REG - Prospex Energy PLC - Half-year Report
19/09/2024 07:00
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RNS Number : 7209E Prospex Energy PLC 19 September 2024
The information contained within this announcement is deemed by the Company to
constitute inside information pursuant to Article 7 of EU Regulation 596/2014
as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 as amended. Upon the publication of this announcement
via the Regulatory Information Service, this inside information is now
considered to be in the public domain.
Prospex Energy Plc / Index: AIM / Epic: PXEN / Sector: Energy
19 September 2024
Prospex Energy Plc
('Prospex' or the 'Company')
Half Year Report
Prospex Energy Plc, the AIM quoted investment company, is pleased to announce
its unaudited Interim Results for the six months ended 30 June 2024.
Corporate and Operational Overview:
· The Company's investment portfolio projects continued to operate on a
fully self-funded basis.
· No serious Health and Safety incidents or environmental issues across
both its operations in Italy and Spain.
· Annulment of Italy's Plan of Areas, which had previously limited the
extent of hydrocarbon prospecting, exploration and production in Italy,
signals a commitment to promote and enable more domestic gas production.
· Actively advancing the permitting of 5 new wells on the El Romeral
concessions in order to bring the utilised electricity production capacity of
the gas-to-power plant to 100% (currently at 33%).
Post period
· Acquisition of 7.2365% in the Viura gas field in northern Spain
("Viura"), its third onshore producing and revenue generating well.
· Successful fundraise of approximately £4.2m via the issue of
69,955,393 new shares at 6p each. The funds raised were used to acquire 7.5%
of HEYCO Energy Iberia S.L. ("HEI") which has majority ownership in the Viura
gas field in northern Spain.
o Prospex is funding 15% of the cost of the development programme to earn
7.5% of HEI. The Company will earn a 10% coupon on its capital investment
and will be repaid its capital investment from 15% of the HEI production
income (after OPEX and taxes), until payback at which point Prospex's share of
net income reverts to 7.5%.
· Ten-year extension of the natural gas exploitation concessions at "El
Romeral 1, 2 and 3" to July 2034.
· 12-month extension to Selva Malvezzi's gas supply contract with BP
Gas Marketing Ltd.
Financial Overview
· All interest-bearing debt outstanding plus accrued interest has been
repaid.
· Well positioned for growth, cash generative with no debt.
· The Company reports a £275,120 loss after taxation from continuing
operations for the six-months ended 30 June 2024 (H1 2023 loss: £888,473).
· This includes a £nil unrealised gain/loss on revaluation of
financial assets at fair value (H1 2023 unrealised loss: £489,037).
· The valuation undertaken at 30 June 2024 resulted in no change in the
net book value of investments. Forward gas prices and exchange rates at 30
June 2024 were taken into consideration as well as gas produced from the
assets in reaching this conclusion.
· Loan capital repayments in the period were £168,487 and interest
payments were £6,753. All debt finance and interest accrued from the
Convertible Loan Notes issued in September 2022 was settled from accumulated
cash within the Company during the reporting period. No further debt-finance
has been raised subsequently.
· At 30 June 2024, the Company held cash and cash equivalents of
£10,991 (30 June 2023: £395,202). Prospex's net share of Cash and cash
equivalents held in Euros in its non-consolidated investment and joint venture
companies amounted to €794,762.
· The bulk of the decrease in trade and other receivables of £505,890
comprises debt repayments to the Company by its investment vehicles on
investment loans made during the exploration and development phases of its
projects.
· The Company and its investment vehicles are expected to have
sufficient funds to meet existing commitments.
Mark Routh, CEO of Prospex, said:
"Firstly, I am pleased to be able to report that our operations both in Italy
and in Spain have been executed this year with no serious Health and Safety
incidents nor any reportable environmental issues, which is a credit to the
operators in country.
