

***Common Stock***

As ofMarch 31, 2009there were 178shareholders of record holding a total of62,174,454 shares of fully paid and non-assessable common stock of the 250,000,000sharesof common stock, par value        $0.0001, authorized. The board of directors believes that the number of beneficial owners is greater than the number of record holders because a portion of our outstanding common stock is held in broker “street names” for the benefit of individual investors. The holders of the common stock are entitled to one vote for each share held of record on all matters submitted to        a vote of stockholders. Holders of the common stock have no preemptive rights and no right to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to the common stock.

***Preferred Stock***

As of March 31, 2009there were no shares issued and outstanding of the 25,000,000 shares of preferred stock authorized. The par value of the preferred stock is        $0.0001 per share. The Company’spreferred stock may have such rights, preferences and designations and may be issued in such series as determined by the board of directors.

***Warrants***

As of March31, 2009the Companyhas 7,267,650outstandingwarrants. The Companyhas issued (i) 348,000 common share purchase warrants exercisable at $0.30 per share at any time until December 1, 2010, (ii) 6,684,960 common share purchase warrants exercisable at $1.00 per share at any time until July 25, 2009, (iii) 188,190 common share        purchase warrants exercisable at $0.72 per share at any time until November 7, 2009, and (iv) 46,500 common share purchase warrants exercisable at $0.72 per share at any time until November 20, 2009.

***Stock Options***

As of March 31, 2009the Company has 9,050,000 outstanding stock options to purchase shares of our common stock, granted pursuant tothe Providence Resources, Inc. 2008 Stock Option Plan, with an        exercise price of $0.20 per optionover a term of ten years from the date of each respective grant.

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***Convertible******Debentures******and Notes***         

As of March 31,2009 the Company’s outstanding convertible debentures and notes are as follows:

During 2008, the Company issued two secured convertible promissory noteson March 4, 2008with interest at 10% per annum. The principal and accrued interest on the notes may be        converted into shares of the Company’s common stockat a conversion price of $0.08 per shareat any time until twoyears from the date of issuance. The principal amounts on the notes are$496,174and $423,188. The Company had one convertible promissory note mature in 2008 which was initially issued on April 29, 2007with interest at 10% per annum. The notewas renewed on April 29, 2008 for a termof two years and        has a principal amount of $1,000,000 with a per share conversion price of $0.08.

During2007, the Company issued seven secured convertible promissory notes in the aggregate amountof $5,000,000with interest at 10% per annum.The principal and accrued interest on the notesmay be converted into shares of the Company’s common stockat any time until three years from the date of issuance. The notes were        issued as follows:one note in the principal amount of $1,000,000 with a per share conversion price, as amended,of $0.08was issued on May 31, 2007, four notes with an aggregate value of $2,500,000 withper        shareconversion pricesof $0.08were issued on August 8, 2007,and two notes with an aggregate value of $500,000 withper shareconversion pricesof $0.08were issued on August 15, 2007. 

During 2005, the Companyissuedseven convertible debentures in the aggregate amount of $3,320,000 with interest at7% per annum. The principal and accrued interest on the notes may be converted into shares of the Company’s common stock at any time until five years from the date of issuance at a conversion price of $0.35. The notes were issued on November 28, 2005.

***Dividends***

The Company has not declared any cash dividends since inception and does not anticipate paying any dividends in the near future. The payment of dividends is within the discretion of the board of directors and will depend on our earnings, capital requirements, financial condition, and other relevant factors. There are no        restrictions that currently limit the Company's ability to pay dividends on its common stock other than those generally imposed by applicable state law.

**Transfer Agent and Registrar**

The Company’s transfer agent and registrar is Interwest Transfer, 1981 E. Murray-Holladay Road, Holladay, Utah, 84117-5164. Interwest’s phone number is (801) 272-9294.

      

**Purchases of Equity Securities made by the Issuer and Affiliated Purchasers**

None.

**Recent Sales of Unregistered Securities**

On December 12, 2008, the Company authorized the issuance of 1,913,336 shares to the holders of five convertible debentures to settle aggregate interest amounts duefrom 2007 and 2008of $287,000        at arevisedconversion rate of $0.15 in reliance ontheexemptions provided by Regulation Sof the Securities Act, as follows:

 

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| ***Holder***                            | ***Principal******($)*** | ***Total Interest                    ($)*** | ***Number o******f Shares*** |
|-----------------------------------------|--------------------------|---------------------------------------------|------------------------------|
| FE Global Leveraged Investments Limited | 400,000                  | 56,000                                      | 373,334                      |
| FE Global Undervalued Investments Ltd.  | 250,000                  | 35,000                                      | 233,334                      |
| FE Global Convertible Investment Ltd.   | 850,000                  | 119,000                                     | 793,334                      |
| Sunshine, Inc.                          | 100,000                  | 7,000                                       | 46,667                       |
| FAGEB AG                                | 1,000,000                | 70,000                                      | 466,667                      |

Regulation S provides generally that any offer or sale that occurs outside of the United States is exempt from the registration requirements of the Securities Act, provided that certain conditions are met. Regulation S has two safe harbors. One safe harbor applies to offers and sales by issuers, securities        professionals involved in the distribution process pursuant to contract, their respective affiliates, and persons acting on behalf of any of the foregoing (the “issuer safe harbor”), and the other applies to resales by persons other than the issuer, securities professionals involved in the distribution process pursuant to contract, their respective affiliates (except certain officers and directors), and persons acting on behalf of any of the forgoing (the “resale safe        harbor”). An offer, sale or resale of securities that satisfied all conditions of the applicable safe harbor is deemed to be outside the United States as required by Regulation S. The distribution compliance period for shares sold in reliance on Regulation S is six months.

The Companycomplied with the exemption requirements of Regulation S by having directed no offeringefforts in the United States, by offering common sharesonlytoofferees who were outside the United States at the time of the offering, and ensuring that the entitiesto whom thecommon shares were issued and        authorized were non-U.S. persons with addresses in foreign countries.

On December 16, 2008 the Company’s board of directors granted,twomillionone hundred thousand(2,100,000) fully vestednon-statutory stock optionsunder the Company’s 2008 Stock        Option Planat an exercise price of $0.20 per sharefor a period of ten years from the date of grantto five individualsinconsiderationof services renderedin reliance on the exemptionsprovided by Section 4(2),Regulation D,and Regulation Sof the Securities Act, as follows:

| ***Name***             | ***Options*** | ***Aggregate Exercise Price (******$******)*** | ***Exemption***     |
|------------------------|---------------|------------------------------------------------|---------------------|
| Markus Mueller         | 700,000       | 140,000                                        | Section 4(2)/Reg. S |
| Nora Coccaro           | 550,000       | 110,000                                        | Section 4(2)/Reg. S |
| Christian Russenberger | 700,000       | 140,000                                        | Section 4(2)/Reg. S |
| Ruairidh Campbell      | 100,000       | 20,000                                         | Section 4(2)/Reg. D |
| Diane Dallyn           | 50,000        | 10,000                                         | Section 4(2)/Reg. S |

The Company complied with the exemption requirements provided by Section 4(2) and Regulation D based on the following factors: (i) the grantswereisolated private        transactionsby the Company which did not involve a public offering; (ii) there were a limited number ofoffereeswho weregranted the Company’s options as considerationfor services rendered(iii) the offereescommitted to hold the options as required by applicable securities laws; (iv) the options were not broken down into smaller denominations; and (v) the negotiations that lead to the grant of the options took place directly between the offereesand the Company.

The Companycomplied with the exemption requirements of Regulation S by having directed no offeringefforts in the United States, by offering common sharesonlytoofferees who were outside the United States at the time of the offering, and ensuring that the entitiesto whom thecommon shares were issued and        authorized were non-U.S. persons with addresses in foreign countries.

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On October 28, 2008, the Company granted Gilbert Burciaga two million (2,000,000) fully vestednon-statutory stock optionsunder the Company’s 2008 Stock Option Planat an exercise price of $0.20 per sharefor a period of ten years from the date of grantas bonus consideration in reliance on the exemption provided by Section 4(2) and Regulation D of the Securities Act.

The Company complied with the exemption requirements provided by Section 4(2) and Regulation D based on the following factors: (i) the grant was an isolated private transaction by the Company which did not involve a public offering; (ii) there was only one offeree who was granted the Company’s options as bonus consideration        (iii) the offeree committed to hold the options as required by applicable securities laws; (iv) the options were not broken down into smaller denominations; and (v) the negotiations that lead to the grant of the options took place directly between the offeree and the Company.

**ITEM 6.     SELECTED FINANCIAL DATA**

Not required.

**ITEM 7****.     MANAGEMENT’S DISCUSSION AND ANALYSIS****OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

This *Management’s Discussion and Analysi**s of Financial Condition and**Results of        Operations*and other parts of this current reportcontain forward-looking statements that involve risks and uncertainties. Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,” “plans,” “predicts,” and similar terms. Forward-looking        statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include but are not limited to those discussed in the subsection entitled *Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition*below. The following discussion should be read in conjunction with our financial statements and notes thereto included in this current report. Our fiscal year end is December 31. 

**Discussion and Analysis**

During the year ended December 31, 2008the Company was involved in (i) evaluating seismic data obtained from the Val Verde leases, (ii) identifying prospective partners for the prospective drilling program, (iii) addressing outstanding issues related to the        Hamilton and Comanche exploration and development program, (iv) entering into aparticipation and joint operating agreement with Elm Ridge, and (vi) satisfying continuous public disclosure requirements.

While Providence Explorationbegan oil and gas drilling operations on our Val Verde leases during the first quarter of 2009, the Companycan provide no assurance that such        operations will produce economically recoverable quantities of oil and gas.Over the next twelve months the Company intends tocomplete the

drilling of asecond exploratory well in Val Verde County and,based upon the results of the first two exploratory        wells,focus on additionaldeep drilling targets for natural gas production.

The Company’s business development strategy is prone to significant risks and uncertainties which could have an immediate impact on its efforts to generate a positive net cash flow and could deter the anticipated expansion of its initial drilling program. Historically, the Company has not generated sufficient cash flow to        sustain operations and has had to rely on debt or equity financing to remain in business. Therefore, we cannot offer that future expectations of oil and gas production will be realizedor that any production will be sufficient to generate the revenue required for our operations. Should we be unable to generate cash flow from our drill program, the Company may be forced to sell assets or seek additional debt or equity        financingas alternatives to the cessation of operations. The success of such measures can in no way be assured.

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**Results of Operations**

***Net Income/Losses***

 

For the period from inception until December 31, 2008 the Company incurred net losses of $44,357,352. Net losses for the yearended December 31, 2008 were $6,238,393as compared to        $22,204,275for theyearended December 31,2007. The decrease in net losses over the comparative periods can be primarily attributed to adecrease in the impairment of capital assets. We have not generated any revenue during the current period.                 We will likely continue to operate at a loss through fiscal 2009and due to the nature of the Company’s oil and gas exploration and development operations cannot determine whether we will ever generate revenues from operations.

 

***General and Administrative******Expenses***

 

General and administrative expenses for the yearended December 31, 2008 were $925,904as compared to $835,602for the        yearended December 31, 2007. The increase in general and administrative expensesinclude financing costs, accounting costs, consulting fees, leases, employment costs, professional fees and costs associated with the preparation of disclosure documentation. We expect general and administrative expenses to decrease in future periods.

***Stock Based Compensation***

Stock based compensation for the year ended December 31, 2008 was $1,710,493 as compared to $285,000 for the year ended December 31, 2007. The increase in stock based compensationover the comparative periods can be primarily attributed to theenactment of our 2008 Stock Option Plan and the subsequentgrant of stock options to our executive officer, our directors and other individuals for services rendered. We expect stock based compensationto decrease in future periods.

***Other Income (Expense******)***

Interest income for the year ended December 31, 2008 increased to $38,121from $25,828 for the year ended December 31, 2007.         

Interest expense for the year ended December 31, 2008 increased to $2,746,454from $1,554,288 for the year ended December 31, 2007.         Impairment ofour oil and gas leases in Comanche and Hamilton Counties for theyear ended December 31, 2008 was$2,000,000as compared to an impairment        of $19,390,826 for the year ended December 31, 2007.          

Debt conversion expense for the year ended December 31, 2008 decreased to $48,671 from $162,444 for the year ended December 31, 2007.          The Company recognizeda gain on thesale of assets in connection with its agreement Elm Ridge for the year ended December 31, 2008 of $1,155,008ascompared to a loss on the disposal of assets of $35,899 for the year ended December 31, 2007.

***Income Tax Expense (Benefit)***

The Company has a prospective income tax benefit resulting from a net operating loss carryforward and start up costs that will offset any future operating profit.

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***Impact of Inflation***

The Company believes that inflation has had an effect on operations due to the increased interest in oil and gas exploration over the last three years which has increased prices for labor, maintenance services and equipment. We believe that we can offset inflationary increases by improving operating efficiencies.

***Capital Expenditures***

The Company has spent significant amounts of capital for the period from February 17, 1993 (inception) to December 31, 2008 on unproved oil and gas properties, pipeline construction, and related exploration costs.

***Liquidity and Capital Resources***

        The Company has been in the exploratorystage since inception and has experienced significant changes in liquidity, capital resources, and stockholders’ equity.

At December 31, 2008, the Company had a working capital surplus of $4,459,369and current assets of $6,672,835thatconsisted of cash on hand of $6,392,364, receivables of $172,971and a note receivable of $107,500. The Company had total assets of $14,032,689as of December 31, 2008 that consisted of current assets andundeveloped oil and gas leasesin Val Verde County.          At December 31, 2008, the Company had current liabilities of $2,213,466, consisting of accounts payable of $1,133,642, accrued expenses of $1,026,324, and related party payables of $53,500. The Company had total liabilities of$8,825,848as of December 31, 2008 that consisted primarily of        convertible debentures in the aggregate amount of$3,320,000, convertible promissory notes of $2,592,382, and notes payable of $700,000.          

Stockholders equity in the Company was $5,055,868as of December 31, 2008.                  For the period from inception until December 31, 2008, the Company’s cash flow used in operating activities was $5,312,358. Cash flows used in operating activities for the year ended December 31, 2008 were $926,450compared to $227,453for the yearended December 31, 2007. The        cash flowused in operating activities during the current period is primarily due to net losses, adjustments from a gain on the disposal of assets andan increase inrelated party receivablesin connection with Elm        Ridge.                  Depreciation, amortization, and impairment for the yearsended December 31, 2008 and 2007 was $2,020,399 and $19,462,036respectively.                 For the period from inception until December 31, 2008, the Company’s cash flow used in investing activities was $11,528,782. Cash flows provided by investing activities for the yearended December 31, 2008 were $6,153,239compared to cash flows used in investing activities of $6,069,257for the yearended December 31, 2007. Cash flows provided by investing activities in the current period are from the sale of a 50% interest in the Val Verde leases to Elm Ridge and payments from notes receivable.                 For the period from inception until December 31, 2008, the Company’s cash flow provided by financing activities was $23,233,504. There were no cash flows provided by financing activities for theyear ended December 31, 2008 compared to $5,936,700for the yearended December 31, 2007.          

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The Company has funded itscash needs from inception primarily through a series of debt and equity transactions, including several private placements. While we believe that our current assets are sufficient to conduct our exploration and development activities        over the next twelve months, no assurances can be given that additional funding, if needed to explore and develop our lease interests, will be available to us on acceptable terms or at all. Our inability to obtain funding, if necessary,would have a material adverse affect on our business.

 

Cash dividends are not expected to be paid in the foreseeable future.                 The Company had no lines of credit or other bank financing arrangements as of December 31, 2008.                  Commitments for future capital expenditures to the Company’s anticipated drill program were material at year-end.                  The Company has a defined benefit plan and contractual commitments with certain of its officers or directors.                  The Company has no current plans for the purchase or sale of any plant or equipment. The Company has no current plans to make any changes in the number of employees. 

      

***Off Balance Sheet Arrangements*** 

As of December 31, 2008, the Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to        stockholders.

