Prospex Energy receives full environmental approval for Selva Gas-Field
London-listed(PXEN ) told investors that it has received full environmental approval for the development of the Selva Malvezzi Gas-Field ('Selva') in northern Italy.
The Group, which is focused on developing European gas and power projects, said it has now been informed of the approval by the project’s operator, Po Valley Operations ('PVO'). Prospex holds a 17% interest in the Podere Gallina licence which holds the Selva gas field.
Prospex believes environmental approval ‘paves the way’ for the grant of a full production licence from Italy's Economic Development Ministry. Meanwhile, PVO said it will submit the required documentation in support ofa an application for a full production licence in 2Q21.
This will include an application for an INTESA (intergovernmental agreement) between the regional and national governments, a standard procedure for onshore gas fields in Italy.
The Company noted that a preliminary gas Production Concession (80.68km²) was previously granted by the Italian Ministry for Economic Development back in early 2019.
Prospex highlighted that today’s receipt of full environmental approval follows the approval of the Environmental Impact Assessment ('EIA') of Selva and subsequent sign-off by the Ministers of MITE (Ministry of Ecological Transition) as well as MIC (Ministry of Culture).
The Group informed investors that development and preliminary work has now commenced to prepare the field, which has gross gas reserves of 13.3bcf (2P), for production in mid-2022. Prospex said the planned Selva development has a small footprint of less than half a hectare.
The Group detailed that under the first phase of the development plan, a fully automated gas plant will be installed at the existing Selva/Podere Maiar 1dir well site along with a one-kilometre long pipeline to connect the well with the nearby Italian National Gas Grid.
Based on dynamic reservoir studies, the field development will produce at a maximum rate of up to 150,000 cubic metres/day (5.3 mmscf/day) from successfully tested C1 and C2 production levels in the Medium-Upper Pliocene sands of the Porto Garibaldi Formation.
“Gas production at Selva promises to transform Prospex Energy's financial profile and with this in mind the granting of full environmental approval for the development of the field is a key milestone for the Company,” commented Prospex’s Non-Executive Chairman, Bill Smith.
“With a planned maximum production rate of up to 150,000 cubic metres/day, Selva on its own is expected to generate annualised revenues several times greater than our historic annual corporate costs which, in turn, will enable us to pursue additional low risk exploration and development opportunities both at Podere Gallina and at our Spanish projects.”
He highlighted that the next steps for the Selva gas field include the submission of the required documentation for a production concession licence later this quarter, as well as the commencement of preliminary development work at the site.
Smith added that the environmental approval will also “aid the progression of discussions with potential non-equity funders” for the company’s share of the development costs.
He added, “Together with the recently completed acquisition of the El Romeral Gas & Power Project in Spain, tangible progress is being made to build a highly cash generative business focused on European gas and power opportunities.”
Today’s receipt of full environmental approval for the development of the Selva Gas-Field follows a placing conducted last month in which Prospex raised £0.75m in order to fund planned programmes at both Selva in Italy as well as in El Romeral in southern Spain.
Approval will enable Prospex to advance its planned Selva development which has a small footprint of less than half a hectare and will have no emissions from any future commissioning of its gas inventory. Shares in Prospex were up 4.62% at 1.7p following the news.
Prospex Energy is an AIM quoted investment company focused on high impact onshore and shallow offshore European opportunities with short timelines to production.
The Company's strategy is to acquire undervalued projects with multiple, tangible value trigger points that can be realised within 12 months of acquisition and then applying low cost re-evaluation techniques to identify and de-risk prospects.
For €0.374m, PXEN will acquire a 49.9% interest in El Romeral which can generate significant revenues from the 8.1MW power station and which cost €10 million to construct.
“It was not only the excellent value however that attracted us to El Romeral but also the significant growth potential,’ Prospex’s Non-Executive Chairman, Bill Smith, said of the project, highlighting the fact that the project presents ‘multiple low risk opportunities.’
Based on historic average prices revenue per Mwh, this would equate to annual revenues of over €4.2m.
Smith said, “As well as the advancement of El Romeral, in 2021 these subscribers along with our existing shareholders can expect to see the commencement of production at the Selva gas field on the Podere Gallina permit in Italy at an initial rate of up to 150,000 scm/day.
Together with El Romeral, our annual gas production has the potential to reach 7,800,000 scm in 2021. This would translate into a material revenue stream for the Company which we will look to reinvest into further development activity across our existing asset base.”
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