"It has been a transitional period for Prospex, but one in which the Company
consolidated its position as an onshore gas producer in two stable European
countries, Italy and Spain. The Company now has no debts outstanding. Post
period-end, the Company announced the acquisition of an interest in Viura, a
producing gas field in Northern Spain thereby adding a third onshore gas
producing asset to our portfolio. This acquisition delivers the next step of
our growth strategy to increase the portfolio of onshore Europe producing gas
assets.
"A development well is being drilled on Viura with two further development
wells being planned next year to increase production even further.
Applications have been submitted to permit five further wells on the El
Romeral concessions in Andalucía southern Spain and preparations are in place
to drill four more wells on the Selva Malvezzi concession in the Po Valley in
northern Italy following the acquisition of a short low-cost 3D seismic survey
across the concession. Accordingly, in the Board's view, all three of
Prospex's producing onshore gas investments have significant upside potential
within the existing production concessions and I look forward to updating
shareholders as we progress with the conversion of both our contingent and
prospective resources on our three production concessions into proved
developed producing reserves."
Operational Highlights
· The Company's investment vehicles continued to operate on a fully
self-funded basis throughout the reporting period.
Selva Malvezzi
· Gas production operations continued at Podere-Maiar-1 well in Italy
with gross production of 13,220,652 scm during the period. Gross gas sales
in the period were €4,218,630, with €1,560,893 attributable to Prospex's
working interest.
· In January 2024, after six months of strong gas production, PVO
confirmed the optimum flow rate from the well should be set at 80,000 scm/d to
ensure that there is no debris accumulation.
· Po Valley Energy, Prospex's joint venture partners confirm potential
for a new seismic acquisition programme over the licence area following the
successful reprocessing of the existing 2D seismic lines in the production
concession. The new programme aims to optimise the drilling programmes of
the identified contingent resources at Selva North, Selva South and the East
Selva and Riccardina prospects.
· In June 2024, the Italian Ministry of Environment and Energy Security
("MASE") accepted the annulment of Italy's Plan of Areas which had previously
limited the extent of hydrocarbon prospecting, exploration and production in
Italy. This is an important sign of the current Government's commitment to
promote and enable more domestic gas production to address the serious energy
security challenges which Italy and more broadly Europe, are facing. It will
also enable the Joint Venture owners of Selva Malvezzi to realise maximum
value from its natural gas investments, whilst helping improve Italy's energy
security.
El Romeral
· Electricity generation operations continued from natural gas produced
from the El Romeral production concessions in Andalucía, southern Spain where
the Company's investment is in the operator, Tarba Energía s.l. ("Tarba").
Income from electricity generated during the period was €398,000 gross of
which €199,000 is attributed to Prospex's share. Revenues were impacted by
low electricity prices in Spain with the high contribution of local renewable
energy sources, including wind, solar and hydroelectricity power generation.
· The Company, together with its co-shareholder in Tarba, is actively
advancing the permitting of 5 new wells on the El Romeral concessions in order
to bring the utilised electricity production capacity of the gas-to-power
plant to 100% (currently at 33%). Tarba also continues to evaluate the
possibility of expanding the capability of the El Romeral assets to sell gas
directly to the national grid, as well as expanded solar power generation.
Post period end:
· In July 2024 a ten-year extension, to July 2034, of the natural gas
exploitation concessions "El Romeral 1, 2 and 3" was granted to Tarba by the
Spanish regulatory authority.
· In August 2024 Po Valley Energy, on behalf of the Selva Malvezzi
Joint Venture, signed a 12-month extension to the gas supply contract with BP
Gas Marketing Ltd ("BPGM"). BPGM buys the gas produced from Selva Malvezzi
at a premium to the quoted TTF gas price.
· At the end of August 2024, the Company completed the acquisition of
7.5% of HEYCO Energy Iberia S.L. ("HEI"), which has majority ownership in the
Viura gas field in northern Spain, having raised, in aggregate, gross proceeds
of approximately £4.2 million. By committing to fund 15% of the 2024-2026
HEI development programme, Prospex now owns 7.5% of HEI which translates to a
Prospex ownership of 7.2365% in the Viura concession.