 

***Going Concern*** 

The Company’s audit expressed substantial doubt as to the Company’s ability to continue as a going concern as a result of reoccurring losses, lack of revenue generating activities, and an accumulated deficit of $44,357,352as of December 31, 2008. These conditions raise substantial doubt about the Company’s        ability to continue as a going concern.

Management’s plan to address the Company’s ability to continue as a going concern, include the development and prospective production of oil and natural gas operations, and the conversion of outstanding debt to equity. The successful outcome of these activities cannot be determined at this time, and there is no assurance that, if achieved, we would        then have sufficient funds to execute our intended business plan or generate positive operating results.

***Forward Looking Statements and Factors That May Affect Future Results and Financial Condition***

The statements contained in the section titled “*Results of Operations**”*and        *“**Description of Business**”*, with the exception of historical facts, are forward looking statements. A safe-harbor provision may not be applicable to the forward looking statements        made in this current report. Forward looking statements reflect our current expectations and beliefs regarding our future results of operations, performance, and achievements. These statements are subject to risks and uncertainties and are based upon assumptions and beliefs that may or may not materialize. These statements include, but are not limited to, statements concerning: 

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|  | ·      | our anticipated financial performance; |
|--|----------------------------------------|----------------------------------------|

|  | ·      | uncertainties related to oil and gas exploration and development; |
|--|----------------------------------------|-------------------------------------------------------------------|

|  | ·      | our ability to generate revenues through oil and gas production to fund future operations; |
|--|----------------------------------------|--------------------------------------------------------------------------------------------|

|  | ·      | our ability to raise additional capital to fund cash requirements for future operations; |
|--|----------------------------------------|------------------------------------------------------------------------------------------|

|  | ·      | the volatility of the stock market; and |
|--|----------------------------------------|-----------------------------------------|

|  | ·      | general economic conditions. |
|--|----------------------------------------|------------------------------|

We wish to caution readers that ouroperating results are subject to various risks and uncertainties that could cause our actual results to differ materially from those discussed or anticipated, including the factors set forth in the section entitled        “*Risk Factors*”included elsewhere in this report. We also wish to advise readers not to place any undue reliance on the forward looking statements contained in this report, which reflect our beliefs and expectations only as of the date of this report. We assume no        obligation to update or revise these forward looking statements to reflect new events or circumstances or any changes in our beliefs or expectations, other that is required by law.

***Stock-Based Compensation***

** **

We have adopted SFAS No. 123 (revised 2004) (SFAS No. 123R), Share-Based Payment, which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on        the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. In January 2005, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 107, which provides supplemental implementation guidance for SFAS No. 123R. SFAS No. 123R eliminates the ability to account for stock-based compensation transactions using the intrinsic value method under Accounting Principles Board (APB) Opinion No. 25,        Accounting for Stock Issued to Employees, and instead generally requires that such transactions be accounted for using a fair-value-based method. We use the Black-Scholes-Merton (“BSM”) option-pricing model to determine the fair-value of stock-based awards under SFAS No. 123R, consistent with that used for pro forma disclosures under SFAS No. 123, Accounting for Stock-Based Compensation. We have elected the modified prospective transition method as permitted by SFAS No. 123R        and accordingly prior periods have not been restated to reflect the impact of SFAS No. 123R. The modified prospective transition method requires that stock-based compensation expense be recorded for all new and unvested stock options, restricted stock, restricted stock units, and employee stock purchase plan shares that are ultimately expected to vest as the requisite service is rendered beginning on January 1, 2006, the first day of our fiscal year 2006. Stock-based compensation        expense for awards granted prior to January 1, 2006 is based on the grant date fair-value as determined under the pro forma provisions of SFAS No. 123.Prior to the adoption of SFAS No 123R, we measured compensation expense for our employee stock-based compensation plans using the intrinsic value method prescribed by APB Opinion No. 25. We applied the disclosure provisions of SFAS No. 123 as amended by SFAS No.        148, Accounting for Stock-Based Compensation – Transition and Disclosure, as if the fair-value-based method had been applied in measuring compensation expense. Under APB Opinion No. 25, when the exercise price ofouremployee stock options was equal to the market price of the underlying stock on the date of the grant, no compensation        expense was recognized.

We account for equity instruments issued in exchange for the receipt of goods or services fromother than employees in accordance with SFAS No. 123 and the conclusions reached by the Emerging Issues Task Force (“EITF”) in Issue No.        96-18. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by EITF 96-18.

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***Critical Accounting Policies*** 

In the notes to the audited consolidated financial statements for the Company for the year ended December 31, 2008 and 2007 included in this Form 10-Kthe Companydiscussed those accounting policies that are considered to be significant in determining the results of operations and financial        position. The Company’s managementbelievesthat their accounting principles conform to accounting principles generally accepted in the United States of America.

The preparation of financial statements requires management to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. By their nature, these judgments are subject to an inherent degree of uncertainty. On an on-going basis, we evaluate our estimates, including those related to bad debts,        inventories, intangible assets, warranty obligations, product liability, revenue, and income taxes. We base our estimates on historical experience and other facts and circumstances that are believed to be reasonable, and the results form the basis for making judgments about the carrying value of assets and liabilities. The actual results may differ from these estimates under different assumptions or conditions.         

***Revenue Recognition***         Revenues are recorded upon the completion of the services, with the existence of an agreement and where collectability is reasonably assured. Oil and natural gas production revenue, if any, will be recognized at the time and point of sale after the product has been extracted from the ground.

***Recent Accounting Pronouncements***

In November 2008, the Emerging Issues Task Force (“EITF”) issued Issue No. 08-7, *Accounting for Defensive Intangible Assets*(“EITF 08-7”). EITF 08-7 applies to all acquired        intangible assets in which the acquirer does not intend to actively use the asset but intends to hold (lock up) the asset to prevent its competitors from obtaining access to the asset (a defensive asset), assets that the acquirer will never actually use, as well as assets that will be used by the acquirer during a transition period when the intention of the acquirer is to discontinue the use of those assets. EITF 08-7 is effective as of January 1, 2009. The Company does not expect        the adoption of EITF 08-7 to have a material impact on itsconsolidated financial statements. 

The Financial Accounting Standards Board (“FASB”) has issued Statement of Financial Accounting Standards (“SFAS”) No. 163, Accounting for Financial Guarantee Insurance Contracts. SFAS No. 163 clarifies how SFAS No. 60, Accounting and Reporting by Insurance Enterprises, applies to financial guarantee        insurance contracts issued by insurance enterprises, and addresses the recognition and measurement of premium revenue and claim liabilities. It requires expanded disclosures about contracts, and recognition of claim liability prior to an event of default when there is evidence that credit deterioration has occurred in an insured financial obligation. It also requires disclosure about (a) the risk-management activities used by an insurance enterprise to evaluate credit deterioration in        its insured financial obligations, and (b) the insurance enterprise's surveillance or watch list. The Company is currently evaluating the impact of SFAS No. 163.          

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In May 2008, FASB issued FASB Staff Position (“FSP”) APB 14-1, *Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)*(“FSP APB 14-1”). FSP APB 14-1 clarifies that convertible debt instruments that may be settled in cash upon either mandatory or optional conversion (including partial cash settlement) are not addressed by paragraph 12 of APB Opinion No. 14, *“Accounting for Convertible Debt and Debt issued with Stock Purchase Warrants.”*Additionally, FSP APB 14-1 specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. FSP APB 14-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within        those fiscal years. We will adopt FSP APB 14-1 beginning in the first quarter of 2009, and this standard must be applied on a retrospective basis. We are evaluating the impact the adoption of FSP APB 14-1 will have on our consolidated financial position and results of operations.

On May 8, 2008, FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles, which will provide framework for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles        (GAAP) for nongovernmental entities. With the issuance of SFAS No. 162, the GAAP hierarchy for nongovernmental entities will move from auditing literature to accounting literature. The Company is currently assessing the impact SFAS No. 162 will have on its financial position and results of operations.

In April 2008, the FASB issued FASB Staff Position (“FSP”) No. FAS 142-3,*Determination of the Useful Life of Intangible Assets.*FSP 142-3 amends the factors        that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS 142”). FSP 142-3 is intended to improve the consistency between the useful life of an intangible asset determined under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141R and other GAAP. FSP 142-3 is effective as        of January 1, 2009. The Company does not expect the adoption of FSP 142-3 to have a material impact on the consolidated financial statements. 

In March 2008, the FASB issued SFAS No. 161, *Disclosures about Derivative Instruments and Hedging Activities*(“SFAS 161”). SFAS 161 is intended to help investors better        understand how derivative instruments and hedging activities affect an entity’s financial position, financial performance and cash flows through enhanced disclosure requirements. SFAS 161 is effective as of January 1, 2009. The Company does not expect the adoption of SFAS 161 to have a material impact on the consolidated financial statements. 

**ITEM 7****A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

Not required.

**ITEM 8.     F****INANCIAL STATEMENTS****AND SUPPLEMENTARY DATA**

Ouraudited financial statements for the yearsended December 31, 2008and 2007are attached hereto as F-1 through F-28. 

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**PROVIDENCE RESOURCES****, INC.**

**(A****n****Exploratory****Stage Company)        INDEX TO****CONSOLIDATED****FINANCIAL STATEMENTS        December 31, 200****8****and 200****7**

                                                                                                 *Page*

Report of Independent Registered Public Accounting Firm     F-2

Consolidated BalanceSheets                                                F-3

Consolidated Statements of Operations                                 F-4         

Consolidated Statements of Stockholders’ Equity(Deficit)and Comprehensive Loss     F-5         

Consolidated Statements of Cash Flows                                F-11         

Notes to Consolidated Financial Statements                           F-12

     **                    **

F-1

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors        Providence Resources, Inc. and Subsidiaries        Austin, Texas         

We have audited the accompanying balance sheets of Providence Resources, Inc. and Subsidiaries (An Exploratory Stage Company) at December 31, 2008 and 2007 and the related statements of operations and comprehensive loss, stockholders' equity (deficit) and cash flows for the years then ended and for the cumulative period from        February 17, 1993 (date of inception) to December 31, 2008. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor        were we engaged to perform, an audit of its internal controls over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence        supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.                 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Providence Resources, Inc. and Subsidiaries at December 31, 2008 and 2007 and the results of its operations and comprehensive loss and its cash flows for the years then ended and from February 17, 1993 (inception) through December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.                 The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has recorded significant losses from operations, and is dependent on financing to continue operations, which together raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include        any adjustments that might result from the outcome of this uncertainty.

/s/ Chisholm, Bierwolf, Nilson & Morrill, LLC         Chisholm, Bierwolf, Nilson & Morrill, LLC        Bountiful, Utah        March 30, 2009         

F-2

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| PROVIDENCE RESOURCES, INC.(AnExploratoryStage Company)                    CONSOLIDATED BALANCE SHEETS

December 31, 2008 and 2007 |
|-----------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                              |   |   |   |   |   |
| ASSETS                                                                                                                            |   |   | 2008 |   | 2007 |
|                                                                                                                              |   |   |   |   |   |
| Current assets:                                                                                                                   |   |   |   |   |   |
| Cash                                                                                                                              |   | $ | 6,392,364 |   | 1,180,147 |
| Receivables                                                                                                                       |   |   | 172,971 |   | - |
| Note receivable                                                                                                                   |   |   | 107,500 |   | 350,000 |
| Prepaid expenses                                                                                                                  |   |   | - |   | 34,168 |
| Total current assets                                                                                                              |   |   | 6,672,835 |   | 1,564,315 |
|                                                                                                                              |   |   |   |   |   |
| Unproved oil and gas properties, not subject to amortization                                                                      |   |   | 7,359,854 |   | 14,115,585 |
| Loan origination fees, net of amortization of $73,250                                                                             |   |   | - |   | 20,399 |
| Total assets                                                                                                                      |   | $ | 14,032,689 |   | 15,700,299 |
|                                                                                                                              |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                              |   |   |   |   |   |
|                                                                                                                              |   |   |   |   |   |
| Current liabilities:                                                                                                              |   |   |   |   |   |
| Accounts payable                                                                                                                  |   | $ | 1,133,642 |   | 1,082,222 |
| Accrued expenses                                                                                                                  |   |   | 1,026,324 |   | 539,413 |
| Related party payables                                                                                                            |   |   | 53,500 |   | 135,500 |
| Short-term note payable                                                                                                           |   |   | - |   | 500,000 |
| Short-term convertible promissory notes                                                                                           |   |   | - |   | 780,821 |
| Current portion of long-term notes payable                                                                                        |   |   | - |   | 773,925 |
| Total current liabilities                                                                                                         |   |   | 2,213,466 |   | 3,811,881 |
|                                                                                                                              |   |   |   |   |   |
| Convertible debentures                                                                                                            |   |   | 3,320,000 |   | 3,320,000 |
| Long-term convertible promissory notes                                                                                            |   |   | 2,592,382 |   | 1,075,695 |
| Long-term notes payable                                                                                                           |   |   | 700,000 |   | 200,000 |
| Total liabilities                                                                                                                 |   |   | 8,825,848 |   | 8,407,576 |
|                                                                                                                              |   |   |   |   |   |
| Minority interest                                                                                                                 |   |   | 150,973 |   | 150,973 |
|                                                                                                                              |   |   |   |   |   |
| Commitments                                                                                                                       |   |   |   |   |   |
|                                                                                                                              |   |   |   |   |   |
| Stockholders' equity:                                                                                                             |   |   |   |   |   |
| Preferred stock, $.0001 par value, 25,000,000 shares                                                                              |   |   |   |   |   |
| authorized, no shares issued and outstanding                                                                                      |   |   | - |   | - |
| Common stock, $.0001 par value, 250,000,000 shares authorized,                                                                    |   |   |   |   |   |
| 62,174,454and 59,161,118 shares issued and outstanding, respectively                                                              | 6,217 |   | 5,916 |
| Additional paid-in capital                                                                                                        |   |   | 49,407,003 |   | 45,240,221 |
| Accumulated other comprehensive income                                                                                            |   |   | - |   | 14,572 |
| Deficit accumulated during the exploratorystage                                                                                   |   |   | (44,357,352) |   | (38,118,959) |
|                                                                                                                              |   |   |   |   |   |
| Total stockholders' equity                                                                                                        |   |   | 5,055,868 |   | 7,141,750 |
|                                                                                                                              |   |   |   |   |   |
| Total liabilities and stockholders' equity                                                                                        |   | $ | 14,032,689 |   | 15,700,299 |

