TIDMPXEN
RNS Number : 0773I
Prospex Energy PLC
10 August 2021
Prospex Energy PLC / Index: AIM / Epic: PXEN / Sector: Oil and
Gas
10 August 2021
Prospex Energy PLC ('Prospex' or the 'Company')
Acquisition of further Working Interest in Selva
Highlights:
-- Conditional acquisition of additional 20% interest in Selva
gas field in Italy for EUR2,164,701 - Prospex's holding will
increase to 37%
-- The transaction is set to add a further 2.7 billion cubic
feet ("Bcf") of 2P gas reserves to Prospex's portfolio and increase
its share in Selva's 2P gas reserves to 5bcf
-- The Company's appointed debt advisers are already engaging in
providing a funding package focused primarily on a loan
facility
-- Selva was successfully drilled in 2018 by the Podere Maiar
well and is expected to come into production by Q2 2022
Prospex Energy PLC, the AIM quoted investment company (AIM:PXEN)
focused on European gas and power projects, is pleased to announce
that on 9 August 2021 it signed a conditional Sale and Purchase
Agreement ("SPA") with AIM quoted United Oil and Gas plc (AIM:UOG)
("UOG") and UOG Holdings plc (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 Italy. Prospex will
acquire 100% of UOG Italia S.r.l. ("UOG Italia") which has a 20%
working interest in the Podere Gallina licence which contains the
Selva Gas Field ("Selva") which is predicted to come onto
production by Q2 2022, subject to receipt of a full production
licence from the Italian authorities. Upon completion, Prospex will
own a 37% working interest in the Podere Gallina Licence,
increasing its share of Selva's independently verified 2P gas
reserves from 2.3 Bcf to 5.0 Bcf([1]) .
The transaction is conditional upon (1) Prospex sourcing the
financing for the consideration of EUR2,164,701 (the
"Consideration") less an amount of EUR108,235 which has already
been paid to UOG as a deposit (and which represents 5% of the total
Consideration) and (2) receipt of required approvals by the Italian
Ministry of Economic Development of a change of control of UOG
Italia S.r.l. ("UOG Italia"). The other 63% participant in the
licence and operator is Po Valley Operations Limited, a wholly
owned subsidiary of Po Valley Energy Limited (ASX:PVE) .
Mark Routh, CEO of Prospex, commented:
"We are extremely pleased to have agreed this important
transaction, as it increases our share of Selva, one of our core
assets which, with full environmental approval in place, is very
close to first gas. This transaction is the product of months of
preparation by the Prospex team and it more than doubles our
independently verified 2P recoverable reserves in Selva from 2.3
Bcf to 5.0 Bcf.([1]) .
"The transaction also increases our share in the multiple
follow-up opportunities on the Podere Gallina licence. These
include the two historic gas producing North Flank and South Flank
reservoirs at Selva, which CGG Services (UK) Limited has estimated
have a 60% - 70% chance of holding gross contingent resources
('2C') of 14.1 Bcf, and the East Selva, Fondo Perino, Cembalina,
and Riccardina prospects, which are estimated to hold aggregate
gross prospective resources (best estimate) of 91.5 Bcf. While our
immediate focus is on Selva, there is much more to go for at Podere
Gallina in the medium term.
"In terms of CO(2) emissions when combusted, gas is the cleanest
hydrocarbon and as a result is increasingly viewed as a key
transition fuel, as the world moves towards renewable, non-fossil
fuel energy. Demand for gas, especially domestically sourced as
opposed to imported, is therefore expected to increase in the years
ahead. Recent positive moves in European gas prices suggest, in our
view, that this is already happening. With gas production at Selva
set to commence in Q2 2022, Prospex is well placed to play its part
in the European energy transition, and with this in mind I look
forward to providing further updates on our progress."
Transaction Details:
-- SPA signed between PXOG Marshall Limited ("the Buyer"), a
wholly owned subsidiary of Prospex, and UOG Holdings plc (a wholly
owned subsidiary of UOG), to acquire 100% of UOG Italia for a total
Consideration of EUR2,164,701 subject to certain working capital
adjustments. UOG Italia's sole asset is its 20% working interest in
the Podere Gallina Licence and the associated joint operating
agreement. UOG Italia is a wholly owned subsidiary of UOG Holdings
plc.