· Prospex is funding 15% of the cost of the Viura development programme
to earn 7.5% of HEI. The Company will not only earn a 10% coupon on its
capital investment but will also be repaid its capital investment from 15% of
the HEI production income (after OPEX and taxes), until payback at which point
Prospex's share of net income reverts to 7.5%.
Business Development
The Company is actively evaluating a number of assets for potential
investment. The assets under consideration are all onshore in Europe and
include high impact exploration targets. The Company will keep shareholders
updated as these projects come to fruition.
CHAIRMAN'S STATEMENT
Operational Report
The first six months of 2024 was a period of preparation for the further
growth of the Company. The production income from both the Selva field in
northern Italy and from the electricity generation at El Romeral in southern
Spain laid the foundations for opportunities to increase the Company's
investments in onshore European gas assets, culminating post period end in the
acquisition of Prospex's third onshore producing gas asset in Viura, Northern
Spain.
With reliable income streams from three onshore gas producing assets in Europe
the Company is well placed for further growth.
Financial Review
For the six months ended 30 June 2024, the Company is reporting a net loss
after taxation from continuing operations of £275,120 (H1 2023: loss -
£888,473). Included in this is an unrealised loss of £nil arising on
revaluation of financial assets at fair value (H1 2023: loss - £489,037).
A valuation as at 30 June 2024 resulted in no change in the carrying value of
the Company's investments. The principal asset of the Company at the
reporting date was its shares in its subsidiary PXOG Marshall Limited in which
the producing assets in the Selva Malvezzi concession in Italy are held. In
addition to the 13,220,652 scm produced gas in the period from the asset, the
valuation takes into account the impact of changes in the forward curve of
European gas prices and the EUR:GBP exchange rate at 30 June 2024.
Administrative expenses of £521,209 were incurred in H1 2024, compared with
£461,322 in the same period last year.
At 30 June 2024, the Company held cash and cash equivalents of £10,991 (30
June 2023: £395,202). Prospex's net share of cash and cash equivalents held
in Euros in non-consolidated investment and joint venture companies amounted
to €794,762.
Outlook
The Board and management continue to focus on developing and growing the
Company's portfolio of assets and income streams, both by increasing the
productivity and profitability of existing assets, and through active search
and investigation of new investment opportunities which meet the Company's
discerning investment criteria.
Bill Smith
Non-Executive Chairman
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.
Prospex Energy Plc
Interim results
For the six months ended 30 June 2024
Statement of profit or loss and other comprehensive income
Six months ended Six months ended Year ended
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
£ £ £
CONTINUING OPERATIONS
Other income - 36,936 36,936
Administrative expenses (521,209) (461,322) (1,112,513)
Share-based payment charge - (191,757) (296,191)
OPERATING LOSS (521,209) (616,143) (1,371,768)
Loss on revaluation of investments and loans - (489,037) (469,709)
(521,209) (1,105,180) (1,841,477)
Finance income 252,842 257,187 519,982
Finance costs (6,753) (162,739) (241,056)
LOSS BEFORE INCOME TAX (275,120) (1,010,732) (1,562,551)
Income tax - 122,259 331,151
LOSS AND TOTAL COMPREHENSIVE LOSS FOR THE PERIOD (275,120) (888,473) (1,231,400)
Loss per share
- Basic and diluted earnings per share (0.08)p (0.31)p (0.41)p
Statement of financial position - As at 30 June 2024
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
£ £ £
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment - - -
Investment 15,596,671 15,575,603 15,594,931
15,596,671 15,575,603 15,594,931