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

F-3

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| PROVIDENCE RESOURCES, INC.(AnExploratoryStage Company)                    CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 2008 and 2007 and Cumulative Amounts |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                           |   |   |   |   |   |   |
|                                                                                                                                                                           |   |   |   |   |   | Inception on |
|                                                                                                                                                                           |   |   |   |   |   | February 17, |
|                                                                                                                                                                           |   |   |   | 1993through |
|                                                                                                                                                                           |   | 2008 |   | 2007 |   | December 31, 2008 |
|                                                                                                                                                                           |   |   |   |   |   |   |
| Sales                                                                                                                                                                          | $ | - |   | - |   | 350 |
| Cost of sales                                                                                                                                                                  |   | - |   | - |   | 25,427 |
|                                                                                                                                                                           |   |   |   |   |   |   |
| Gross profit                                                                                                                                                                   |   | - |   | - |   | 25,777 |
|                                                                                                                                                                           |   |   |   |   |   |   |
| General and administrative expenses                                                                                                                                            |   | 2,636,397 |   | 1,120,602 |   | 11,212,423 |
|                                                                                                                                                                           |   |   |   |   |   |   |
| Loss from operations                                                                                                                                                           |   | (2,636,397) |   | (1,120,602) |   | (11,186,646) |
|                                                                                                                                                                           |   |   |   |   |   |   |
| Other income (expense):                                                                                                                                                        |   |   |   |   |   |   |
| Interest income                                                                                                                                                                |   | 38,121 |   | 25,828 |   | 512,433 |
| Interest expense                                                                                                                                                               |   | (2,746,454) |   | (1,554,288) |   | (9,744,382) |
| Impairment of capital assets                                                                                                                                                   |   | (2,000,000) |   | (19,390,826) |   | (21,390,826) |
| Debt conversion expense                                                                                                                                                        |   | (48,671) |   | (162,444) |   | (211,115) |
| Gain (loss) on saleof assets                                                                                                                                                   |   | 1,155,008 |   | (35,899) |   | 1,119,109 |
|                                                                                                                                                                           |   |   |   |   |   |   |
| Loss before minority interest, income taxes,and                                                                                                                                |   |   |   |   |   |   |
| discontinued operations                                                                                                                                                        |   | (6,238,393) |   | (22,238,231) |   | (40,901,427) |
|                                                                                                                                                                           |   |   |   |   |   |   |
| Minority interest                                                                                                                                                              |   | - |   | 33,956 |   | 53,854 |
|                                                                                                                                                                           |   |   |   |   |   |   |
| Loss before income taxes and discontinued operations                                                                                                                           | (6,238,393) |   | (22,204,275) |   | (40,847,573) |
|                                                                                                                                                                           |   |   |   |   |   |   |
| Provision for income taxes                                                                                                                                                     |   | - |   | - |   | - |
|                                                                                                                                                                           |   |   |   |   |   |   |
| Loss before discontinued operations                                                                                                                                            |   | (6,238,393) |   | (22,204,275) |   | (40,847,573) |
|                                                                                                                                                                           |   |   |   |   |   |   |
| Loss from discontinued operations, net of tax                                                                                                                                  |   | - |   | - |   | (3,407,279) |
|                                                                                                                                                                           |   |   |   |   |   |   |
| Net loss before cumulative effect of accounting change                                                                                                                         | (6,238,393) |   | (22,204,275) |   | (44,254,852) |
|                                                                                                                                                                           |   |   |   |   |   |   |
| Cumulative effect of accounting change, net of tax                                                                                                                             |   | - |   | - |   | (102,500) |
|                                                                                                                                                                           |   |   |   |   |   |   |
| Net loss                                                                                                                                                                       |   | (6,238,393) |   | (22,204,275) |   | (44,357,352) |
|                                                                                                                                                                           |   |   |   |   |   |   |
| Loss per common share from continuing operations -                                                                                                                             |   |   |   |   |   |   |
| basic and diluted                                                                                                                                                              | $ | (0.10) |   | (0.38) |   |   |
| Loss per common share from discontinued operations -                                                                                                                           |   |   |   |   |   |   |
| basic and diluted                                                                                                                                                              | $ | - |   | - |   |   |
| Loss per common share -basic and diluted                                                                                                                                       | $ | (0.10) |   | (0.38) |   |   |
| Weighted average common shares outstanding -                                                                                                                                   |   |   |   |   |   |   |
| basic and diluted                                                                                                                                                              |   | 59,917,703 |   | 58,845,406 |   |   |

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

 

 

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| PROVIDENCE RESOURCES, INC.(AnExploratoryStage Company)                    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) AND COMPREHENSIVE LOSS

February 17, 1993 ( Date of Inception) to December 31, 2008 |        |                 |        |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|--------|
|                                                                                                                                                                                                                    |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  |  |  |
|                                                                                                                                                                                                                    |   |            |   |   |   |   |   |   |   |   |   |   |   | Deficit |   |   |  |  |  |
|                                                                                                                                                                                                                    |   |            |   |   |   |   |   |   |   |   | Accumulated                    Other                    Comprehensive

Income | Accumulated |   |   |  |  |  |
|                                                                                                                                                                                                                    |   |            |   |   |   |   |   |   |   | Additional | During the |   |   |  |  |  |
|                                                                                                                                                                                                                    |   | Preferred Stock |   | Common Stock |   | Paid-in |  Development |   |   |   |
|                                                                                                                                                                                                                    |   | Shares          |   | Amount |   | Shares |   | Amount |   | Capital | Stage |   | Total |  |  |  |
|                                                                                                                                                                                                                    |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |  |  |  |  |
| Balance at February 17, 1993 (date of inception)                                                                                                                                                                        |   | -               | $      | - |   | 60,000 | $ | 6 | $ | 1,194 | $ | - | $ | - | $ | 1,200 |  |  |  |
|                                                                                                                                                                                                                    |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  |  |  |
| Net loss                                                                                                                                                                                                                |   | -               |   | - |   | - |   | - |   | - |   | - |   | (200) |   | (200) |  |  |  |
| Balance at December 31, 1993                                                                                                                                                                                            |   | -               |   | - |   | 60,000 |   | 6 |   | 1,194 |   | - |   | (200) |   | 1,000 |  |  |  |
|                                                                                                                                                                                                                    |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  |  |  |
| Net loss                                                                                                                                                                                                                |   | -               |   | - |   | - |   | - |   | - |   | - |   | (240) |   | (240) |  |  |  |
| Balance at December 31, 1994                                                                                                                                                                                            |   | -               |   | - |   | 60,000 |   | 6 |   | 1,194 |   | - |   | (440) |   | 760 |  |  |  |
|                                                                                                                                                                                                                    |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  |  |  |
| Net loss                                                                                                                                                                                                                |   | -               |   | - |   | - |   | - |   | - |   | - |   | (240) |   | (240) |  |  |  |
| Balance at December 31, 1995                                                                                                                                                                                            |   | -               |   | - |   | 60,000 |   | 6 |   | 1,194 |   | - |   | (680) |   | 520 |  |  |  |
|                                                                                                                                                                                                                    |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  |  |  |
| Net loss                                                                                                                                                                                                                |   | -               |   | - |   | - |   | - |   | - |   | - |   | (240) |   | (240) |  |  |  |
| Balance at December 31, 1996                                                                                                                                                                                            |   | -               |   | - |   | 60,000 |   | 6 |   | 1,194 |   | - |   | (920) |   | 280 |  |  |  |
|                                                                                                                                                                                                                    |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  |  |  |
| Issuance of common stock for cash                                                                                                                                                                                       |   | -               |   | - |   | 32,068 |   | 3 |   | 80,269 |   | - |   | - |   | 80,272 |  |  |  |
| Net loss                                                                                                                                                                                                                |   | -               |   | - |   | - |   | - |   | - |   | - |   | (79,765) |   | (79,765) |  |  |  |
| Balance at December 31, 1997                                                                                                                                                                                            |   | -               |   | - |   | 92,068 |   | 9 |   | 81,463 |   | - |   | (80,685) |   | 787 |  |  |  |
|                                                                                                                                                                                                                    |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  |  |  |
| Issuance of common stock for:                                                                                                                                                                                           |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  |  |  |
| Services                                                                                                                                                                                                                |   | -               |   | - |   | 6,500 |   | 1 |   | 12,999 |   | - |   | - |   | 13,000 |  |  |  |
| Cash                                                                                                                                                                                                                    |   | -               |   | - |   | 26,170 |   | 3 |   | 26,167 |   | - |   | - |   | 26,170 |  |  |  |
| Additional shares due to rounding                                                                                                                                                                                       |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  |  |  |
| after stock split                                                                                                                                                                                                       |   | -               |   | - |   | 300 |   | 1 |   | (1) |   | - |   | - |   | - |  |  |  |
| Net loss                                                                                                                                                                                                                |   | -               |   | - |   | - |   | - |   | - |   | - |   | (36,896) |   | (36,896) |  |  |  |
| Balance at December 31, 1998                                                                                                                                                                                            |   | -               |   | - |   | 125,038 |   | 14 |   | 120,628 |   | - |   | (117,581) |   | 3,061 |  |  |  |
|                                                                                                                                                                                                                    |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |  |  |  |
|                                                                                                                                                                                                                    |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |  |  |  |

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| Balance forward, December 31, 1998            | -      |   | -      |   | 125,038 |      | 14     |   | 120,628 |      | -      |   | (117,581) |        | 3,061  |
|-----------------------------------------------|--------|--------|--------|--------|---------|-----------|--------|--------|---------|-----------|--------|--------|-----------|-------------|--------|
|                                          |   |   |   |   |    |      |   |   |    |      |   |   |      |        |   |   |
| Rounding                                      |   | -      |   | -      |    | (38)      |   | -      |    | -         |   | -      |      | -           |   | - |
| Issuance of common stock for:                 |   |   |   |   |    |      |   |   |    |      |   |   |      |        |   |   |
| Cash                                          |   | -      |   | -      |    | 22,500    |   | 2      |    | 899,998   |   | -      |      | -           |   | 900,000 |
| Assets                                        |   | -      |   | -      |    | 128,012   |   | 13     |    | 1,020,452 |   | -      |      | -           |   | 1,020,465 |
| Net book value of Healthbridge, Inc.          | -      |   | -      |   | 20,500  |      | 2      |   | (2)     |      | -      |   | -         |        | -      |
| Dividends-in-kind                             |   | -      |   | -      |    | 50,202    |   | 5      |    | 2,008,091 |   | -      |      | (2,008,096) |   | - |
| Debt                                          |   | -      |   | -      |    | 242,500   |   | 23     |    | 999,978   |   | -      |      | -           |   | 1,000,001 |
| Reverse acquisition with 

Healthbridge Inc.  |   |   |   |   |    |      |   |   |    |      |   |   |      |        |   |
| and Wattmonitor, Inc.                         |   | -      |   | -      |    | 147,500   |   | 15     |    | 798,046   |   | -      |      | -           |   | 798,061 |
| Common stock offering costs                   |   | -      |   | -      |    | -         |   | -      |    | (105,000) |   | -      |      | -           |   | (105,000) |
| Reverse acquisition, retirement of            |   |   |   |   |    |      |   |   |    |      |   |   |      |        |   |   |
| old sharesof Wattmonitor, Inc.                |   | -      |   | -      |    | (147,500) |   | (15)   |    | (915,627) |   | -      |      | 117,581     |   | (798,061) |
| Share adjustment for shares previously issued |   | -      |   | -      |    | 150       |   | -      |    | -         |   | -      |      | -           |   | - |
| Net loss                                      |   | -      |   | -      |    | -         |   | -      |    | -         |   | -      |      | (3,196,076) |   | (3,196,076) |
| Balance at December 31, 1999                  |   | -      |   | -      |    | 588,864   |   | 60     |    | 4,826,564 |   | -      |      | (5,204,172) |   | (377,549) |
|                                          |   |   |   |   |    |      |   |   |    |      |   |   |      |        |   |   |
| Issuance of common stock for:                 |   |   |   |   |    |      |   |   |    |      |   |   |      |        |   |   |
| Debt                                          |   | -      |   | -      |    | 34,950    |   | 4      |    | 349,496   |   | -      |      | -           |   | 349,500 |
| Services                                      |   | -      |   | -      |    | 11,000    |   | 1      |    | 71,199    |   | -      |      | -           |   | 71,200 |
| Cash                                          |   | -      |   | -      |    | 19,500    |   | 2      |    | 194,998   |   | -      |      | -           |   | 195,000 |
| Accounts payable                              |   | -      |   | -      |    | 7,500     |   | 1      |    | 74,999    |   | -      |      | -           |   | 75,000 |
| Common stock offering costs                   |   | -      |   | -      |    | -         |   | -      |    | (15,600)  |   | -      |      | -           |   | (15,600) |
| Stock option compensation expense             |   | -      |   | -      |    | -         |   | -      |    | 6,000     |   | -      |      | -           |   | 6,000 |
| Net loss                                      |   | -      |   | -      |    | -         |   | -      |    | -         |   | -      |      | (816,545)   |   | (816,545) |
| Balance at December 31, 2000                  |   | -      |   | -      |    | 661,814   |   | 67     |    | 5,507,656 |   | -      |      | (6,020,717) |   | (512,994) |
|                                          |   |   |   |   |    |      |   |   |    |      |   |   |      |        |   |   |

F-6

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| Balance forward, December 31, 2000 | -      |   | -      |   | 661,814 |    | 67     |   | 5,507,656 |      | -      |   | (6,020,717) |        | (512,994) |
|------------------------------------|--------|--------|--------|--------|---------|---------|--------|--------|-----------|-----------|--------|--------|-------------|-------------|-----------|
|                               |   |   |   |   |    |    |   |   |      |      |   |   |        |        |      |   |
| Issuance of common stock for:      |   |   |   |   |    |    |   |   |      |      |   |   |        |        |      |   |
| Services                           |   | -      |   | -      |    | 84,400  |   | 9      |      | 258,941   |   | -      |        | -           |      | 258,950 |
| Accounts payable                   |   | -      |   | -      |    | 13,750  |   | 1      |      | 59,999    |   | -      |        | -           |      | 60,000 |
| Debt                               |   | -      |   | -      |    | 41,603  |   | 4      |      | 249,614   |   | -      |        | -           |      | 249,618 |
| Net loss                           |   | -      |   | -      |    | -       |   | -      |      | -         |   | -      |        | (422,008)   |      | (422,008) |
| Balance at December 31, 2001       |   | -      |   | -      |    | 801,567 |   | 81     |      | 6,076,210 |   | -      |        | (6,442,725) |      | (366,434) |
|                               |   |   |   |   |    |    |   |   |      |      |   |   |        |        |      |   |
| Comprehensive loss:                |   |   |   |   |    |    |   |   |      |      |   |   |        |        |      |   |
| Net loss                           |   | -      |   | -      |    | -       |   | -      |      | -         |   | -      |        | (1,221,203) |      | (1,221,203) |
| Other comprehensive income-        |   |   |   |   |    |    |   |   |      |      |   |   |        |        |      |   |
| cumulative foreign currency        |   |   |   |   |    |    |   |   |      |      |   |   |        |        |      |   |
| translation adjustment             |   | -      |   | -      |    | -       |   | -      |      | -         |   | 4,869  |        | -           |      | 4,869 |
| Total comprehensive loss           |   |   |   |   |    |    |   |   |      |      |   |   |        |        |      | (1,216,334) |
| Issuance of common stock for:      |   |   |   |   |    |    |   |   |      |      |   |   |        |        |      |   |
| Intellectual property              |   | -      |   | -      |    | 37,500  |   | 4      |      | 224,996   |   | -      |        | -           |      | 225,000 |
| Services                           |   | -      |   | -      |    | 143,000 |   | 14     |      | 806,086   |   | -      |        | -           |      | 806,100 |
| Accounts payable and services      |   | -      |   | -      |    | 5,000   |   | 1      |      | 10,999    |   | -      |        | -           |      | 11,000 |
| Stock option compensation expense  |   | -      |   | -      |    | -       |   | -      |      | 12,500    |   | -      |        | -           |      | 12,500 |
| Balance at December 31, 2002       |   | -      |   | -      |    | 987,067 |   | 99     |      | 7,130,791 |   | 4,869  |        | (7,663,928) |      | (528,169) |
|                               |   |   |   |   |    |    |   |   |      |      |   |   |        |        |      |   |

