TIDMPXEN
RNS Number : 8800H
Prospex Energy PLC
11 April 2022
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 Italy. The Selva Gas Field is scheduled to come into
production by Q2 2023.
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
Italy, via the acquisition of UOG Holdings' subsidiary, UOG Italia
S.r.l. ("UOG Italia"). Having secured the funding for the
transaction from the Company's Placing in February 2022, the final
condition for closing the transaction was the approval by the
Ministry of Ecological Transition ("MITE") for the change of
control of 100% of UOG Italia from UOG to Prospex. This was
officially received on 4 April 2022. The Company has now paid UOG
the balance of the consideration of EUR2,056,466 plus the working
capital requirement accrued from the effective date of 1 January
2021 to 6 April 2022 of EUR134,500, a total of EUR2,190,966. UOG
Italia has a 20% working interest in the Podere Gallina licence
which contains the Selva Gas Field ("Selva"). Prospex now owns a
37% working interest in the Podere Gallina Licence, through its
100% ownership of UOG Italia and its pre-existing 17% share of the
licence through its wholly-owned subsidiary PXOG Marshall
Limited.
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 Emilia Romagna Region (the Regional Government).
This pre-award for the intergovernmental agreement is the
penultimate step for the approval of the Production Concession. The
final step is the award of the Production Concession. Once this is
awarded the field development physical project activity can
commence.
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 (UK) Limited, January 2019) has the gross
metrics for the Selva field as stated in the table below for proven
plus probable (2P) reserves and the estimated gross NPV10 which was
derived from approximate annual cash flows at a gas price of
EUR0.2/scm flat. Net figures for the Company's post-transaction
equity interest of 37% are shown (being the 17% already owned by
Prospex plus the 20% acquired in this transaction.)
CPR Metric ([1]) Gross (100%) Net (37%)
2P Reserves (MMscm) 379 140
-------------- ----------
2P Reserves (bcf) 13.4 5
-------------- ----------
NPV10 at EUR0.2/scm EUR27.4 EUR10.2
-------------- ----------
.APPROX.5-year plateau gas production rate
(MMscm) 36.5 13.5
-------------- ----------
.APPROX.5-year plateau annual cash flow >EUR7 million >EUR2.6
(EURMM/year) at EUR0.2/scm million
-------------- ----------
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, n ew economics were run b y 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
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.
-- A deposit of EUR108,235, was paid on 10 August 2021,
representing 5% of the total consideration. The balance of the
consideration has now been paid on completion.
-- 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 Rome on 8 April
2022.
-- 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 EUR134,500
and has been added to the final consideration.
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 EUR0.2/scm. With the forward
curve gas prices of more than four times this number and estimated
to remain high, we are potentially looking at net annual cash flows
from our revised share of the Selva gas production in excess of
EUR8 million per year for the first five years of the ten-year
production profile.
"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 UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR") and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
* *S * *
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
Ritchie Balmer 3494
Colin Rowbury Novum Securities Limited Tel: +44 (0) 20 7399
Jon Belliss 9427
Duncan Vasey Peterhouse Capital Tel: +44 (0) 20 7220
Lucy Williams Limited 9797
Susie Geliher St Brides Partners Tel: +44 (0) 20 7236
Ana Ribeiro Ltd 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 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 up-dip of the previous wells on the Selva field. The
Company now has a 37% working interest in the Podere Gallina
licence.
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 (UK) Limited 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
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,
Italy" prepared by CGG Services (UK) Limited in January 2019
https://bit.ly/3nZNfYf ].
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.
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END
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