Prospex Energy PLC /
Index: AIM / Epic: PXEN / Sector: Oil and Gas
31 May 2024
Prospex Energy PLC
("Prospex" or the
"Company")
Italy: Selva Malvezzi Production
Concession
Q1/Q2 2024 Activity
Report
Prospex Energy PLC (AIM: PXEN), the AIM quoted
investment company focused on European gas and power projects, is
pleased to provide an update from the Selva Malvezzi production
concession in Italy following the announcements made at the AGM of
Po Valley Energy Limited ("PVE") (ASX: PVE) on 29 May
2024.
Po Valley Operations Pty Limited ("PVO"), a
wholly owned subsidiary of PVE is the operator of the Selva
Malvezzi Production Concession, and has a 63% working interest,
while Prospex has the remaining 37% working interest.
Q1/Q2 2024
Highlights
· The
Podere Maiar-1 well at Selva ("PM-1") has continued to perform
consistently during Q1/Q2 2024, reaching gross cumulative
production of 20.61 MMscm (7.63 MMscm net to Prospex) and
generating revenue of €2.6 million for Prospex by 26 May
2024.
·
Average daily gross production from PM-1 remains steady at a
rate of 78,000 to 80,000 scm per day.
· Gas
sold at a premium to the Title Transfer Facility ("TTF") gas price
generates more than £6,100 per day in free cash flow (net to
Prospex).
·
Lifting of the inherent hydrocarbon exploration and
extraction restrictions on the Plan for the Sustainable Energy
Transition of Eligible Areas ("PiTESAI") has led to increased
access for activities on the Selva Malvezzi Concession.
·
East Selva may now be drilled from an optimum location, no
longer requiring a highly deviated well thereby reducing risk and
cost.
·
Improved regulatory environment and geopolitical landscape in
Italy is leading to a reform of the permitting process and
schedules now resulting in the application to permit four wells on
the concession targeting increased future revenues.
Mark Routh,
Prospex's CEO, commented:
"In the first
half of this year we have seen a significant change in the
regulatory environment in Italy. The annulment of the areas
which were restricted for hydrocarbon exploration and extraction
activities (the "PiTESAI") has resulted in a reform of the
permitting process and the related environmental impact
assessments. Another benefit of the relaxation of the
'PiTESAI' restricted areas is that the East Selva prospect may now
be drilled from an optimum location no longer requiring a highly
deviated well, meaning lower cost and lower risk.
"We will
continue to support the operator as it advances activities to
facilitate the development drilling programmes at Selva Malvezzi
with the target of converting the contingent resources at Selva
North and Selva South and the prospective resources at East Selva
and Riccardina into proved, developed and producing reserves in the
near term."
Selva Malvezzi
Production Concession
Gross gas production from the Selva field (PM-1
gas well) in the Selva Malvezzi Production Concession reached a
cumulative 9.8 million standard cubic metres ("MMscm") (3.6 MMscm
net to Prospex) by 31 December 2023, generating revenue of €1.3
million for Prospex in 2023. By 26 May 2024 this has
increased to a cumulative 20.61 MMscm (7.63 MMscm net), generating
revenue of €2.6 million for Prospex. After a period of
testing and commissioning, the PM-1 well is now consistently
producing gas at a steady rate of 78,000 to 80,000 scm per day
(gross).
The TTF gas price to which the gas sales
agreement with BP Gas Marketing is linked, has risen because of
external factors. The Joint Venture sells the gas at a
premium to the quoted TTF price and is currently generating over
£6,100 per day in free cash flow (net to Prospex).
There has been a significant shift in the
political and regulatory landscape in Italy. In the first
quarter of 2024 the Italian government's Energy Decree, designed to
encourage Italy's energy security, was introduced. This
included measures to strengthen the security of natural gas supply
which is highly encouraging for the domestic gas production
sector. The Ministry of Ecological Transition was renamed to
the Ministry of Environment and Energy Security in October
2022. This has all resulted in one of the most favourable
government and regulatory environments in Italy ever seen, as the
country aims to reduce its reliance on Russian natural gas and
imports.