F-7

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----

| Balance forward, December 31, 2002 | -      |   | -      |   | 987,067 |      | 99     |   | 7,130,791 |      | 4,869  |   | (7,663,928) |        | (528,169) |
|------------------------------------|--------|--------|--------|--------|---------|-----------|--------|--------|-----------|-----------|--------|--------|-------------|-------------|-----------|
|                               |   |   |   |   |    |      |   |   |      |      |   |   |        |        |      |   |
| Comprehensive loss:                |   |   |   |   |    |      |   |   |      |      |   |   |        |        |      |   |
| Net loss                           |   | -      |   | -      |    | -         |   | -      |      | -         |   | -      |        | (232,560)   |      | (232,560) |
| Other comprehensive loss -         |   |   |   |   |    |      |   |   |      |      |   |   |        |        |      |   |
| cumulative foreign currency        |   |   |   |   |    |      |   |   |      |      |   |   |        |        |      |   |
| translation adjustment             |   | -      |   | -      |    | -         |   | -      |      | -         |   | (806)  |        | -           |      | (806) |
| Total comprehensive loss           |   |   |   |   |    |      |   |   |      |      |   |   |        |        |      | (233,366) |
| Issuance of common stock for:      |   |   |   |   |    |      |   |   |      |      |   |   |        |        |      |   |
| Cash                               |   | -      |   | -      |    | 314,165   |   | 32     |      | 102,801   |   | -      |        | -           |      | 102,833 |
| Services                           |   |   |   |   |    | 2,100     |   | -      |      | 3,888     |   | -      |        | -           |      | 3,888 |
| Debt                               |   |   |   |   |    | 1,537,048 |   | 154    |      | 475,583   |   | -      |        | -           |      | 475,737 |
| Common stock offering costs        |   | -      |   | -      |    | -         |   | -      |      | (2,000)   |   | -      |        | -           |      | (2,000) |
| Issuance of common stock           |   |   |   |   |    |      |   |   |      |      |   |   |        |        |      |   |
| options for services               |   | -      |   | -      |    | -         |   | -      |      | 15,000    |   | -      |        | -           |      | 15,000 |
| after reverse split                |   | -      |   | -      |    | 65        |   | -      |      | -         |   | -      |        | -           |      | - |
| Balance at December 31, 2003       |   | -      |   | -      |    | 2,840,445 |   | 285    |      | 7,726,063 |   | 4,063  |        | (7,896,488) |      | (166,077) |
|                               |   |   |   |   |    |      |   |   |      |      |   |   |        |        |      |   |
| Comprehensive loss:                |   |   |   |   |    |      |   |   |      |      |   |   |        |        |      |   |
| Net loss                           |   | -      |   | -      |    | -         |   | -      |      | -         |   | -      |        | (311,757)   |      | (311,757) |
| Other comprehensive income-        |   |   |   |   |    |      |   |   |      |      |   |   |        |        |      |   |
| cumulative foreign currency        |   |   |   |   |    |      |   |   |      |      |   |   |        |        |      |   |
| translation adjustment             |   | -      |   | -      |    | -         |   | -      |      | -         |   | 1,250  |        | -           |      | 1,250 |
| Total comprehensive loss           |   |   |   |   |    |      |   |   |      |      |   |   |        |        |      | (310,507) |
| Issuance of common stock for:      |   |   |   |   |    |      |   |   |      |      |   |   |        |        |      |   |
| Debt conversion                    |   | -      |   | -      |    | 2,735,555 |   | 273    |      | 197,673   |   | -      |        | -           |      | 197,946 |
| Services                           |   |   |   |   |    | 1,050,000 |   | 105    |      | 80,395    |   |   |        |        |      | 80,500 |
| Balance at December 31, 2004       |   | -      |   | -      |    | 6,626,000 |   | 663    |      | 8,004,131 |   | 5,313  |        | (8,208,245) |      | (198,138) |
|                               |   |   |   |   |    |      |   |   |      |      |   |   |        |        |      |   |

F-8

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----

| Balance forward, December 31, 2004         | -      |   | -      |   | 6,626,000  |       | 663    |   | 8,004,131  |       | 5,313  |   | (8,208,245) |         | (198,138)  |
|--------------------------------------------|--------|--------|--------|--------|------------|------------|--------|--------|------------|------------|--------|--------|-------------|--------------|------------|
|                                       |   |   |   |   |       |       |   |   |       |       |   |   |        |         |       |   |
| Comprehensive loss:                        |   |   |   |   |       |       |   |   |       |       |   |   |        |         |       |   |
| Net loss                                   |   | -      |   | -      |       | -          |   | -      |       | -          |   | -      |        | (944,857)    |       | (944,857) |
| Other comprehensive income-                |   |   |   |   |       |       |   |   |       |       |   |   |        |         |       |   |
| cumulative foreign currency                |   |   |   |   |       |       |   |   |       |       |   |   |        |         |       |   |
| translation adjustment                     |   | -      |   | -      |       | -          |   | -      |       | -          |   | 9,057  |        | -            |       | 9,057 |
| Total comprehensive loss                   |   |   |   |   |       |       |   |   |       |       |   |   |        |         |       | (935,800) |
| Issuance of common stock for:              |   |   |   |   |       |       |   |   |       |       |   |   |        |         |       |   |
| Cash                                       |   | -      |   | -      |       | 7,520,000  |   | 752    |       | 2,005,248  |   | -      |        | -            |       | 2,006,000 |
| Debt                                       |   | -      |   | -      |       | 2,334,841  |   | 233    |       | 349,992    |   | -      |        | -            |       | 350,226 |
| Issuance of warrants for finders fees      |   | -      |   | -      |       | -          |   | -      |       | 191,400    |   | -      |        | -            |       | 191,400 |
| Common stock offering costs                |   | -      |   | -      |       | -          |   | -      |       | (125,400)  |   | -      |        | -            |       | (125,400) |
| Balance at December 31, 2005               |   | -      |   | -      |       | 16,480,841 |   | 1,649  |       | 10,425,371 |   | 14,370 |        | (9,153,102)  |       | 1,288,288 |
|                                       |   |   |   |   |       |       |   |   |       |       |   |   |        |         |       |   |
| Comprehensive loss:                        |   |   |   |   |       |       |   |   |       |       |   |   |        |         |       |   |
| Net loss                                   |   | -      |   | -      |       | -          |   | -      |       | -          |   | -      |        | (6,761,584)  |       | (6,761,584) |
| Other comprehensive income-                |   |   |   |   |       |       |   |   |       |       |   |   |        |         |       |   |
| cumulative foreign currency                |   |   |   |   |       |       |   |   |       |       |   |   |        |         |       |   |
| translation adjustment                     |   | -      |   | -      |       | -          |   | -      |       | -          |   | 190    |        | -            |       | 190 |
| Total comprehensive loss                   |   |   |   |   |       |       |   |   |       |       |   |   |        |         |       | (6,761,394) |
| Issuance of common stock for:              |   |   |   |   |       |       |   |   |       |       |   |   |        |         |       |   |
| Acquisition of Providence Exploration      | -      |   | -      |   | 20,000,000 |       | 2,000  |   | 15,998,000 |       | -      |   | -           |         | 16,000,000 |
| Cash                                       |   | -      |   | -      |       | 13,369,920 |   | 1,337  |       | 8,020,615  |   | -      |        | -            |       | 8,021,952 |
| Debt                                       |   | -      |   | -      |       | 2,004,778  |   | 200    |       | 2,071,014  |   | -      |        | -            |       | 2,071,214 |
| Issuance of warrants with equity financing |   | -      |   | -      |       | -          |   | -      |       | 3,409,330  |   | -      |        | -            |       | 3,409,330 |
| Issuance of warrants for finders fees      |   | -      |   | -      |       | -          |   | -      |       | 122,743    |   | -      |        | -            |       | 122,743 |
| Balance at December 31, 2006               |   | -      |   | -      |       | 51,855,539 |   | 5,185  |       | 40,047,072 |   | 14,560 |        | (15,914,684) |       | 24,152,133 |
|                                       |   |   |   |   |       |       |   |   |       |       |   |   |        |         |       |   |

F-9

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----

| Balance forward, December 31, 2006                     | -      |   | -      |   | 51,855,539 |       | 5,185  |   | 40,047,072 |       | 14,560 |     | (15,914,684) |         | 24,152,133 |
|--------------------------------------------------------|--------|--------|--------|--------|------------|------------|--------|--------|------------|------------|--------|----------|--------------|--------------|------------|
|                                                   |   |   |   |   |       |       |   |   |       |       |   |     |         |         |       |   |
| Comprehensive loss:                                    |   |   |   |   |       |       |   |   |       |       |   |     |         |         |       |   |
| Net loss                                               |   | -      |   | -      |       | -          |   | -      |       | -          |   | -        |         | (22,204,275) |       | (22,204,275) |
| Other comprehensive income-                            |   |   |   |   |       |       |   |   |       |       |   |     |         |         |       |   |
| cumulative foreign currency                            |   |   |   |   |       |       |   |   |       |       |   |     |         |         |       |   |
| translation adjustment                                 |   | -      |   | -      |       | -          |   | -      |       | -          |   | 12       |         | -            |       | 12 |
| Total comprehensive loss                               |   |   |   |   |       |       |   |   |       |       |   |     |         |         |       | (22,204,263) |
| Issuance of common stock for:                          |   |   |   |   |       |       |   |   |       |       |   |     |         |         |       |   |
| Cash                                                   |   | -      |   | -      |       | 1,987,500  |   | 199    |       | 236,501    |   | -        |         | -            |       | 236,700 |
| Services                                               |   |   |   |   |       | 1,450,000  |   | 145    |       | 284,855    |   | -        |         | -            |       | 285,000 |
| Debt                                                   |   |   |   |   |       | 3,868,079  |   | 387    |       | 580,126    |   | -        |         | -            |       | 580,513 |
| Discount on convertible notes                          |   | -      |   | -      |       | -          |   | -      |       | 4,091,667  |   | -        |         | -            |       | 4,091,667 |
| Balance at December 31, 2007                           |   | -      |   | -      |       | 59,161,118 |   | 5,916  |       | 45,240,221 |   | 14,572   |         | (38,118,959) |       | 7,141,750 |
|                                                   |   |   |   |   |       |       |   |   |       |       |   |     |         |         |       |   |
| Comprehensive loss:                                    |   |   |   |   |       |       |   |   |       |       |   |     |         |         |       |   |
| Net loss                                               |   | -      |   | -      |       | -          |   | -      |       | -          |   | -        |         | (6,238,393)  |       | (6,238,393) |
| Other comprehensive loss -                             |   |   |   |   |       |       |   |   |       |       |   |     |         |         |       |   |
| cumulative foreign currency                            |   |   |   |   |       |       |   |   |       |       |   |     |         |         |       |   |
| translation adjustment                                 |   | -      |   | -      |       | -          |   | -      |       | -          |   | (14,572) |         | -            |       | (14,572) |
| Total comprehensive loss                               |   |   |   |   |       |       |   |   |       |       |   |     |         |         |       | (6,252,965) |
| Issuance of common stock for:                          |   |   |   |   |       |       |   |   |       |       |   |     |         |         |       |   |
| Services                                               |   | -      |   | -      |       | 1,100,000  |   | 110    |       | 219,890    |   | -        |         | -            |       | 220,000 |
| Interest on convertible                     debentures |   | -      |   | -      |       | 1,913,336  |   | 191    |       | 286,809    |   | -        |         | -            |       | 287,000 |
| Stock compensation - stock options                     |   | -      |   | -      |       | -          |   | -      |       | 1,490,493  |   | -        |         | -            |       | 1,490,493 |
| Discount on convertible notes                          |   | -      |   | -      |       | -          |   | -      |       | 2,169,590  |   | -        |         | -            |       | 2,169,590 |
| Balance at December 31, 2008                           |   | -      | $      | -      |       | 62,174,454 | $      | 6,217  | $          | 49,407,003 | $      | -        | $            | (44,357,352) | $          | 5,055,868 |

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

 

 

F-10

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----

 

 

| PROVIDENCE RESOURCES, INC.                                         |
|--------------------------------------------------------------------|
| (AnExploratoryStage Company)                                       |
| CONSOLIDATED STATEMENTS OF CASH FLOWS                              |
| Years ended December 31, 2008 and 2007 and Cumulative Amounts      |
|                                                               |   |   |   |   |   | Inception on |
|                                                               |   |   |   |   |   | February 17, |
|                                                               |   |   |   | 1993 through |
|                                                               |   | 2008 |   | 2007 |   | December 31, 2008 |
| Cash flows from operating activities:                              |   |   |   |   |   |   |
| Net loss                                                           | $ | (6,238,393) |   | (22,204,275) |   | (44,357,352) |
| Adjustments to reconcile net loss to net cash                      |   |   |   |   |   |  |
| used in operating activities:                                      |   |   |   |   |   |   |
| Shares issued for services                                         |   | 220,000 |   | 285,000 |   | 645,000 |
| Shares issued with financing                                       |   | - |   | - |   | 3,532,073 |
| Shares issued for debt and accrued interest conversion             |   | - |   | 178,214 |   | 599,761 |
| Additional value of shares issued for debt and services conversion |   | - |   | 152,300 |   | 3,176,831 |
| Options issued for services                                        |   | 1,490,493 |   | - |   | 1,490,493 |
| Amortization of conversion rights on debt                          |   | 1,986,094 |   | 948,184 |   | 2,934,278 |
| Depreciation, amortization,and impairment                          |   | 2,020,399 |   | 19,462,036 |   | 21,647,455 |
| Minority interest                                                  |   | - |   | (33,956) |   | (53,854) |
| Discontinued operations                                            |   | - |   | - |   | 2,542,150 |
| Gain on write-off of liabilities                                   |   | - |   | - |   | (96,270) |
| Gain (loss) on saleof assets                                       |   | (1,155,008) |   | 35,899 |   | (1,119,109) |
| (Increase) decrease in:                                            |   |   |   |   |   |   |
| Accounts receivable and prepaid expenses                           |   | 34,168 |   | 207 |   | 144,893 |
| Inventory                                                          |   | - |   | 374,515 |   | 374,515 |
| Related party receivable                                           |   | (172,971) |   | - |   | (172,971) |
| Increase (decrease) in:                                            |   |   |   |   |   |   |
| Accounts payable                                                   |   | 51,420 |   | 128,419 |   | 1,730,666 |
| Accrued expenses                                                   |   | 919,348 |   | 385,504 |   | 1,515,271 |
| Related party payables                                             |   | (82,000) |   | 60,500 |   | 153,812 |
| Net cash used in operating activities                              |   | (926,450) |   | (227,453) |   | (5,312,358) |
|                                                               |   |   |   |   |   |   |
| Cash flows from investing activities:                              |   |   |   |   |   |   |
| Advances to Providence Exploration prior to acquisition            |   | - |   | - |   | (8,886,761) |
| Cash of Providence Exploration on acquisition date                 |   | - |   | - |   | 73,271 |
| Acquisition of intangible assets                                   |   | - |   | - |   | (150,398) |
| Acquisition of property and equipment                              |   | (1,302,061) |   | (6,069,257) |   | (10,019,578) |
| Proceeds from sales of assets                                      |   | 7,212,800 |   | - |   | 7,212,800 |
| Payments received on notes receivable                              |   | 242,500 |   | - |   | 242,500 |
| Issuance of notes receivable                                       |   | - |   | - |   | (616) |
| Net cash provided by (used in)investing activities                 |   | 6,153,239 |   | (6,069,257) |   | (11,528,782) |
|                                                               |   |   |   |   |   |   |
| Cash flows from financing activities:                              |   |   |   |   |   |   |
| Proceeds from notes payable                                        |   | - |   | 700,000 |   | 1,392,999 |
| Proceeds from convertible promissory notes payable                 |   | - |   | 5,000,000 |   | 5,000,000 |
| Issuance of common stock                                           |   | - |   | 236,700 |   | 13,347,979 |
| Commissions paid to raise convertible debentures                   |   | - |   | - |   | (41,673) |
| Minority investment in subsidiary                                  |   | - |   | - |   | 136,915 |
| Proceeds from (payments for) convertible debentures                |   | - |   | - |   | 3,654,173 |
| Payments on notes payable                                          |   | - |   | - |   | (256,889) |
| Net cash provided by financing activities                          |   | - |   | 5,936,700 |   | 23,233,504 |
|                                                               |   |   |   |   |   |   |
| Change in accumulated other comprehensive income                   |   | (14,572) |   | 12 |   | - |
| Net increase (decrease) in cash                                    |   | 5,212,217 |   | (359,998) |   | 6,392,364 |
| Cash, beginning of period                                          |   | 1,180,147 |   | 1,540,145 |   | - |
| Cash, end of period                                                | $ | 6,392,364 |   | 1,180,147 |   | 6,392,364 |

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

F-11

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----

PROVIDENCE RESOURCES, INC.            (An Exploratory Stage Company)

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2008and            2007**

Note 1 — Organization and Summary of Significant Accounting Policies

Organization 

The consolidated financial statements consist of Providence Resources, Inc. (“Providence Resources”) (formerly Healthbridge, Inc.) and its wholly owned subsidiaries, Healthbridge AG (“Healthbridge AG”), and Providence Exploration LLC (“Providence Exploration”). Providence        Exploration has two wholly owned subsidiaries, PDX Drilling LLC (“PDX”) and Providence Resources LLC, and a ninety percent interest inComanche County Pipeline,LLC. Collectively, these entities are referred to as “the Company”.                 Providence Resources, Inc. was organized on February 17, 1993 (date of inception) under the laws of the State of Texas. Healthbridge AG was formed as a German subsidiary. PDX was formed to acquire drilling and service rigs for the purpose of drilling oil and gas wells in Texas. Providence Resources LLC, was formed to acquire leases in Texas for oil and gas exploration and development. Comanche County Pipeline, LLC was formed for constructing an oil and gas pipeline in Comanche County,        Texas.         