-- A deposit of EUR108,235, which is non-refundable save for
certain circumstances (including where change of control approval
is not received), has already been paid to UOG from the Company's
existing funds, representing 5% of the total Consideration.
-- The balance of the Consideration is to be paid on completion.
-- The Company's appointed debt advisers are already engaged to
source a funding package focused primarily on a loan facility.
-- The acquisition has an effective date of 1 January 2021 and
completion is primarily conditional upon:
o Regulatory approval of the change of ownership of UOG
Italia;
o Prospex paying the balance of the Consideration.
-- Application for the approvals from the Italian Government
will be submitted shortly but are anticipated to take at least
several months.
-- Approval timings anticipated to dovetail with finalising of the funding package.
-- Further expenditure on the asset will continue to be funded
by all three co-venturers in the Licence proportionate to the
current 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.
-- The SPA has a maximum long stop date of 210 days from the
date of the SPA for the Buyer to complete the transaction being 7
March 2022.
-- Prospex is party to the SPA to guarantee the obligations of the Buyer.
-- Customary warranties have been granted by UOG Holdings plc in
respect of UOG Italia together with an indemnity in relation to
certain financial matters since 1 January 2021.
As of 31 December 2020, UOG Italia reported EUR2,061,620 of
total assets, revenue of nil, and a pre-tax loss of EUR36,394. As
part of the transaction, an inter-company loan between UOG Holdings
plc and UOG Italia of EUR1,735,240 will be extinguished.
* *S * *
This announcement contains inside information for the purposes
of the Market Abuse Regulation (as in force in the United Kingdom
pursuant to the European Union (Withdrawal) Act 2018).
For further information visit www.prospex.energy or contact the
following:
Mark Routh Prospex Energy PLC Tel: +44 (0) 20 3948
1619
Rory Murphy Strand Hanson Limited Tel: +44 (0) 20 7409
Ritchie Balmer 3494
Colin Rowbury Novum Securities Limited Tel: +44 (0) 20 7399
Jon Belliss 9427
Duncan Vasey Peterhouse Corporate Limited Tel: +44 (0) 20 7220
9797
Frank Buhagiar St Brides Partners Ltd Tel: +44 (0) 20 7236
1177
Notes
About Prospex Energy
Prospex Energy PLC is an AIM quoted investment company focussed
on high impact onshore and shallow offshore European gas and power
opportunities. The Company acquires undervalued projects and then
applies low-cost re-evaluation techniques to identify and de-risk
prospects. Prospex currently holds a portfolio of three projects:
the Podere Gallina Permit in Italy where first gas at the Selva
field is targeted for early 2022; the El Romeral gas and power
project in Spain, which includes three producing wells that supply
gas to a 100% project-owned 8.1MW power plant; and the large scale
Tesorillo gas project in southern Spain, which has the potential to
hold gross un-risked Prospective Resources of 830 Bcf of gas (Best
Estimate), with upside in excess of 2 Tcf. The Company's strategy
is to 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 Italy.
The licence contains the currently shut--in Selva gas-field as well
as exciting exploration opportunities. The Podere Maiar-1 well was
completed in December 2017 and successfully found a commercial gas
accumulation updip of the previous wells on the Selva field.
A Competent Person's Report ("CPR") of the Podere Gallina
Licence was prepared by CGG GeoConsulting in January 2019 on behalf
of the joint venture.([1]) It attributed a total of 379 MMscm (13.4
Bcf) gross 2P reserves for the Selva redevelopment project. Upon
completion of this transaction the net 2P reserves attributable to
Prospex will increase from 64 MMscm (2.3 Bcf) to 140 MMscm (5.0
Bcf).([1])
The CPR also attributed Best Estimate gross prospective
(unrisked) gas resources of 1,493 MMscm (52.7 Bcf) on the Podere
Gallina Licence in three separate structures.
References:
[1] "Competent Person's Report Podere Gallina Licence, Italy"
prepared by CGG GeoConsulting in January 2019. The CPR can be
accessed in full at the following link:
https://www.prospex.energy/cms/wp-content/uploads/2019/02/BP521-Selva-PC-licence-CPR-Report-190206.pdf
Glossary:
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 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.
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END
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