CURRENT ASSETS
Trade and other receivables 5,695,203 6,229,986 6,201,093
Investments 100 100 100
Cash and cash equivalents 10,991 395,202 3,186
5,706,294 6,625,288 6,204,379
TOTAL ASSETS 21,302,965 22,200,891 21,799,310
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 7,279,630 7,232,065 7,279,630
Share premium account 17,158,847 15,100,654 17,158,847
Capital redemption reserve 43,333 43,333 43,333
Merger reserve 2,416,667 2,416,667 2,416,667
Fair value reserve 14,617,174 14,388,954 14,617,174
Retained earnings (21,213,723) (20,471,890) (20,938,603)
TOTAL EQUITY 20,301,928 18,709,783 20,577,048
LIABILITIES
NON-CURRENT LIABILITIES
Deferred taxation 927,658 1,136,550 927,658
927,658 1,136,550 927,658
CURRENT LIABILITIES
Trade and other payables 73,379 44,902 126,117
Financial liabilities - borrowings
Interest bearing loans and borrowings - 2,309,656 168,487
73,379 2,354,558 294,604
TOTAL LIABILITIES 1,001,037 3,491,108 1,222,262
TOTAL EQUITY AND LIABILITIES 21,302,965 22,200,891 21,799,310
Statement of changes in equity
For the six months ended 30 June 2024
Capital
Share Share Retained redemption Merger Fair value
capital premium earnings reserve reserve reserve Total
£ £ £ £ £ £ £
Unaudited
At 1 January 2024 7,279,630 17,158,847 (20,938,603) 43,333 2,416,667 14,617,174 20,577,048
Total comprehensive income for the period - - (275,120) - - - (275,120)
At 30 June 2024 7,279,630 17,158,847 (21,213,723) 43,333 2,416,667 14,617,174 20,301,928
Unaudited
At 1 January 2023 7,225,893 14,850,928 (20,141,952) 43,333 2,416,667 14,755,732 19,150,601
Total comprehensive income for the period - - (888,473) - - - (888,473)
Issue of shares 6,172 249,726 - - - - 255,898
Equity settled share based payment - - 191,757 - - - 191,757
Transfer to fair value reserve - - 366,778 - - (366,778) -
At 30 June 2023 7,232,065 15,100,654 (20,471,890) 43,333 2,416,667 14,388,954 18,709,783
Audited
At 1 January 2023 7,225,893 14,850,928 (20,141,952) 43,333 2,416,667 14,755,732 19,150,601
Total comprehensive income for the year - - (1,231,400) - - - (1,231,400)
Issue of shares 53,737 2,307,919 - - - - 2,361,656
Equity-settled share based payments - - 296,191 - - - 296,191
Transfer to fair value reserve - - 138,558 - - (138,558) -
At 31 December 2023 7,279,630 17,158,847 (20,938,603) 43,333 2,416,667 14,617,174 20,577,048
Statement of Cash Flows
For the six months ended 30 June 2024
Six months ended Six months ended Year ended
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
£ £ £
Operating activities
Loss before income tax (275,120) (1,010,732) (1,562,551)
Loss on revaluation of investments and loans - 489,037 469,709
Finance income (252,842) (257,187) (519,982)
Finance costs 6,753 162,739 241,056
Operating loss (521,209) (616,143) (1,371,768)
Decrease/(increase) in trade and other receivables 758,730 (461,870) (170,812)
Increase/(decrease) in trade and other payables (52,738) 3,462 84,677
Equity-settled share-based payment charge - 191,757 296,191
Net cash inflow/(outflow) from operating activities 184,783 (882,794) (1,161,712)
Cash flows from investing activities
Purchase of investments (1,740) - -
Interest received 2 4,308 4,938
Interest paid (6,753) (159,862) (166,365)
Net cash outflow from investing activities (8,491) (155,554) (161,427)
Cash flows from financing activities
Loan repayments (168,487) (107,227) (214,454)
Issue of share capital - 58,015 58,017
Net cash outflow from financing activities (168,487) (49,212) (156,437)
Net increase/(decrease) in cash and cash equivalents 7,805 (1,087,560) (1,479,576)
Cash and cash equivalents at start of period 3,186 1,482,762 1,482,762
Cash and cash equivalents at end of period 10,991 395,202 3,186
Notes to the interim financial statements
1 General information
Prospex Energy Plc is a company incorporated in England and Wales, which is
listed on the Alternative Investment Market of the London Stock Exchange
Plc. The address of its registered office is 60 Gracechurch Street, London
EC3V 0HR.