Providence Exploration is involved in explorationactivities for the recoveryof oil and gas from the Ellenburger carbonate, Strawn carbonate, and Pennsylvanian-Wolfcamp        sandstone reservoirs in Val Verde County. The Val Verde County prospect includesapproximately 16,184 gross acres of oil and gas leases. Providence Exploration has up to a 50% working interest and its joint venture operating partner, Elm RidgeExploration Company LLC(Elm Ridge)has a 50% working interest in the Val Verde County prospect.                 The Company is considered an exploratorystage company as defined in SFAS No. 7.          

Principles of Consolidation 

The consolidated financial statements include the accounts of Providence Resources and its subsidiaries. All significant intercompany balances and transactions have been eliminated.          

Use of Estimates in the Preparation of Financial Statements 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the        reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents 

For purposes of the statements of cash flows, the Company considers all highly liquid investments with an original or current maturity of three months or less to be cash equivalents. 

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PROVIDENCE RESOURCES, INC.            (An Exploratory Stage Company)

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2008and            2007**

Note 1 — Organization and Summary of Significant Accounting Policies(continued)

Property and Equipment 

Property and equipment are stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred. Costs of major renewals or betterments are capitalized over the remaining useful lives of the related assets. Depreciation is computed by using the straight-line method. The cost of property disposed        of and related accumulated depreciation is removed from the accounts at the time of disposal, and gain or loss is reflected in operations.          

During 2007, the Company disposed of all its equipment and recorded a depreciation expense of $9,911.

Unproved Oil and Gas Properties, Not Subject to Amortization         

The Company follows the full cost method of accounting for exploration and development of oil and gas properties whereby all costs in acquiring, exploring and developing properties are capitalized, including an estimate of abandonment costs, net of estimated equipment salvage costs, and subjected to a quarterly        impairment test, based on the estimated net realizable value of the property. Management records the impairment of itsunproved oil and gas propertiesat the time impairment appears to exist.         

No costs related to production, general corporate overhead, or similar activities have been capitalized. As of December 31, 2008, the Company only has capitalized costs of unproved properties acquired and related exploration costs. Leasehold costs are depleted based on the units-of-production method based on        estimated proved reserves. No proved reserves currently exist for the Company and therefore no depletion has been taken as of December 31, 2008and 2007.

Convertible Notes Payable

The fair value of the conversion option on a convertible note payable is calculated using the intrinsic value method and recorded as a discount on the face value of the note. This amount is amortized using the straight-line method over the term of the note.

Loan Origination Fees

Loanorigination fees are amortized on a straight line basis over the 36 month term of the loans.

Income Taxes

Deferred income taxes arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of the assets and liabilities to which they relate.        Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.

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PROVIDENCE RESOURCES, INC.            (An Exploratory Stage Company)

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2008and            2007**

Note 1 — Organization and Summary of Significant Accounting Policies(continued)

Income Taxes(continued)

The Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109.” This statement clarifies the accounting for uncertainty in income tax positions. The Company has filed income tax returns in the U.S.        federal jurisdiction and in certain states.                 The Company adopted the provisions of FIN 48 on January 1, 2007. The Company did not make any adjustment to opening retained earnings as a result of the implementation. The Company recognizes interest accrued related to unrecognized tax benefits,along with penalties,in        operating expenses. During the yearsended December 31, 2008 and 2007, the Company did not recognize any interest and penalties relating to income taxes. The Company did not have any accrual for the payment of interest and penalties at December 31, 2008.

Concentration of Credit Risk 

The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits.The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash        equivalents.The amount in excess of federally insured limits at December 31, 2008 was approximately $5,700,000.         

Translation of Foreign Currencies

Assets and liabilities of the Company’s foreign subsidiary are translated into U.S. dollars at the applicable exchange rates at year-end. Net gains or losses resulting from the translation of the Company’s assets and liabilities are reflected as a separate component of stockholders’ equity. A negative translation        impact on stockholders’ equity reflects a current relative U.S. dollar value higher than at the point in time that assets were actually acquired in a foreign currency. A positive translation impact would result from a U.S. Dollar weaker in value than at the point in time foreign assets were acquired. 

Income and expense items are translated at the weighted average rate of exchange (based on when transactions actually occurred) during the year.          

Revenue Recognition

Revenues are recorded upon the completion of the services, with the existence of an agreement and where collectibility is reasonably assured. Oil and natural gas production revenue will be recognized at the time and point of sale after the product has been extracted from the ground. 

Stock-Based Compensation 

The Company has stock-based employee compensation plans. The Company accounts for stock-based compensation in accordance with Statement of Financial Accounting Standards (SFAS) 123R, *Share-Based        Payment*. This statement requires the Company to recognize compensation cost based on the grant date fair value of options granted. 

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PROVIDENCE RESOURCES, INC.            (An Exploratory Stage Company)

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2008and            2007**

Note 1 — Organization and Summary of Significant Accounting Policies(continued)

Earnings Per Share 

The computation of basic earnings per common share is based on the weighted average number of shares outstanding during each year.                 The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the period plus the common stock equivalents which would arise from the exercise of stock options outstanding using the treasury stock method and the average market price per share during the period. Common stock equivalents are not included in the diluted earnings per share calculation when their effect is antidilutive. In 2008 and 2007 the Company’s common        stock equivalents were antidilutive. Common stock equivalents that could potentially dilute earnings per sharein the futureare the common stock options and warrants(see Note 14)and convertible debts (see Notes 4        through 8).

Reclassifications 

Certain amounts in the 2007 financial statements may have been reclassified to conform to the 2008 presentation.          

Recent Accounting Pronouncements

In November 2008, the Emerging Issues Task Force (“EITF”) issued Issue No. 08-7, *Accounting for Defensive Intangible Assets*(“EITF 08-7”). EITF 08-7 applies to        all acquired intangible assets in which the acquirer does not intend to actively use the asset but intends to hold (lock up) the asset to prevent its competitors from obtaining access to the asset (a defensive asset), assets that the acquirer will never actually use, as well as assets that will be used by the acquirer during a transition period when the intention of the acquirer is to discontinue the use of those assets. EITF 08-7 is effective as of January 1, 2009. The Company        does not expect the adoption of EITF 08-7 to have a material impact on the consolidated financial statements.          

The Financial Accounting Standards Board (“FASB”) has issued Statement of Financial Accounting Standards (“SFAS”) No. 163, Accounting for Financial Guarantee Insurance Contracts. SFAS No. 163 clarifies how SFAS No. 60, Accounting and Reporting by Insurance Enterprises, applies to financial guarantee        insurance contracts issued by insurance enterprises, and addresses the recognition and measurement of premium revenue and claim liabilities. It requires expanded disclosures about contracts, and recognition of claim liability prior to an event of default when there is evidence that credit deterioration has occurred in an insured financial obligation. It also requires disclosure about (a) the risk-management activities used by an insurance enterprise to evaluate credit deterioration in        its insured financial obligations, and (b) the insurance enterprise's surveillance or watch list. The Company is currently evaluating the impact of SFAS No. 163.          

In May 2008, FASB issued FASB Staff Position (“FSP”) APB 14-1, *Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)*(“FSP APB 14-1”). FSP APB 14-1 clarifies that convertible debt instruments that may be settled in cash upon either mandatory or optional conversion (including partial cash settlement) are not addressed by paragraph 12 of APB Opinion No. 14, “Accounting for Convertible Debt and Debt issued with Stock Purchase Warrants.” 

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PROVIDENCE RESOURCES, INC.            (An Exploratory Stage Company)

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2008and            2007**

Note 1 — Organization and Summary of Significant Accounting Policies (continued)

**Recent Accounting Pronouncements(continued)**

Additionally, FSP APB 14-1 specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. FSP APB 14-1 is effective for financial        statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. We will adopt FSP APB 14-1 beginning in the first quarter of 2009, and this standard must be applied on a retrospective basis. We are evaluating the impact the adoption of FSP APB 14-1 will have on our consolidated financial position and results of operations.         

On May 8, 2008, FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles, which will provide framework for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles        (GAAP) for nongovernmental entities. With the issuance of SFAS No. 162, the GAAP hierarchy for nongovernmental entities will move from auditing literature to accounting literature. The Company is currently assessing the impact SFAS No. 162 will have on its financial position and results of operations.

In April 2008, the FASB issued FASB Staff Position (“FSP”) No. FAS 142-3,*Determination of the Useful Life of Intangible Assets.*FSP 142-3 amends the factors        that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS 142”). FSP 142-3 is intended to improve the consistency between the useful life of an intangible asset determined under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141R and other GAAP. FSP 142-3 is effective as        of January 1, 2009. The Company does not expect the adoption of FSP 142-3 to have a material impact on the consolidated financial statements. 

In March 2008, the FASB issued SFAS No. 161, *Disclosures about Derivative Instruments and Hedging Activities*(“SFAS 161”). SFAS 161 is intended to help investors better        understand how derivative instruments and hedging activities affect an entity’s financial position, financial performance and cash flows through enhanced disclosure requirements. SFAS 161 is effective as of January 1, 2009. The Company does not expect the adoption of SFAS 161 to have a material impact on the consolidated financial statements. 

Note 2 — Going Concern 

        As of December 31, 2008, the Company’s revenue generating activities have not generated sufficient funds for profitable operations, and the Companyhas negative working capital, negative cash flows from operations, andhas incurred losses ofapproximately$44,000,000 since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern.         

We anticipate that additional funding will be required in the next twelve months and that it will be in the form of equity financing from the sale of our common stock. However, we do not have any financing arranged and we cannot provide investors with firm assurance that we will be able to raise sufficient funding from the sale of        our common stock to fund our plan of operations.

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PROVIDENCE RESOURCES, INC.            (An Exploratory Stage Company)

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2008and            2007**

Note 3 — Note Receivable 

The note receivable is from Central Basin Oil Investments, Inc. (CBOI). The note bears interest at 6% and is secured by a vehicle and drilling rigs sold to CBOI. The note is currently in default and is therefore due on demand.

Note 4– Short-Term Note Payable 

At December 31, 2007, the Company had a twelve month note payable with Global Convertible Megatrend LTD in the amount of $500,000. The note was unsecured and principal and accrued interest were payable in full on February 23, 2008. Interest accrued at a rate of 10% per annum. Accrued interest payable was convertible to common        shares at $0.35 per share. The note matured and was renewed fora term of two years (see Note 8). Accrued interest at maturity was not paid and is included on the Balance Sheet under the caption “Accrued expenses”. 

Note 5– Short-Term Convertible Promissory Notes

At December 31, 2007, the Company had a twelve month convertible promissory note with Miller Energy LLC with a face value of $1,000,000, an unamortized discount of $219,179, and a net book value of $780,821 as seen in the balance sheet. The note was secured by certain seismic information and other assets with principal and accrued        interest payable in full on April 29, 2008. Interest accrued at a rate of 10% per annum. Accrued interest payable was convertible to common shares at $0.15 per share. The note matured in 2008 and was renewed fora term of two years (see Note 7). Accrued interest at maturity was not paid and is included on the Balance Sheet under the caption “Accrued expenses”. 

Note 6– Convertible Debentures

The Company has issued seven convertible debenture certificates for the total principal sum of $3,320,000 due in full with accrued and unpaid interest on November 30, 2010. The interest at a rate of 7.0% per annum is payable on a semi-annual basis. The holders of the debentures have the right to convert all or        part of the principal and accrued interest into common shares of the Company at $0.35 per share at any time prior to maturity. The convertible debentures are secured by substantially all of the Company’s assets consisting of all tangible and intangible property.         

On December 12, 2008, the interest accrued on five debentures was converted into shares of common stock at $0.15 per share. The Company issued 1,913,336 shares for $287,000 of interest owed.

On December 1, 2007, the interest accrued on seven debentures was partially converted into shares of common stock at between $0.15and $0.35 per share. The Company issued 994,516 shares for $178,214 of interest owed. 

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PROVIDENCE RESOURCES, INC.            (An Exploratory Stage Company)

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2008and            2007**

Note 7– Long-Term Convertible Promissory Notes

Long-term convertible promissory notes consisted of the following:

|                                                                                                                                                                                           |   | 2008        |   | 2007        |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|--------|-------------|
| Convertible Promissory Note Payable – Global Project Finance AG, secured, payable in full on May 31, 2010including interest at 10%, convertible at $0.08per common share.                | $      | 1,000,000   |   | 1,000,000   |
|                                                                                                                                                                                           |   |        |   |        |
| Convertible Promissory Note Payable – Global Convertible Megatrend Ltd., secured, payable in full on August 8, 2010including interest at 10%, convertible at $0.08 per common share.     |   | 1,400,000   |   | 1,400,000   |
|                                                                                                                                                                                           |   |        |   |        |
| Convertible Promissory Note Payable – Golden Beach Company Ltd., secured, payable in full on August 8, 2010 including interest at 10%, convertible at $0.08 per common share.            |   | 100,000     |   | 100,000     |
|                                                                                                                                                                                           |   |        |   |        |
| Convertible Promissory Note Payable – CR Innovations AG, secured, payable in full on August 8,2010 including interest at 10%, convertible at $0.08 per common share.                     |   | 600,000     |   | 600,000     |
|                                                                                                                                                                                           |   |        |   |        |
| Convertible Promissory Note Payable – Global Project Finance AG, secured, payable in full on August 8, 2010 including interest at 10%, convertible at $0.08 per common share.            |   | 400,000     |   | 400,000     |
|                                                                                                                                                                                           |   |        |   |        |
| Convertible Promissory Note Payable – Global Undervalued Investment Ltd., secured, payable in full on August 15, 2010including interest at 10%, convertible at $0.08 per common share.   |   | 250,000     |   | 250,000     |
|                                                                                                                                                                                           |   |        |   |        |
| Convertible Promissory Note Payable – FE Global Leveraged Investment Ltd., secured, payable in full on August 15, 2010 including interest at 10%, convertible at $0.08 per common share. |   | 250,000     |   | 250,000     |
|                                                                                                                                                                                           |   |        |   |        |
| Convertible Promissory Note Payable – Miller Energy LLC, secured, payable in full on April 29, 2010 including interest at 10%, convertible at $0.08 per common share.                    |   | 1,000,000   |   | -           |
|                                                                                                                                                                                           |   |        |   |        |
| Convertible Promissory Note Payable – FAGEB AG, secured, payable in full on March 4, 2010 including interest at 12%, convertible at $0.08                    per common share.           |   | 496,174     |   | -           |
|                                                                                                                                                                                           |   |        |   |        |
| Convertible Promissory Note Payable – Global Convertible Megatrend Ltd., secured, payable in full on March 4, 2010 including interest at 12%, convertible at $0.08 per common share.     |   | 423,188     |   | -           |
|                                                                                                                                                                                           |   | 5,919,362   |   | 4,000,000   |
| Less unamortized discount                                                                                                                                                                      |   | (3,326,980) |   | (2,924,305) |
|                                                                                                                                                                                           | $      | 2,592,382   |   | 1,075,695   |

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PROVIDENCE RESOURCES, INC.            (An Exploratory Stage Company)

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2008and            2007**

Note 7– Long-Term Convertible Promissory Notes(continued)                 The notes listed above are secured by:         

|  | ·      | All seismic data obtained in connection with the 3D Seismic Project Proposal and Agreement between the Company and TRNCO Petroleum Corporation which seismic data may not be shared with any third party without the express written consent of the holder of the note. |
|--|----------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | Any and all proceeds arising from or attributable to the assets. |
|--|----------------------------------------|------------------------------------------------------------------|

The fair value of the conversion options on the long-term promissory notes are $3,326,980and $2,924,305 at December 31, 2008 and 2007, respectively, and are calculated using the intrinsic value method and were recorded as discounts on the face values of the        notes. These amounts are amortized using the straight-line method over the term of the notes. In 2008 and 2007, the Company recorded $1,986,094and $500,696 as interest expense due to amortization of the discounts.