Also in the first quarter of 2024, the Regional
Administrative Court of Rome annulled the PiTESAI. The former
PiTESAI, restricted hydrocarbon exploration and extraction
activities in Italy and its repeal is anticipated to improve
further drilling opportunities at Selva Malvezzi. Whilst this
annulment created a period of uncertainty in the first half of
2024, the new conditions have created possibilities to fast-track
the approvals for all of the discoveries and prospects in Selva
Malvezzi, which could ultimately bring more wells into production
more quickly than originally envisaged. PVO's team in Italy
is working closely with the Ministry in Rome to understand and
assess these new opportunities for the concession.
These developments have caused the operator to
reassess the optimal outcome for the Joint Venture in the next few
years by capitalising on the window of opportunity created by the
current Italian geopolitical environment and higher gas
prices.
As a result, instead of seeking Ministry
approval under the former PiTESAI to drill the smaller Selva North
and South fields from a common pad following a limited 2D seismic
campaign, the operator is now actively pursuing more ambitious
plans to submit applications to drill the larger East Selva and
Riccardina prospects as well as Selva North and Selva South.
In addition, the East Selva prospect may now be drilled from
an optimum location no longer requiring a highly deviated
well. The Ministerial Authorities have advised to file all
Environmental Impact Assessments on the concession at the same
time, so applying now to drill all four wells is expected to avoid
delays.
By including the permit applications to drill
the East Selva and Riccardina prospects at the same time as Selva
North and South, the end result should ultimately be increased
cashflow from the concession.
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.
* * ENDS * *
For further information visit
www.prospex.energy or
contact the following:
Mark Routh
|
Prospex Energy PLC
|
Tel:
+44 (0) 20 7236 1177
|
Ritchie Balmer
Rory Murphy
|
Strand Hanson Limited
|
Tel: +44
(0) 20 7409 3494
|
Andrew Monk (Corporate Broking)
Andrew Raca / Alex Cabral (Corporate Finance)
|
VSA Capital Limited
|
Tel: +44
(0) 20 3005 5000
|
Ana Ribeiro /
Susie Geliher
|
St Brides Partners
Limited
|
Tel: +44
(0) 20 7236 1177
|
Notes
Prospex Energy PLC 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.
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 Selva Malvezzi Production Concession is in
the Po Valley region of northern Italy. The concession
contains the Selva gas-field as well as exciting exploration and
development opportunities. The Podere Maiar-1 well at Selva
was completed in December 2017 and successfully found a commercial
gas accumulation up-dip of the previous wells on the Selva
field. The Company has a 37% working interest in the
Production Concession held via Prospex's two wholly owned
subsidiaries, PXOG Marshall Ltd (17% of the Licence) and UOG Italia
Srl (20% of the Licence).
The Selva Malvezzi Production Concession holds
independently verified 2P gross proven reserves of 13.4 Bcf (5.0
Bcf net to Prospex at 37% WI) in Selva, gross Contingent 2C
Resources of 14.1 Bcf (5.2 Bcf net) and a further 88.2 Bcf of gross
Best Estimate Prospective Resources (un-risked) (32.6 Bcf
net).[1]
An independent Competent Person's Report of the
Podere Gallina Licence which was converted into the Selva Malvezzi
Production Concession at first gas in July 2023, was prepared
by CGG Services (UK) Limited
in July 2022 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.
References:
[1] Source: "Competent Person's Report
Podere Gallina Licence, Italy" prepared by CGG Services (UK)
Limited in July 2022 : https://bit.ly/44VF02A
Glossary:
scm
Standard cubic metres
scm/d
Standard cubic metres per day
MMscm
Million standard cubic metres
Bcf
Billion standard cubic feet
MMscfd
million standard cubic feet per day
MWh
Mega Watt hour
TTF
The 'Title Transfer Facility' - a virtual trading point for natural
gas in the Netherlands.
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.