The Group is primarily involved in the development, exploration and the
production of natural gas and the generation of electricity.
2 Financial information
The interim financial information for the six months ended 30 June 2024 and
2023 have not been audited or reviewed by the auditors and do not constitute
statutory accounts within the meaning of Section 434 of the Companies Act
2006. The comparative financial information for the year ended 31 December
2023 has been derived from the audited financial statements for that period.
A copy of those statutory financial statements for the year ended 31 December
2023 has been delivered to the Registrar of Companies. The report of the
independent auditors on those financial statements was unqualified, drew
attention to a material uncertainty relating to going concern and did not
contain a statement under Sections 498 (2) or (3) of the Companies Act 2006.
The interim financial statements have been prepared in accordance with
International Accounting Standards in conformity with the requirements of the
Companies Act 2006 as they apply to the financial statements of the Company
for the six months ended 30 June 2024 and as applied in accordance with the
provisions of the Companies Act 2006 and under the historical cost convention
or fair value where appropriate. They have also been prepared on a basis
consistent with the accounting policies expected to be applied for the year
ending 31 December 2024 and which are also consistent with those set out in
the statutory accounts of the Company for the year ended 31 December 2023.
The interim financial statements are presented in pounds sterling because that
is the currency of the primary economic environment in which the company
operates.
3 Taxation
On the basis of these accounts there is no charge to taxation.
4 Loss per share
The loss and number of shares used in the calculation of earnings per share
are as follows:
Six months ended Six months ended Year ended
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
Basic and diluted EPS
Loss for the financial period (275,120) (888,473) (1,231,400)
Weighted average number of shares 332,584,535 283,657,000 298,729,117
Loss per share (0.08)p (0.31)p (0.41)p
The loss and weighted average number of shares used for calculating the
diluted loss per share are identical to those for the basic loss per share.
The exercise price of the outstanding share options are above the market price
of the shares and would therefore not be dilutive under IAS 33 'Earnings per
Share'.
5 Non-current investment
Shares in
group Unlisted
undertakings investments Total
£ £ £
Unaudited
At 1 January 2024 15,544,931 50,000 15,594,931
Additions 1,740 - 1,740
At 30 June 2024 15,546,671 50,000 15,596,671
Unaudited
At 1 January 2023 16,014,640 50,000 16,064,640
Revaluations (489,037) - (489,037)
At 30 June 2023 15,525,603 50,000 15,575,603
Audited
At 1 January 2023 16,014,640 50,000 16,064,640
Revaluations (469,709) - (469,709)
At 31 December 2023 15,544,931 50,000 15,594,931
The investments in subsidiary undertakings are accounted for at fair value
through the profit and loss, as the Company is deemed to be an Investment
Entity.
6 Dividends
The directors do not propose to declare a dividend for the period.
7 Copies of interim results
Copies of the interim results can be obtained from the website
www.prospex.energy (http://www.prospex.energy) . From this site you may
access our financial reports and presentations, recent press releases and
details about the company and its operations.
Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed to be, forward
looking statements. Forward looking statements are identified by their use
of terms and phrases such as ''believe'', ''could'', "should" ''envisage'',
''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect",
''will'' or the negative of those, variations or comparable expressions,
including references to assumptions. These forward-looking statements are
not based on historical facts but rather on the Directors' current
expectations and assumptions regarding the Company's future growth, results of
operations, performance, future capital and other expenditures (including the
amount, nature and sources of funding thereof), competitive advantages,
business prospects and opportunities. Such forward looking statements
reflect the Directors' current beliefs and assumptions and are based on
information currently available to the Directors.
Such statements are based on current expectations and assumptions and are
subject to a number of risks and uncertainties that could cause actual events
or results to differ materially from any expected future events or results
expressed or implied in these forward-looking statements. Persons receiving
and reading this announcement should not place undue reliance on
forward-looking statements. Unless otherwise required by applicable law,
regulation or accounting standard, the Company does not undertake to update or
revise any forward-looking statements, whether as a result of new information,
future developments or otherwise.
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