Note 8– Long-Term Notes Payable

Long-term notes payable consisted of the following:

|                                                                                                                                                                                                                                          |   | 2008    |   | 2007      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|--------|-----------|
| Note Payable - FAGEB AG, secured by drilling equipment, payable in quarterly installments of $25,119 through July 31, 2008, including interest at 12%.                                                                                        | $      | -       |   | 156,515   |
|                                                                                                                                                                                                                                          |   |    |   |      |
| Note Payable - Global Convertible Megatrend LTD., secured by drilling equipment, payable in quarterly installments of $50,238 through July 31, 2008, including interest at 12%.                                                               |   | -       |   | 352,608   |
|                                                                                                                                                                                                                                          |   |    |   |      |
| Note Payable - FAGEB AG, secured by drilling equipment, payable in quarterly installments of $37,722 through September 25, 2008, including interest at 12%.                                                                                   |   | -       |   | 264,802   |
|                                                                                                                                                                                                                                          |   |    |   |      |
| Note Payable – Bluemont Investment Ltd, payable in full by August 27, 2010,including interest at 10%.                                                                                                                                   |   | 200,000 |   | 200,000   |
|                                                                                                                                                                                                                                          |   |    |   |      |
| Note Payable - Global Convertible Megatrend Ltd., unsecured, principal payable in full on February 23, 2010, interest at 10% and payable at the end of each fiscal quarter, accrued interest convertible to common shares at $0.08 per share. |   | 500,000 |   | -         |
|                                                                                                                                                                                                                                          |   |    |   |      |
|                                                                                                                                                                                                                                          |   | 700,000 |   | 973,925   |
| Less current portion                                                                                                                                                                                                                          |   | -       |   | (773,925) |
|                                                                                                                                                                                                                                          |   |    |   |      |
|                                                                                                                                                                                                                                          | $      | 700,000 |   | 200,000   |

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PROVIDENCE RESOURCES, INC.            (An Exploratory Stage Company)

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2008and            2007**

Note 9– Related Party Payables

Related party payables consist of amounts due to directors of the Company for consulting fees and were $53,500 and $135,500 at December 31, 2008 and 2007, respectively.

Note 10— Related Party Transactions 

The Company entered into an agreement with Markus Mueller, a director of the Company for consulting services. The agreement had an automatic renewal provision unless terminated by either party. During 2008 and 2007, the Company recognized consulting expense of $22,500 and $45,000 respectively. The agreement was        terminated on March 31, 2008, and the Company issued 500,000 shares of common stock at $0.15 per share in satisfaction of amounts due totaling an aggregate of $75,000. Fair value of the shares issued was $100,000. The excess ($25,000) was recorded as a Debt Conversion Expense.        The Company has entered into an agreement with Nora Coccaro, a director of the Company, for consulting services. The agreement has an automatic renewal provision unless terminated by either party. During the years ended December 31, 2008 and 2007, the Company recognized consulting expense of $96,000 and $109,500 respectively. 

The Company has an agreement with Gil Burciaga as the Company’s president, CEO, and director. The agreement provides for an annual base salary of $150,000, incentive stock options of 1,700,000, tenure stock options of 5,650,000, and performance stock options if he successfully meets certain performance requirements. The term        of the agreement is for four years. During 2008 and 2007, the Company recognized consulting expensesof $150,000 and $75,000, respectively to Gil Burciaga.During2008,the        Company’s board of directors authorized a cash bonus of $250,000 to Mr. Burciaga.

On December 16, 2008 the Company’s board of directors authorized1,950,000fully vestednon-statutory stock        optionsas consideration for services renderedunder the Company’s 2008 Stock Option Plan to the non-executive Companydirectors. The exercise price per share is $0.20 exercisable ten years from the date of grant.

Note 11— Supplemental Cash Flow Information 

Actual amounts paid for interest and income taxes are as follows:

|         |   | 2008   |   | 2007   |
|--------------|--------|--------|--------|--------|
|         |   |   |   |   |
| Interest     | $      | -      |   | -      |
| Income taxes | $      | -      |   | -      |

During the year ended December 31, 2007, the Company issued 1,450,000 shares of common stock valued at $285,000 for consulting and legal services. The Company recorded an additional interest and financing expense of $22,500 to reflect the value of the shares issued upon conversion in excess of the debt and interest        amounts.

During the year ended December 31, 2007, the Company issued 994,516 shares of common stock to extinguish $178,214 in accrued interest on convertible debentures. 

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PROVIDENCE RESOURCES, INC.            (An Exploratory Stage Company)

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2008and            2007**

Note 11— Supplemental Cash Flow Information(continued)

During the year ended December 31, 2007, the principal amount of a $250,000 convertible debenture to Global Convertible Megatrend Ltd. and $12,357 of accrued interest were converted into shares of common stock at $0.10 per share. After applying a 10% bonus, the Company issued 2,873,563 shares of common stock to extinguish $287,356        of debt consisting of $250,000 of principal repayment and $37,356 in accrued interest and bonus. The Company recorded compensation expense of $139,944 to reflect the value of the shares issued upon conversion in excess of the debt and interest amounts.                 During year ended December 31, 2007, the Company issued 1,987,500 shares of common stock for total proceeds of $236,700.                  During the year ended December 31, 2007, the Company recorded $4,091,667 of discount on promissory notes to value the conversion options as calculated using the intrinsic value method.

During the year ended December 31, 2008, the Company issued 500,000 shares of common stock to Markus Mueller, a director of the Company, at $0.15 per share in satisfaction of amounts due for consulting services totaling an aggregate of $75,000. Fair value of shares issued was $100,000. The excess ($25,000) was recorded as a Debt        Conversion Expense.                 During year ended December 31, 2008, the Company entered into an agreement with Edward Moses for his services as a director. For his services rendered, the Company issued 100,000 shares of common stock in satisfaction of amounts due of $20,000.                  During year ended December 31, 2008, the Company entered into an agreement with Bill Purves for his advisory services. For his services rendered, the Company issued 500,000 shares of common stock in satisfaction of amounts due $100,000.                  During the year ended December 31, 2008, the Company recorded $2,169,590of discount on promissory notes to value the conversion options as calculated using the intrinsic value method.

During the year ended December 31, 2008, the Company issued 1,913,336 shares of common stock to extinguish $287,000 in accrued interest on convertible debentures.

Note 12– Income Taxes

The difference between income taxes at statutory rates and the amount presented in the financial statements is a result of the following: 

|                                  |   |   |        |      |        | Years Ended December 31, |         | Cumulative |
|---------------------------------------|--------|--------|-------------|-----------|-------------|--------------------------|--------------|------------|
|                                  |   |   |        |      |        | 2008                     |         | 2007       |   | Amounts |
|                                  |   |   |        |      |        |                     |         |       |   |   |
| Federal tax benefit at statutory rate |   | $      | (2,120,000) |      | (7,549,000) |                     | (14,390,000) |
| Change in valuation allowance         |   |   |        | 2,120,000 |        | 7,549,000                |         | 14,390,000 |
|                                  |   |   |        |      | $           | -                        |         | -          |   | - |

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PROVIDENCE RESOURCES, INC.            (An Exploratory Stage Company)

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2008and            2007**

Note 12– Income Taxes(continued)

Deferred tax assets are as follows:

|                             |   |   |       |         |       |         |   |   |
|----------------------------------|--------|--------|------------|--------------|------------|--------------|--------|--------|
|                             |   |   |       |         |       | 2008         |   | 2007   |
|                             |   |   |       |         |       |         |   |   |
| Net operating loss carryforwards |   | $      | 14,390,000 |         | 12,270,000 |
| Valuation allowance              |   |   |       | (14,390,000) |       | (12,270,000) |
|                             |   |   |       |         |       |         |   |   |
|                             |   |   |       |         | $          | -            |   | -      |
|                             |   |   |       |         |       |         |   |   |

The Company has net operating loss carryforwards of approximately $44,000,000, which begin to expire in the year 2014. The amount of net operating loss carryforwards that can be used in any one year will be limited by significant changes in the ownership of the Company and by the applicable tax laws which are in effect at the time        such carryforwards can be utilized.

Note 13— Preferred Stock 

The Company’s preferred stock may have such rights, preferences, and designations and may be issued in such series as determined by the Board of Directors. No shares were issued and outstanding at December 31, 2008. 

         

Note 14– Common Stock Options and Warrants 

Common stock options and warrants are as follows:         

|                                    |   |      |   |      |   |        |   |     |   | Exercise  |
|-----------------------------------------|--------|-----------|--------|-----------|--------|-------------|--------|----------|--------|-----------|
|                                    |   |      |   |      |   | Number of   |   | Price    |
|                                    |   |      |   |      |   | Options     |   | Warrants |   | Per Share |
| Outstanding at January 1, 2007 and 2008 |   | -         |   | 7,267,650 | $      | 0.30 - 1.00 |
| Granted                                 |   |      |   |      |   | 9,050,000   |   | -        | $      | 0.20      |
| Outstanding at December 31, 2008        |   | 9,050,000 |   | 7,267,650 | $      | 0.20 - 1.00 |

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PROVIDENCE RESOURCES, INC.            (An Exploratory Stage Company)

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2008and            2007**

Note 14– Common Stock Options and Warrants(continued)

The following assumptions were used for the Black-Scholes valuation of the options granted in 2008:

| Risk-free interest rate  |   | 2.25% - 2.53% |
|--------------------------|--------|---------------|
| Expected life of options |   | 10 years      |
| Annualized volatility    |   | 55%- 107%     |
| Dividend rate            |   |          |   | - |

The weighted average fair value of each option granted during 2008 ranged fromapproximately $ 0.12to $0.20.The following table summarizes information about common stock options and warrants outstanding at December 31, 2008:

| Outstanding    |   | Exercisable        |
|----------------|--------|--------------------|
| Exercise Price |   | Number Outstanding |   | Weighted Average Remaining Contractual Life (Years) |   | Weighted Average Exercise Price |   | Number Exercisable |   | Weighted Average Exercise Price |
|           |   |               |   |   |
|           |   |               |   |   |
|           |   |               |   |   |
|           |   |               |   |   |
|           |   |               |   |   |   |   |   |   |   |   |
| 0.20           |   | 9,050,000          |   | 9.7 |   | 0.20 |   | 9,050,000 |   | 0.20 |
| 0.30           |   | 348,000            |   | 2.0 |   | 0.30 |   | 348,000 |   | 0.30 |
| 0.72           |   | 234,690            |   | 1.0 |   | 0.72 |   | 234,690 |   | 0.72 |
| 1.00           |   | 6,684,960          |   | 1.0 |   | 1.00 |   | 6,684,960 |   | 1.00 |
| $ 0.20 - 1.00  |   | 16,317,650         |   | 5.85 |   | $ 0.20 - 1.00 |   | 16,317,650 |   | $ 0.20 - 1.00 |

Note 15– Commitments and Contingencies

In 2008, the Company entered into a prospect participation and joint operating agreement with Elm Ridge, whereby Elm Ridge acquired a 50% interest in certain leases. Under the agreement the Company received a payment of $7,212,800 (including a credit for the $100,000 paid as a non-refundable option) and will be carried on the first        two wells by Elm Ridge for $2,000,000.          

The Company has a royalty commitment of 25% of net revenue on certain of its oil leases.

The Harding Company (“Harding”) has filed a complaint against the Company for amounts remaining due for drilling wells in Comanche and Hamilton Counties and for the pipeline to these dry wells under a Joint Exploration Agreement.         

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PROVIDENCE RESOURCES, INC.            (An Exploratory Stage Company)

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2008and            2007**

Note 15 – Commitments and Contingencies(continued)

The Company filed a counterclaim against Harding and an original claim against Abram Janz (“Janz”) that seeks damages for fraud, negligent misrepresentation, breach of contract, and breach of fiduciary duty arising out of Harding’s and Janz’s solicitation of the Company to invest in a drilling and        development venture in Comanche and Hamilton Counties. The Company believes that it will be successful in its defense of the Harding claims and in pursuing its counterclaim against Harding and Janz.                  At December 31, 2008 and 2007,the Company had accounts payable to Harding of approximately $1,061,000 and $1,061,000, respectively.

The Company maintains limited office space in Austin, Texas for which itpaysno rent.          

Note 16— Fair Value of Financial Instruments 

The Company’s financial instruments consist of cash, receivables, accounts payable,and notes payable. The carrying amount of these items approximates fair value because of their short-term nature and the notes payable        bear interest at the market interest rate. 

Note 17– Impairment of Capital Assets

During 2007,management determined that an impairment of long-lived assets had occurred due to unsuccessful drilling efforts that decreased the carrying values of the Company’s oil and gas leases, allowed lease terms to        expire,and rendered the oil and gas pipeline unnecessary. Accordingly, the Company recorded impairment charges of $17,881,092 and $1,509,734 on the leases and pipeline,respectively. During 2008, the Company recorded an impairment charge of $2,000,000 which was the capitalized        cost of Comanche and Hamilton County leases that expired on their own terms.

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**Supplemental Oil and Gas Information – FAS69**

The following unaudited disclosures on standardized measures of discounted cash flows and changes therein relating to proved oil and gas reserves are determined in accordance with United States Statements of Financial Accounting Standards No. 69 “Disclosures About Oil and Gas Producing Activities”.        

*Standardized Measure of Discounted Future Net Cash Flows and Changes Therein*

In calculating the standardized measure of discounted future net cash flows, year-end constant prices and cost assumptions were applied to the Company’s annual future production from proved reserves to determine cash inflows. Future production and development costs are based on constant price assumptions and assume the        continuation of existing economic, operating and regulatory conditions. Future income taxes are calculated by applying statutory income tax rates to future pre-tax cash flows after provision for the tax cost of oil and natural gas properties based upon existing laws and regulations. The discount was computed by application of a 10 percent discount factor to the future net cash flows. The calculation of the standardized measure of discounted future net cash flows is based upon discounted        future net cash flows prepared by the Company’s independent qualified reserve evaluators in relation to the reserves they respectively evaluated, and adjusted by the Company to account for management’s estimate obligations and future income taxes. The Company cautions that the discounted future net cash flows relating to proved oil and gas reserves are an indication of neither the fair market value of the Company’s oil and gas properties, nor of the future net cash        flows expected to be generated from such properties. The discounted future net cash flows do not include the fair market value of exploratory properties and probable or possible oil and gas reserves, nor is consideration given to the effect of anticipated future changes in crude oil and natural gas prices, development, asset retirement and production costs, and possible changes to tax and royalty regulations. The prescribed discount rate of 10 percent may not appropriately reflect        future interest rates. The Company’s projections should not be interpreted as being equivalent to fair market value.

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PROVIDENCE RESOURCES, INC.            (An Exploratory Stage Company)

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2008and            2007**

**Supplemental Oil and Gas Information – FAS69 (continued)**

**Net Proved Reserves***(1, 2)*

|                            |   |   |   |          |   | Natural Gas              |   | Crude oil and Natural |
|---------------------------------|--------|--------|--------|---------------|--------|--------------------------|--------|-----------------------|
|                            |   |   |   |          |   | *(millions of*           |   | Gas Liquids           |
| Net proved reserves             |   |   |   | *cubic feet)* |   | *(thousands of barrels)* |
|                            |   |   |   |          |   |                     |   |                  |   |   |
| December 31, 2006               |   |   |   | -             |   |                     |   | -                     |
| Purchase of reserves in place   |   |   |   | -             |   |                     |   | -                     |
| Productions                     |   |   |   |          |   | -                        |   |                  |   | - |
| Adjustment for uneconomic wells |   |   |   | -             |   |                     |   | -                     |
|                            |   |   |   |          |   |                     |   |                  |   |   |
| December 31, 2007 and 2008      |   |   |   | -             |   |                     |   | -                     |
|                            |   |   |   |          |   |                     |   |                  |   |   |
| Developed                       |   |   |   |          |   | -                        |   |                  |   | - |
| Undeveloped                     |   |   |   |          |   | -                        |   |                  |   | - |
|                            |   |   |   |          |   |                     |   |                  |   |   |
| Total                           |   |   |   |          |   | -                        |   |                  |   | - |

|  | *(1)     * | *Definitions:* |
|--|-------------------------------------|----------------|

*a.     “Net*” reserves are the remaining reserves of the Company, after deduction of estimated royalties and including royalty interests.

