REG - Prospex Energy PLC - Operational Update & Appointment of Joint Broker

Prospex EnergyAnnouncement

08/04/2025 07:00

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RNS Number : 0047E  Prospex Energy PLC  08 April 2025

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

 

8 April 2025

 

Prospex Energy plc

("Prospex" or the "Company")

 

Operational Update and Appointment of Joint Broker

187% Increase in Net Production Rates since 2024

 

Prospex Energy plc (AIM: PXEN), the AIM quoted investment company focused on
European gas and power projects, is pleased to provide an operational update
on its production, development and drilling schedules across its portfolio of
three producing natural gas assets onshore Europe: Viura, Selva and El
Romeral.

The net production across Prospex's portfolio of investments is now at
≈70,000 scm/d (≈2.5 MMscfd ≈424 Boe/d).  There has been a reduction of
the flow rates achieved from the Viura production facility since the initial
high rates seen in January 2025.  Despite this reduction, Prospex's net
production rates have increased by 187% since January 2024.  Net revenues
have also risen year on year assisted also by the rise in energy prices.  For
the ownership of each of the assets in the Company's investment portfolio,
please refer to the notes section below.

 

Prospex Energy Net Production

 

Viura Production (45% of Net Production)

Gross gas production from the Viura field averaged ≈217,000 scm/d (≈7.7
MMscfd) for the months of February-March 2025, which net to Prospex was
≈31,400 scm/d (≈1.1 MMscfd).  The original producing well on the Viura
field known as Viura-1 ST3 was not in production during this period.

The Viura-3 well was worked over to convert it into a water injection well in
December 2024/January 2025.  However, it was determined that Viura-3 is not a
candidate for water injection.  Consequently, the Viura plant is continuing
current water abatement procedures, and the Viura-3 well has been capped and
suspended.

 

Viura Project Drilling Schedule Update

As advised in the RNS of 20 March 2025, the schedule for the commencement of
drilling operations at the Viura gas field in northern Spain, operated by
HEYCO Energy, has been pushed back by 6 to 8 weeks.  For operational reasons,
the operator has advised that  drilling  on the Viura project is now
expected to start in Q2 2025, commencing with the Viura-3B well which was
permitted first in 2024.

The procurement of long lead items and the necessary equipment required for
drilling has been secured from production income.

 

Selva Production (43% of Net Production)

Gross gas production from the Selva field averaged ≈79,800 scm/d (≈2.8
MMscfd) for the months February-March 2025, which net to Prospex was ≈29,900
scm/d (≈1.1 MMscfd).  Production operations continue to run smoothly from
this asset which has achieved gross flow rates of between 78,000 - 80,000
scm/d throughout 2024.

 

Selva 3D Seismic Acquisition and Drilling Schedule

The 3D seismic acquisition on the Selva Malvezzi concession is anticipated in
Q3 2025 with the required permitting for the equipment mobilisation and
execution of the project proceeding according to plan.  The 3D seismic
acquisition is scheduled to be completed within a three-week period and the
data processing and interpretation will be completed immediately following
acquisition.

 

The permit applications to drill the four new wells on the Selva Malvezzi
concession were officially lodged with the central Italian Ministry in Rome on
24 December 2024.  The current estimate of the commencement of drilling once
full permits are received and the necessary equipment has been procured is
Q4-2025/Q1-2026.  The Environmental Impact Assessment ("EIA") has been
submitted and the statutory consultation process is underway.  Discussions
with landowners for access to the required sites is underway and is expected
to take several months in parallel with the EIA process.

 

El Romeral Production (12% of Net Production)

Gross gas production from the El Romeral concessions for the months
February-March 2025 averaged ≈17,300 scm/d (≈0.6 MMscfd), which net to
Prospex was ≈8,700 scm/d (≈0.3 MMscfd).  All the gas was converted into
electricity and sold on the hourly spot market generating an average of
≈1,700MW throughout the quarter (≈850MW net to Prospex).  When the
acquisition of 100% of Tarba completes later this month, Prospex's net
production from this asset will double.

 

El Romeral Drilling Schedule

The 30-working day Statutory Consultation period of the Environmental Impact
Assessment ("EIA") for the application to drill the five new natural gas wells
ended on 4 April 2025.  The Junta de Andalucía now reports back to MITECO
(the central Ministry in Madrid) which will then collate and review the final
EIA evaluation and all reports from the public and statutory consultees.
MITECO then produces its final review before issuing the approval resolution
granting the permits to drill the wells.  This process can take between 90
and 180 days.  As long as no significant objections are received, the
earliest that permits to drill the 5 wells on the El Romeral concessions are
received would be Q4 2025, but MITECO is under no obligation to adhere to
these time frames.

 

A new Corporate Presentation for Q2-2025, which contains the latest estimate
of these drilling schedules in a GANTT chart is available on the Company's
website. https://prospex.energy/investors/corporate-documents
(https://prospex.energy/investors/corporate-documents)

 

Appointment of Hannam & Partners ('H&P') as Joint Corporate Broker

The Company is also pleased to announce the appointment of H&P as Joint
Corporate Broker to the Company.  Alongside their broking services, H&P,
will, among other things, initiate research on Prospex (currently expected
late April), with periodic updates on corporate developments and assist with
the Company's market communications.  Their research will be available to all
shareholders via both their own and the Company website.

