REG - Prospex Energy PLC - Gas Sales Agreement signed with BP Gas Marketing

Prospex EnergyAnnouncement

14/02/2023 07:00

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RNS Number : 7898P  Prospex Energy PLC  14 February 2023

Prospex Energy PLC / Index: AIM / Epic: PXEN / Sector: Oil and Gas

 

14 February 2023

 

Prospex Energy PLC

('Prospex' or the 'Company')

 

Italy: Selva Field Development

Gas Sales Agreement signed with BP Gas Marketing

 

Prospex Energy PLC (AIM: PXEN), the AIM quoted investment company focused on
European gas and power projects, is pleased to announce that the Operator of
the Selva Malvezzi production concession in which Prospex has a 37% working
interest, has signed a gas sales agreement ("GSA") with BP Gas Marketing
Limited ("BPGM"), an indirect, wholly owned subsidiary of BP International
Limited ("BPI") under which BPGM will purchase the forecast gas production
from the soon to be completed Podere Maiar-1 production facility in the Selva
Malvezzi production concession located in the Po Valley Region of Italy.  Po
Valley Operations Pty Limited ("PVO"), a wholly owned subsidiary of Po Valley
Energy Limited (ASX: PVE) is the Operator of the Selva Malvezzi production
concession with 63% ownership interest and Prospex has the remaining 37%
working interest.

 

Highlights

·    18-month GSA contract to commence on 1 April 2023 with potential to
extend

·    An estimated 37 million standard cubic metres of natural gas is
expected to be supplied to BPGM under the contract

·    Gas supply price will be linked to Italy's "Heren PSV day ahead mid"
price assessment

·    The Joint Venture is fully funded to complete the Podere Maiar-1
production facility development and first gas is on track for early Q2 2023.

 

Mark Routh, Prospex's CEO, commented:

"The gas sales agreement with BP Gas Marketing Ltd marks a significant
milestone for the Company and its joint venture partner, Po Valley as we get
closer to first gas production from the Selva field development.  We are
delighted that Po Valley has secured the agreement with BP Gas Marketing
Limited, a recognisable brand in the industry, to take delivery and sell our
gas and look forward to working with them.  Prospex is selling its share of
the gas production jointly with the Operator, Po Valley, under a joint
marketing agreement, in order to optimise the value of our gas sales.

 

"First gas is still on track for early in the second quarter of 2023, on
schedule and on budget."

 

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 (http://www.prospex.energy)
or contact the following:

 

 Mark Routh                                    Prospex Energy PLC          Tel: +44 (Tel:+44) (0) 20 7236 1177
 Ritchie Balmer                                Strand Hanson Limited       Tel: +44 (0) 20 7409 3494

Rory Murphy
 Andrew Monk (Corporate Broking)               VSA Capital Limited         Tel: +44 (0) 20 3005 5000

Andrew Raca/Alex Cabral (Corporate Finance)
 Colin Rowbury                                 Novum Securities Limited    Tel: +44 (0) 20 7399 9427

Jon Belliss
 Susie Geliher                                 St Brides Partners Limited  Tel: +44 (0) 20 7236 1177

Ana Ribeiro

 

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 the Gas Sales Agreement:

Key terms of the GSA include:

 Parties                                                      PVO and BPGM
 Start date                                                   1 April 2023
 End date                                                     30 September 2024 (18 months duration)
 Extension of contract                                        No automatic right to extend, parties to commence extension discussions 30
                                                              days before 30 September 2024
 Termination rights                                           Termination conditions standard for a contract of this nature including gas
                                                              quality and delivery specifications and payment
 SNAM delivery point                                          Budrio 50202301
 Gas supply volumes (estimate) - standard cubic metres (scm)  -      12,142,200 scm for the thermal year ending 30 Sep 2023 (6 months)

                                                              -      24,970,400 scm for the thermal year ending 30 Sep 2024 (12 months)
 GSA gas pricing                                              -      Linked to Heren PSV day ahead mid

                                                              -      Heren PSV day ahead mid is a virtual, market-based price
                                                              assessment announced in the ICIS Heren report at 5:30pm on any Banking Day for
                                                              gas prices in Italy.  PSV is short for "Punto di Scambio Virtuale" which
                                                              translates to "virtual trading point"

                                                              -      Heren PSV day ahead mid is the arithmetic mean of the Day-ahead
                                                              Offer price and the Day-ahead Bid price for Natural Gas at the PSV on such
                                                              Banking Day; and (ii) in respect of a Day that is a non-Banking Day, the
                                                              arithmetic mean of the Weekend Offer price and Weekend Bid price for Natural
                                                              Gas at the PSV on such non-Banking Day as published, in each case, on the
                                                              Banking Day immediately preceding the relevant Day by ICIS Heren under the
                                                              heading: "PSV Price Assessment" in "European Spot Gas Markets", and expressed
                                                              in Euros per MWh

                                                              -      As Heren PSV day-ahead mid pricing is only available in ICIS Heren
                                                              reports (private and subscription based), Dutch TTF spot price is considered a
                                                              useful proxy which is publicly available.  Refer to competent persons report
                                                              July 2022, Section 5 'Economic Analysis' (see link below)
 PVO supply volume nominations                                -      PVO to provide provisional nominations monthly, weekly and daily

                                                              -      Actual and binding nominations required by 2pm on any Banking Day
 GSA payment terms                                            GSA includes detailed invoicing process for gas sales and SNAM transport
                                                              costs.  Settlement and payment process completes 20 days after month end
 Podere Maiar - 1 operating costs                             Expected to be Euro 0.60 million per annum, abandonment costs expected to Euro
                                                              2.70 million.  Refer to competent persons report July 2022, Section 5
                                                              'Economic Analysis' (see link below)

 

 

About Selva:

The Podere Gallina Licence is in the Po Valley region of northern Italy.  The
licence contains the currently shut‑in 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 Podere Gallina licence held via Prospex's
two wholly owned subsidiaries, PXOG Marshall Ltd (17% of the Licence) and UOG
Italia Srl (20% of the Licence).

The Podere Gallina Licence holds independently verified 2P gross 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 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.

References:

 1  Source: "Competent Person's Report Podere Gallina Licence, Italy" prepared
by CGG Services (UK) Limited in July 2022 [https://bit.ly/3JASCc2
(https://bit.ly/3JASCc2) ]

 

 

 

Glossary:

scm                       Standard cubic metres

MMscm               Million standard cubic metres

Bcf                        Billion standard cubic feet

MMscfd               million standard cubic feet per day

MWh                    Mega Watt hour

 

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.

 

An Investor Presentation from January 2023 is available on the Company's
website at https://www.prospex.energy/home/ (https://www.prospex.energy/home/)

 

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