*b.     “Proved oil and gas reserves.”*Proved oil and gas reserves are the estimated quantities of crude oil, natural gas, and natural gas liquids which geological and engineering data demonstrate with reasonable        certainty to be recoverable in future years from known reservoirs under existing economicand operating conditions, i.e. prices and costs as of the date the estimate is made. Prices include consideration of changes in existing prices provided only by contractual arrangements, but not on escalations based upon future conditions. 

Reservoirs are considered proved if economic product ability is supported by either actual production or conclusive formation test. The area of a reservoir considered proved includes that portion delineated by drilling and defined by gas-oil and /or oil-water contacts, if any; and the immediately adjoining portions not yet drilled,        but which can be reasonably judged as economically productive on the basis of available geological and engineering data. In the absence of information on fluid contacts, the lowest known structural occurrence of hydrocarbons controls the lower proved limit of the reservoir.

|  | i.      | Reserves which can be produced economically through application of improved recovery techniques (such as fluid injection) are included in the “proved” classification when successful testing by a pilot project, or the operation of an installed program in the reservoir, provides support for the engineering analysis on which the                    project or program was based. |
|--|----------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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PROVIDENCE RESOURCES, INC.            (An Exploratory Stage Company)

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2008and            2007**

**Supplemental Oil and Gas Information – FAS69 (continued)**

|  | ii.      | Estimates of proved reserves do not include the following: |
|--|-----------------------------------|------------------------------------------------------------|

Oil that may become available from known reservoirs but is classified separately as “indicated additional reserves”;

Crude oil, natural gas, and natural gas liquids, the recovery of which is subject to reasonable doubt because of uncertainty as to geology, reservoir characteristics, or economic factors;

Crude oil, natural gas, and natural gas liquids, that may occur in undrilled prospects; and 

Crude oil, natural gas, and natural gas liquids, that may be recovered from oil shale, coal, gilsonite and other such sources.

*c.     “Proved developed oil and gas reserves.”*Proved developed oil and gas reserves are reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. Additional        oil and gas expected to be obtained through the application of fluid injection or other improved recovery techniques for supplementing the natural forces and mechanisms of primary recovery should be included as “proved developed reserves” only after testing by a pilot project or after the operation of an installedprogram has confirmed through production response that increased recovery will be achieved.        

*d.     “Proved undeveloped reserves.”*Proved undeveloped oil and gas reserves are reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major        expenditure is required for recompletion. Reserves on undrilled acreage shall be limited to those drilling units offsetting productive units that are reasonably certain of production when drilled. Proved reserves for other undrilled units can be claimed only where it can be demonstrated with certainty that there is continuity of production from the existing productive formation. Under no circumstances should estimates, for proved undeveloped reserves be attributable to any acreage for        which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual tests in the area and in the same reservoir. 

*(2) The Company does not file any estimates of total net proved crude oil or natural gas reserves with any U.S. federal authority or agency other than the SEC.*

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PROVIDENCE RESOURCES, INC.            (An Exploratory Stage Company)

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**December 31, 2008and            2007**

**Supplemental Oil and Gas Information – FAS69 (continued)**

**Standardized Measure of Discounted Future Net Cash Flows Related to Proved Oil and Gas Reserves**

**                         **

The Company has no proved reserves and no oil and gas production and therefore has not presented the Standardized Measure of Discounted Future Net Cash Flows or operating results.

**Capitalized Costs**

| December 31, 2008               |   |   |   | United States |
|---------------------------------|--------|--------|--------|---------------|
|                            |   |   |   |          |   |   |
| Proved oil and gas properties   |   |   | $      | -             |
| Unproved oil and gas properties |   |   |   | 7,359,854     |
|                            |   |   |   |          |   |   |
| Total capital costs             |   |   |   | 7,359,854     |
| Accumulated depletion           |   |   |   | -             |
|                            |   |   |   |          |   |   |
| Net capitalized costs           |   |   | $      | 7,359,854     |

**Costs Incurred**

| Year Ended December 31, 2008 |   |   |   | United States |
|------------------------------|--------|--------|--------|---------------|
|                         |   |   |        |          |   |   |
| Acquisitions:                |   |   |   |          |   |   |
| Proved reserves              |   |   | $      | -             |
| Unproved reserves            |   |   |   | 172,971       |
|                         |   |   |   |          |   |   |
| Total acquisitions           |   |   |   | 172,971       |
| Exploration costs            |   |   |   |          | - |
| Development costs            |   |   |   | 1,129,090     |
| Asset retirement obligations |   |   |   | -             |
|                         |   |   |   |          |   |   |
| Total costs incurred         |   |   | $      | 1,302,061     |

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**ITEM 9****.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS****ON ACCOUNTING AND FINANCIAL DISCLOSURE**

None.

**ITEM 9****A.     CONTROLS AND PROCEDURES****(ITEM 9A****(T))**

**Evaluation of Disclosure Controls and Procedures**

In connection with the preparation of this annual report, an evaluation was carried out by the Company’s management, with the participation of the chief executive officer and the chief financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)        under the Securities Exchange Act of 1934 (“Exchange Act”)) as of December 31, 2008. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to management, including the chief executive officer and        the chief financial officer, to allow timely decisions regarding required disclosures.                 Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s rules and forms, and such information was accumulated and communicated to management, including the chief executive officer and the chief        financial officer, to allow timely decisions regarding required disclosures.         

**Management’s Report on Internal Control over Financial Reporting**

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process, under the supervision of the chief executive officer and the chief financial officer, designed to provide reasonable assurance        regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with United States generally accepted accounting principles (GAAP). Internal control over financial reporting includes those policies and procedures that:         

|  | ·      | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company’s assets; |
|--|----------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the board of directors; and |
|--|----------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. |
|--|----------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the        policies or procedures may deteriorate.

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The Company’s management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, which assessment did not        identify any material weaknesses in internal control over financial reporting. A material weakness is a control deficiency, or a combination of deficiencies in internal control over financial reporting that creates a reasonable possibility that a material misstatement in annual or interim financial statements will not be prevented or detected on a timely basis. Since the assessment of the effectiveness of our internal control over financial reporting did not identify any material        weaknesses, management considers its internal control over financial reporting to be effective.                  This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Commission that permit us to provide only management’s report in this annual report.

***Changes in Internal Controls******over Financial Reporting***

During the period ended December 31, 2008, there has been no change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.

**9B.           OTHER INFORMATION**

None.

**PART III**

**ITEM****10****.     DIRECTORS, EXECUTIVE OFFICERS, AND****CORPORATE GOVERNANCE**

**Officers and Directors**

The following table sets forth the name, age and position of each director and executive officer of the Company:

| ***Name***             | ***Age*** | ***Year                    Elected/Appointed*** | ***Positions Held***               |
|------------------------|-----------|-------------------------------------------------|------------------------------------|
| Gilbert Burciaga       | 55        | 2007                                            | CEO,CFO, PAO, and director         |
| Markus Mueller         | 50        | 2003                                            | Chairman of the board of directors |
| Nora Coccaro           | 52        | 1999                                            | Director                           |
| Christian Russenberger | 40        | 2008                                            | Director                           |

***Gilbert Burciaga***was appointed as chief executive officer, chief financial officer, principal accounting officer, and director on July 2, 2007. 

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Mr. Burciaga is a director of Miller Energy, LLC, as well as the chairman/chief executive officer of Miller’s recently created gas marketing company, Vintage Gas Marketing, LLC. Mr. Burciaga has been involved in the natural gas supply and marketing business for over 25 years in which time he was a        founding member of Dynegy, Inc. Mr. Burciaga served as one of six senior vice-presidents involved in the startup and development of Dynegy, which became a Fortune 500 trading company. Between 1992 and 1997, Mr. Burciaga was the president of NGC Energy Resources, a division of Dynegy. NGC Energy Resources focused on the acquisition and operation of downstream assets.                  The appointment of Mr. Burciaga to the board of directors was included in the Agreement with Miller. Mr. Burciaga is an affiliate of Miller, serving as a director of Miller and as a director/chief executive officer of Miller’s subsidiary Vintage Gas Marketing. The Agreement provides that both the Company and Miller waive any conflict of interest rights that may arise as result of the relationships between the parties. 

***Markus Mueller***was appointed to the Company’s’s board of directors on May 28, 2003.         

Mr. Mueller currently acts as a director of Scherrer & Partner Portfolio Management AG Zurich and of First Equity Securities AG Zurich. He has held these positions since August of 2000. Both companies are involved in asset management for private clients and manage investment funds. Prior to Mr. Mueller’s        current engagements, he acted as a director of Jefferies (Switzerland) AG Zurich and as the managing director of Jefferies Management AG Zug (Switzerland) from 1995 until 2000. The Jefferies companies are also involved in asset management for private clients.         

***Nora Coccaro***was appointed to the Company’s board of directors on November 16, 1999.          

Ms. Coccaro resigned as chief executive officer, chief financial officer,andprincipal accounting officer on July 2, 2007at which time she was appointed as Vice-President of Corporate Affairs.         

Ms. Coccaro attended medical school at the University of Uruguay before becoming involved in the management of public entities. Ms. Coccaro has also served as officer and/or directorwith the following companies:

|  | ·      | an officer and director (November 2005 to September 2008) of ASP Ventures, Inc., an OTC: BB quoted company without operations, |
|--|----------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | an officer and director (December 2005 to September 2008) of Newtech Resources, Inc., an OTC:BB quoted company without operations, and |
|--|----------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | an officer and director (March 2007 to September 2008) of Enwin Resources, Inc, an OTC: BB quoted company without operations. |
|--|----------------------------------------|------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | an officer and director (January 2000 to June 2007) of Sibling Entertainment Corp. (formerly Sona Development Corp.) an OTC: BB quoted company formerly without operations, and |
|--|----------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | an officer and director (February 2000 to January 2004) of SunVesta Inc. (formerly OpenLimit, Inc.), an OTC: BB quoted company formerly involved in credit card encryption technology, and |
|--|----------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | a director (February 2004 to March 2007) of Solar Energy Limited an OTC:BB quoted company involved in the development of alternative sources of energy. |
|--|----------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

Between September 1998 and December 2005 Ms. Coccaro acted as the Consul of Uruguay to Western Canada. 

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***Christian Russenberger***was appointedto the Company’s board of directorson March 31, 2008. 

Mr. Russenberger is the sole owner and director of CR Innovations Holding AG, CR Innovations AG (financial consulting), Global Project Finance AG (long term investments), Profumeria.ch AG.  Since 2004 Mr. Russenberger has been involved in the management and direction of each of these companies. Prior        to his current experience Mr. Russenberger worked with Finter Bank in Zurich, Switzerland (1993-2004) as a relationship manager and analyst. Before joining Finter Bank, Mr. Russenberger worked in Zurich as an analyst with Anlage-und Kreditbank AKB (1991-1993) and Bank Leu AG (1990-1991).

No persons other than executive officers or directors of the Company are expected to make any significantcontributions to management.         

***Term of Office***         Our directors are appointed for staggered terms ofone (1) year, two (2) years and three (3) yearsto hold office until the next annual meeting of our shareholders or until removed from office in accordance with our bylaws. Our executive officers are appointed by our board of directors and hold office until removed by the board.          

***Family Relationships***         There are no family relationships between or among the directors or executive officers.

***Involvement in Certain Legal Proceedings***         To the best of our knowledge, during the past five years, none of the following occurred with respect to a present or former director, executive officer, or employee: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic        violations and other minor offences); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodities Futures Trading Commission to have        violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.         

**Compliance with Section 16(A) of the Exchange Act**

Based solely upon a review of Forms 3, 4 and 5 furnished to the Company, we are unaware persons who, during the period ended December 31, 2008, failed to file, on a timely basis, reports required by Section 16(a) of the Securities Exchange Act of 1934.

***Code of Ethics***

The Companyhas adopted a Code of Ethics within the meaning of Item 406(b) of Regulation S-Kof the Securities Exchange Act of 1934. The Code of Ethics applies to directors and senior officers, such as the principal executive officer, principal financial officer, controller, and persons        performing similar functions. The Companyhas incorporated a copy of its Code of Ethics as Exhibit 14 to this form 10-K. Further, ourCode of Ethics is available in print, at no charge, to any security holder who requests such information by contacting us.

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**Board of Directors Committees**

 

The board of directors has not established an audit committee. An audit committee typically reviews, acts on and reports to the board of directors with respect to various auditing and accounting matters, including the recommendations and performance of independent auditors, the scope of the annual audits, fees to be paid to the        independent auditors, and internal accounting and financial control policies and procedures. Certain stock exchanges currently require companies to adopt a formal written charter that establishes an audit committee that specifies the scope of an audit committee’s responsibilities and the means by which it carries out those responsibilities. In order to be listed on any of these exchanges, the Company will be required to establish an audit committee.The board of directors has not established a compensation committee. 

**Director Compensation**

Non-executive directors are compensatedfor attendance at meetings in the amount $500 per meeting but are not reimbursed for out-of-pocket costs incurred in attending meetings.          During the year ended December 31, 2008, the Company compensated its non-executive directors for services rendered by granting stock options to purchase common shares pursuant to our2008 Stock Option Plan.          During the year ended December 31, 2008, the Company compensated the chairman of our board of directors pursuant toa consulting agreementthat terminated on March 31, 2008and another of our directors pursuant to a        consulting agreement that is current (see *Directors**Summary Compensation Table*below).          

The following table provides summary information for the year 2008concerning cash and non-cash compensation paid or accrued by the Companyto or on behalf of our directors.

| ***Director’s******Summary Compensation Table*** |
|--------------------------------------------------------|
| Name                                                   | Fees earned or paid in cash 

($) | Stock awards

($) | Option

Awards

($)*** | Non-equity incentive plan compensation

($) | Nonqualified deferred compensation

($) | All other compensation

($) | Total

($) |
| Markus Mueller, chairman                               | - | 75,000* | 84,000 | - | - | - | 159,000 |
| Nora Coccaro                                           | 96,000** | - | 66,000 | - | - | - | 162,000 |
| Christian Russenberger                                 | - | - | 84,000 | - | - | - | 84,000 |

*      Pursuant to a consulting agreement which terminated on March 31, 2008 for amounts due in 2007 and 2008 totaling $75,000 in stock.

**     Pursuant to a consulting agreementamount paid for her services as vice-president of corporate affairs(please see the *Executive Summary Compensation        Summary*table, below).

***     Stock optionsgrants were authorized on December 16, 2008.

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**ITEM 11****.     EXECUTIVE COMPENSATION**

**Compensation Discussion and Analysis**

 

The objective of the Company’s compensation program is to provide compensation for services rendered by our executive officer. We use salaries, stock compensation awards, and stock options awardsto incentivize our executive        officer. We utilizetheseformsof compensation because we feel that same areadequate to retain and motivate our executive officer. The amountwe deem appropriate to compensate our executive officerisdetermined in accordance with market forces aswe have no specific formula to determine        compensatory amounts at this time. While we have deemed that our current compensatory program and the decisions regarding compensation are easy to administer and are appropriately suited for our objectives, we may expand our compensation program to include options additionalcompensatory elementsat some future        time.

Executive compensation for the yearended December 31, 2008 was$1,234,000 as compared to $184,500 for theyearended December 31, 2007and $424,500 for the year ended December 31, 2006. The increase in executive compensation for the year ended 2008 from the year ended 2007isprimarily attributableto(i)a stock option plan that went into effect in the current year to retain and incentivize our executive officer and (ii)acash bonus for closing the Elm Ridge agreement.The decrease in executive compensation for the year ended 2007 from the year ended 2006 is attributable to a stock bonus provided in the priorperiodto our former executive officer.We expect executive compensation to decrease in future periods.

