Prospex Energy PLC / Index: AIM / Epic: PXEN / Sector: Oil and Gas
11 April 2022
Prospex Energy PLC
('Prospex' or the 'Company')
Completion of Selva Acquisition
Selva Gas Field is Scheduled to be in Production by Q2 2023
Prospex Energy PLC, the AIM-quoted investment company focused on European energy projects, is pleased to announce that it has completed the acquisition of the 20 percent share of the Podere Gallina licence which contains the Selva Gas Field in the Po Valley region of
Background
On 9 August 2021 Prospex signed a conditional Sale and Purchase Agreement ("SPA") with AIM quoted United Oil and Gas plc (AIM:UOG) ("UOG") and UOG Holdings plc ("UOG Holdings"), a wholly owned subsidiary of UOG), to conditionally acquire a further 20% working interest in the Podere Gallina Licence in the Po Valley region of
Completion of this transaction increases the Company's share of Selva's independently verified 2P gas reserves from 2.3 Bcf to 5.0 Bcf[1]. The other 63% participant in the licence and operator is Po Valley Operations Limited ("Po Valley"), a wholly-owned subsidiary of Po Valley Energy Limited (ASX:PVE).
The Selva Gas Field is scheduled to come into production by Q2 2023 from the suspended Podere Maiar-1 well which was drilled in December 2017. The next steps to first gas are: -
1. receipt of a full production licence from the Italian authorities which is expected in Q2 2022. On 21 January 2022, the INTESA (the agreement) for the Selva Malvezzi concession was sent by MITE to the
2. completion of the 12-month seismic environmental monitoring programme, which commenced in January 2021.
3. installation of an 800m 4-inch pipeline from the well head to the gas grid network operated by Snam Rete Gas S.p.A. ("SNAM") in order to export the gas to market.
4. connection of the pipeline from the well to the SNAM gas grid network by SNAM. Procurement and engineering by SNAM for this activity commenced in December 2021.
Prospex is supporting the operator Po Valley to accelerate completion of these steps in order to achieve first gas prior to the current target of Q2 2023.
The Competent Person Report ("CPR") for the Podere Gallina Licence (CGG Services (
CPR Metric [1] |
Gross (100%) |
Net (37%) |
2P Reserves (MMscm) |
379 |
140 |
2P Reserves (bcf) |
13.4 |
5 |
NPV10 at |
|
|
≈5-year plateau gas production rate (MMscm) |
36.5 |
13.5 |
≈5-year plateau annual cash flow (€MM/year) at |
> |
> |
The forward curve gas price from Q2 2023 is more than four times the CPR assumption from January 2019. A more than four-fold increase in predicted gas price increases both the NPV10 and the annual cash flow per annum proportionally by more than a factor of four. Taking into account capital and cost inflation since the January 2019 CPR, together with the effect of any increased taxes and royalties, new economics were run by management, which show the Company's net NPV10 and net cash flow to be approximately four times higher than the CPR economics at the forward curve gas prices.
Transaction Details:
· SPA signed on 9 August 2021 between Prospex, PXOG Marshall Limited ("the Buyer"), a wholly-owned subsidiary of Prospex and UOG Holdings to acquire 100% of UOG Italia for a total consideration of
· A deposit of
· The acquisition has an effective date of 1 January 2021 and completion was conditional upon:
o Regulatory approval of the change of ownership of UOG Italia;
o Prospex paying the balance of the consideration.
· MITE approved the change of control of UOG Italia on 4 April 2022 and the deed of transfer was executed in
· Further expenditure on the asset has been funded by all three co-venturers in the Podere Gallina licence proportionate to their working interests until completion at which point the 20% share of the working capital funded by UOG since 1 January 2021 will be added to the consideration. This sum has been agreed as
Mark Routh, Prospex's CEO, commented:
"I am delighted to announce the completion of the Selva acquisition. This is a transformational deal for Prospex with the potential to significantly add to our revenue stream in a relatively short space of time.
"The 2019 CPR conducted on the Selva field, which we are estimating to be in production Q2 next year, concluded that the field is economic at a gas price of
"Given the above, we are supporting the operator Po Valley to accelerate the last remaining steps to first gas, starting with the award of the production concession for Selva Malvezzi which is expected in Q2 2022.
"Once again, I would like to take this opportunity to thank our shareholders for their continued support and look forward to updating the market on our progress in due course".
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of
* * ENDS * *
For further information visit www.prospex.energy or contact the following:
Mark Routh |
Prospex Energy PLC |
Tel: +44 (0) 20 7236 1177 |
Rory Murphy |
Strand Hanson Limited
|
Tel: +44 (0) 20 7409 3494 |
Colin Rowbury |
Novum Securities Limited |
Tel: +44 (0) 20 7399 9427 |
Duncan Vasey |
Peterhouse Capital Limited |
Tel: +44 (0) 20 7220 9797 |
Susie Geliher |
St Brides Partners Ltd
|
Tel: +44 (0) 20 7236 1177 |
Notes
Prospex Energy PLC is an AIM quoted investment company focussed 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. The Company will rapidly scale up gas production in the short term to generate internal revenues that can then be deployed to develop the asset base and increase production further.
About Selva:
The Podere Gallina Licence is in the Po Valley region of
The Podere Gallina Licence holds independently verified 2P gross reserves of 13.4 Bcf (5.0 Bcf net to Prospex at 37% WI), gross Contingent 2C Resources of 14.1 Bcf (5.2 Bcf net) and a further 91.5 Bcf of gross Best Estimate Prospective Resources (33.9 Bcf net).
An independent Competent Person's Report of the Podere Gallina Licence was prepared by CGG Services (
The CPR also attributed Best Estimate gross prospective (un-risked) gas resources of 1,493 MMscm (52.7 Bcf) on the Podere Gallina Licence in three separate structures.
References:
[1] Source: "Competent Person's Report Podere Gallina Licence,
Glossary:
scm Standard cubic metres
MMscm Million standard cubic metres
Bcf Billion standard cubic feet
Qualified Person Signoff
In accordance with the AIM notice for Mining and Oil and Gas Companies, the Company discloses that Mark Routh, the CEO and a director of Prospex Energy plc has reviewed the technical information contained herein. Mark Routh has an MSc in Petroleum Engineering and has been a member of the Society of Petroleum Engineers since 1985. He has over 40 years operating experience in the upstream oil and gas industry. Mark Routh consents to the inclusion of the information in the form and context in which it appears.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.