**Tables**

The following table provides summary information for the years 2008, 2007, and 2006concerning cash and non-cash compensation paid or accrued by the        Companyto or on behalf of (i) the chief executive officer and (ii) any other employee to receive compensation in excess of $100,000.

| ***Executive’s******Summary Compensation Table***              |
|----------------------------------------------------------------------|
| Name and Principal Position                                          | Year | Salary                    ($) | Bonus                    ($) | Stock Awards                    ($) | Option                    Awards                    ($) | Non-Equity Incentive Plan Compensation                    ($) | Change in Pension Value and Nonqualified Deferred Compensation                    ($) | All Other Compensation                    ($) | Total                    ($) |
| Gilbert Burciaga:CEO, CFO, PAOand director*                          | 2008

2007

2006 | 150,000

75,000

- | 250,000

-

- | -                    -

- | 834,000

-

- | -                    -

- | -                    -

- | -                    -

- | 1,234,000

75,000

-                      |
| Nora Coccaro:

director;                    former CEO, CFO,andPAO** | 2008

2007

2006 | 96,000

93,50064,500 | -

-

- | -

16,000

360,000 | 66,000***

-- | -                    -

- | -                    -

- | -                    -

- | 162,000

109,500

424,500 |

*******     **Appointed to executive positions on July 2, 2007.

**     Resigned executive positions on July 2, 2007. Salary pursuant to a consulting agreement, as amended,dated March 16, 2000. 

***     Options grantedfor services as director (please see the *Directors**Summary Compensation Summary*table, above).

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The following table provides summary information for 2008 concerningeach grant of an award(including awards that subsequently have been transferred) by        the Companyto or on behalf of (i) the chief executive officer and (ii) any other employee to receive compensation in excess of $100,000:

| ***Grants of Plan-Based Awards*** |
|-----------------------------------|
| Name                              | Grant date | Estimated future payouts under non-equity incentive plan awards | Estimated future payouts under equity incentive plan awards | All other stock awards: Number of shares of stock or units

(#) | All other option awards: Number of securities underlying options

(#) | Exercise or base price of option awards

($/Sh) | Grant date fair value of stock and option awards* |
| Threshold

($)                    | Target

($) | Maximum

($) | Threshold

(#) | Target

(#) | Maximum

(#) |   |   |   |   |
| Gilbert Burciaga                  | 6/13 | - | - | - | - | - | - | - | 4,500,000 | 0.20 | 540,000 |
| 6/30                              | - | - | - | - | - | - | - | 150,000 | 0.20 | 18,000 |
| 9/30                              | - | - | - | - | - | - | - | 150,000 | 0.20 | 18,000 |
| 10/28                             | - | - | - | - | - | - | - | 2,000,000 | 0.20 | 240,000 |
| 12/31                             | - | - | - | - | - | - | - | 150,000 | 0.20 | 18,000 |
| Nora Coccaro                      | 12/16** | - | - | - | - | - | - | - | 550,000 | 0.20 | 66,000 |

*     Fair market value of $0.12; see the methodology for this valuation in Note 14to the audited financial statement included herein.

The following table provides summary information for 2008 concerning unexercised options, stock that has not vested, and equity incentive plan awards by the Companyto or on        behalf of (i) the chief executive officer and (ii) any other employee to receive compensation in excess of $100,000:

| ***Outstanding Equity Awards at Fiscal Year-End*** |
|----------------------------------------------------|
|                                               | Option awards | Stock awards |
| Name                                               | Number of securities underlying unexercised options                    (#) exercisable | Number of securities underlying unexercised options                    (#) unexercisable | Equity incentive plan awards: number of securities underlying unexercised unearned options                    (#) | Option exercise price                    ($) | Option expiration date | Number of shares or units of stock that have not vested                    (#) | Market value of shares or units of stock that have not vested                    (#) | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested                    (#) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested                    ($) |
| Gilbert Burciaga                                   | 6,950,000 | 9,237,500 | - | 0.20 | June 12, 2018 | - | - | - | - |
| Nora Coccaro                                       | 550,000 | - | - | 0.20 | June 12, 2018 | - | - | - | - |

The following table provides summary information for 2008 concerning each exercise of stock options, SARs and similar instruments, and each vesting of stock, including restricted stock, restricted stock units and similar instruments (on an aggregated basis)by        the Companyto or on behalf of (i) the chief executive officer and (ii) any other employee to receive compensation in excess of $100,000:

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| ***Option Exercises and Stock Vested***                                                            |
|----------------------------------------------------------------------------------------------------|
| Name                                                                                               | Option awards | Stock awards |
| Number of shares                    acquired on                    exercise                    (#) | Value                    realized on                    exercise                    ($) | Number of shares                    acquired on vesting                    (#) | Value                    realized on                    vesting                    ($) |
| Gilbert Burciaga                                                                                   | 0 | 0 | 0 | 0 |
| Nora Coccaro                                                                                       | 0 | 0 | 0 | 0 |

We have no “Pension Benefits”, “Nonqualified Deferred Compensation”, or“Post Employment Payments” to report.

**ITEM 12****.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT****AND RELATED STOCKHOLDER MATTERS**

The following table sets forth certain information concerning the ownership of the Company’s 62,174,454shares of common stock issued and outstanding as of March30, 2009with respect to: (i) all directors; (ii) each person known by us to be the beneficial owner of more than five percent of our common stock; and (iii) our directors and executive officers as a group.

| ***Names and Addresses of Managers and Beneficial Owners***                                                          | ***Title of***

***Class*** | ***Number of Shares***                                                     | ***Percent of                     Class*** |
|----------------------------------------------------------------------------------------------------------------------|-----------------------------|----------------------------------------------------------------------------|--------------------------------------------|
| Gilbert Burciaga, CEO, CFO, PAO, director

5300 Bee Caves Rd Bldg 1 Suite 240                    Austin, Texas 78746 | Common                      | 0(6,950,000 options)                                                       | 0%                                         |
| Markus Mueller, director                    Bleicherweg 66, CH-8022

Zurich, Switzerland                             | Common                      | 8,434,384(700,000 options)                                                 | 13.6%                                      |
| Nora Coccaro, director

Rio Negro 1245, Apartment 102                     Postal Code 1100, Montevideo, Uruguay      | Common                      | 453,520(550,000 options)                                                   | 0.7%                                       |
| Christian Russenberger*, director                    Meierhofrain 36, CH-8820

Wädenswil, Switzerland           | Common                      | 1,120,000(700,000 options,

25,000,000 convertible notes, 289,183warrants) | 1.8%                                       |
| Officer and directors (4) as a group                                                                                 | Common                      | 10,007,634                                                                 | 16.1%                                      |

*     Christian Russenberger is considered the beneficial owner of1,120,000 common shares and $1,400,000 in debt convertible into        17,500,000 common shares held by Global Project Finance AG.He is also the beneficial owner of $600,000 in debt convertible into 7,500,000 common shares and 289,183 warrants to purchase common shares held by CR Innovations AG.

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**ITEM 13****.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS****AND DIRECTOR INDEPENDENCE**

***Certain Relationships and Related Transactions***

None of our directors or executive officers, nor any proposed nominee for election as a director, nor any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to all of our outstanding shares, nor any members of the immediate family (including spouse,        parents, children, siblings, and in-laws) of any of the foregoing persons has any material interest, direct or indirect, in any transaction since the beginning of our last fiscal year or in any presently proposed transaction which, in either case, has or will materially affect usexcept the following consulting fees, bonus and option grants

|  | ·      | Gilbert Burciaga,our sole executive officer and a director,entered into an employment                    agreement dated effective May 1, 2007 pursuant to which he realized$150,000in consulting fees, a bonus in the amount of $250,000 for the annual period ended December 31, 2008. Mr. Burciaga had further vested 6,950,000stock options                    to purchase shares of the Company’s common stock at an exercise price of $0.20 exercisable for ten years from the date of grant as of the year end. |
|--|----------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | Markus Mueller, the chairman of our board of directors, pursuant to a consulting agreement that terminated on March 31, 2008 realized 500,000 shares of the Company’s common stock in satisfaction of a consulting expense due of $75,000 as of December 31, 2008. Mr. Mueller had further vested 700,000                    stock options to purchase shares of the Company’s common stock at an exercise price of $0.20 exercisable for ten years from the date of grant as of the year end. |
|--|----------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | Nora Coccaro, vice-president of corporate affairs and a director, pursuant to a consulting agreement that is current realized $96,000 in consulting fees as of December 31, 2008. Ms. Coccaro had further vested 550,000 stock options to purchase shares of the Company’s common stock at an exercise                    price of $0.20 exercisable for ten years from the date of grant as of the year end. |
|--|----------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·      | Christian Russenberger, a director, vested 700,000stock options to purchase shares of the Company’s common stock at an exercise price of $0.20 exercisable for ten years from the date of grant as of December 31, 2008. |
|--|----------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Director Independence*** 

The Company is quoted on the OTC Bulletin Board inter-dealer quotation system, which does not have director independence requirements. However, for purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 4200(a)(15). NASDAQ Rule 4200(a)(15) states that a director is not considered to be        independent if he or she is also an executive officer or employee of the corporation. Accordingly, we consider Mr. Russenberger to be an independent director.

**ITEM 14.****     ****PRINCIPAL ACCOUNTANT FEES AND SERVICES**

******

***Audit Fees***

Chisholm, Bierwolf,Nilson& Morrill, LLC provided audit services to the Companyin connection with its annual report for the fiscal year ended December 31, 2008and 2007. The aggregate fees billed by Chisholm,        Bierwolf & Nilson, LLC for the 2008and 2007audit of our annual financial statements and a review of our quarterly financial statements was $35,500and $25,000, respectively. 

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***Audit Related Fees***

Chisholm, Bierwolf,Nilson& Morrill, LLC billed to the Companyno fees in 2008or 2007for professional services that are reasonably related to the audit or review of our        financial statements that are not disclosed in “Audit Fees” above. 

******

***Tax Fees***

Chisholm, Bierwolf,Nilson& Morrill, LLC billed to the Companyno fees in 2008or 2007for professional services rendered in connection with the preparation of our tax returns        for the period. 

******

***All Other Fees***

Chisholm, Bierwolf,Nilson& Morrill, LLC billed to the Companyno fees in 2008or 2007for other professional services rendered or any other services not disclosed above.        

******

***Audit Committee Pre-Approval***

The Companydoes not have a standing audit committee. Therefore, all services provided to us by Chisholm, Bierwolf,Nilson& Morrill, LLC, as detailed above, were pre-approved by our board of directors. Our independent auditors, Chisholm,        Bierwolf,Nilson& Morrill, LLC, performed all work using only their own full time permanent employees. 

**PART IV**

**ITEM 15.     EXHIBITS AND FINANCIAL STATEMENT SCHEDULES**

***(a) Con******solidated Financial Statements***

The following documents are filedunder “*Item 8. Financial Statements and Supplementary Data**,*”pages F-1 through F-28,and are included as part of this Form 10-K: 

     Financial Statements ofthe Companyfor the years ended December 31, 2008and        2007:

Reportof Independent Registered Public Accounting Firm**     **

ConsolidatedBalance Sheets

ConsolidatedStatements of OperationsConsolidated Statementsof Stockholders’ Equity(Deficit) and Comprehensive LossConsolidatedStatements of Cash Flows

Notes to Consolidated Financial Statements

***(b) Exhibits***

The exhibits required to be attached by Item 601 of Regulation S-Kare listed in the Index to Exhibits on page36of this Form 10-K, and are incorporated herein by this reference.

***(c)******Financial Statement Schedules***

We are not filing any financial statement schedules as part of this Form 10-K because such schedules are either not applicable or the required information is included in the financial statements or notes thereto.

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**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

| ***Providence Resources, Inc.****          *                                                | ***Date***     |
|-----------------------------------------------------------------------------------------------------------------------------------------------|----------------|
| /s/ Gilbert Burciaga

By: Gilbert Burciaga

Its: Chief Executive Officer, Chief Financial Officer, Principal 

Accounting Officerand Director | March 31, 2009 |

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.          

|                                                                                                                                                   | ***Date***     |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|----------------|
| /s/ Gilbert Burciaga

Gilbert Burciaga                    Chief Executive Officer, Chief Financial Officer, Principal 

Accounting Officerand Director | March 31, 2009 |
| /s/ Markus Mueller

Markus Mueller

Director                                                                                                           | March 31, 2009 |
| /s/ Nora Coccaro

Nora Coccaro

Director                                                                                                               | March 31, 2009 |
| /s/ Christian Russenberger

Christian Russenberger

Director                                                                                           | March 31, 2009 |

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**INDEX TO EXHIBITS**

***Exhibit     Description***

3(i)(a)*       Articles of Incorporation (incorporated by reference from the Form 10-SB filed with the Commission on April 17, 2000).     

3(i)(b)(c)*       Amendment to Articles of Incorporation (incorporated by reference from the Form 10-SB filed with the Commission on April 17, 2000).     

3(i)(d)*     Amended and Restated Articles of Incorporation (incorporated by reference from the Form 10-SB filed with the Commission on April 17, 2000).     

3(i)(e)*     Articles of Amendment to the Amended and Restated Articles of Incorporation (incorporated by reference from the Form 10-QSB filed with the Commission on November 17, 2003).     

3(i)(f)*     Amendment to the Amended and Restated Articles of Incorporation (incorporated by reference from the Form 8-K filed with the Commission on October 2, 2006).     

3(i)(g)*     Amendment to the Amended and Restated Articles of Incorporation (incorporated by reference from the Form 10-QSB filed with the Commission on August 14, 2007).

3(ii)(a)*     Bylaws of the Company (incorporated by reference from the Form 10-SB filed with the Commission on April 17, 2000).     

3(ii)(b)*       Amended and Restated Bylaws of the Company (incorporated by reference from the Form 8-K filed with the Commission on October 26, 2006).     

10(i)*       Joint Venture Agreement between Providence Exploration and Harding Company, dated October 1, 2005 (incorporated by reference from the Form 8-K filed with the Commission on October 2, 2006).

10(ii)*       Agreement for Purchase and Sale between Providence Exploration and Global Mineral Solutions, L.P., dated February 22, 2006 (incorporated by reference from the Form 8-K filed with the Commission on October 2, 2006).     

10(iii)*       Securities Exchange Agreement dated April 10, 2006, between the Company, Providence Exploration, and the membership unit holders of Providence Exploration (filed on Form 8-K with the Commission on April 14, 2006).     

10(iv)*       Note Exchange Agreement dated April 10, 2006, between the Company and the holders of certain promissory notes issued by Providence Exploration (filed on Form 8-K with the Commission on April 14, 2006).     

10(v)*       Amendment to the Terms of the Securities Exchange Agreement effective as of May 26, 2006, between the Company, Providence Exploration, and the membership unit holders of Providence Exploration (filed on Form 8-K with the Commission on July 3, 2006).     

10(vi)*       Amendment to the Terms of the Note Exchange Agreement effective as of May 26, 2006, between the Company and the holders of certain promissory notes issued by Providence Exploration (filed on Form 8-K with the Commission on July 3, 2006).

10(vii)*       Letter Agreement between Providence Exploration and Harding Company, dated March 30, 2006 (incorporated by reference from the Form SB2/A-2 filed with the Commission on February 28, 2007).

10(viii)*     Project Participation Agreement with Elm Ridge Exploration Company, LLC, dated July 31, 2008 (filed on Form 10-Q/Awith the Commission on October 20, 2008).

14*       Code of Ethics, adopted as of March 1, 2004 (incorporated by reference from the form 10-QSB filed with the Commission on November 17, 2004).

21*     Subsidiaries(incorporated by reference from the Form 10-K filed with the Commission on April 7, 2008).

31     Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14 of the Securities and Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (attached).

32          Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (attached).

     *      Incorporated by reference to previous filings of the Company.

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