 

Hannam & Partners is acting in a Joint Corporate Broker capacity alongside
VSA Capital Limited.

 

Mark Routh, Prospex's CEO, commented:

 

"Operations continue to make solid progress across our portfolio of assets.
 As an investing company rather than an operator, we do not control
on-the-ground activities or the timeframes associated with permitting.
 However, our deep sector knowledge and subsurface expertise combined with
our understanding of the growing energy demand across Europe, has helped drive
a net production increase of over 187% since the same period in 2024.  This
has led to a commensurate increase in net revenues in line with that increase
in production.  This growth has enabled us to make strategic acquisitions,
including the Viura asset last August and the proposed acquisition of Tarba,
funded from production income, which should complete later this month.  I
remain confident in our ability to continue delivering sustainable growth for
the benefit of all shareholders.

 

"To this end, I am  extremely pleased to announce the appointment of Hannam
& Partners as our joint corporate broker.  Hannam & Partners is a
specialist in the natural resources sector and will provide the Company with
an enhanced package of services including the preparation of an analyst's
research note on the Company for our existing and potential investors.

 

"I am excited to be working closely with the team at Hannam & Partners in
the coming months as we increase our natural gas production and cash flow from
our asset portfolio in both Italy and Spain."

 

Investor Meet Presentation

The Company will provide a live presentation on the Company's operations via
Investor Meet Company on Wednesday 16 April 2025 at 2pm BST.

 

Investors can sign up to Investor Meet Company for free and add to meet
Prospex Energy Plc via:
https://www.investormeetcompany.com/prospex-energy-plc/register-investor
(https://www.investormeetcompany.com/prospex-energy-plc/register-investor)

 

Investors who already follow Prospex Energy on the Investor Meet Company
platform will automatically be invited.

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of
the European Union (Withdrawal) Act 2018, as amended by virtue of the Market
Abuse (Amendment) (EU Exit) Regulations 2019.

 

* * 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 (Corporate Finance)
 Neil Passmore                     Hannam & Partners             Tel: +44 (0) 20 7907 8500

 Leif Powis
 Ana Ribeiro / Charlotte Page      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.

 

The Company currently has three non-operated, revenue generating, onshore
producing gas investments in Europe with low operational risk:

•     Viura Gas Field, northern Spain (7.24% interest)

•     Selva Malvezzi, northern Italy (37% interest)

•     El Romeral gas to power plant, southern Spain (49.9% interest,
soon to be 100%)

 

Prospex also owns a 15% interest in the Tesorillo Exploration Permit in
Southern Spain which will become a 100% working interest on the completion of
the Tarba acquisition.

 

Prospex has identified and hopes to acquire prospective blocks in Poland,
which meet the Company's stringent investment criteria.

 

The Company has no debt finance outstanding.

 

Net after-tax cash flows are as far as possible and where appropriate,
retained within the Company's investment vehicles to fund expected future
development costs therein and limit foreign exchange risk.

 

About Viura:

The Viura-1B development well, which has been drilled by HEYCO Energy Iberia
S.L. ("HEI"), reached its revised targeted Total Depth ("TD") of 4,500 metres,
which is ≈4,100 metres True Vertical Depth ("TVD"), on 21 October 2024 in
the 6-inch hole section of the bottom 450 metres of the well.  Prior to
drilling the current Viura-1B well, the Viura producing gas field onshore in
northern Spain had an estimated gross original gas in place of 211 Bcf (6 Bcm)
and estimated reserves of 105 Bcf (3 Bcm).  To date, just 16 Bcf (0.5 Bcm) of
gas has been produced from Viura meaning that the remaining reserves were
estimated as 90 Bcf (2.5 Bcm), which is 6.5 Bcf (0.18 Bcm) net to Prospex.

The Viura-1B well was deepened by 450 metres in order to appraise the
undrilled Utrillas-B formation and assess if it was gas bearing.  Having
confirmed the presence of gas-bearing reservoir quality sandstones in the
Utrillas-B, the operator completed this interval with a cemented 4½ inch
liner.  The flow testing programme for the Utrillas B section will be
performed during the planned plant shut‑down in H2 2025.

The drilling rig has been cold stacked at the Viura-3A/Viura-3B well site
locations in preparation for the commencement of drilling in May 2025.

Following the shut-in of the Marismas gas concession for its conversion to a
gas storage facility, there are now only two producing onshore natural gas
fields in Spain: El Romeral and Viura.  Prospex is an owner in both of these
concessions and thus is the only company in Spain owning a working interest in
both of Spain's onshore producing gas fields.  Prospex owns a 49.9% share of
the El Romeral concessions (soon to be 100%) and a 7.2365% of the Viura
concession.

HEI currently has a 58.7964% interest in Viura.  The other participants in
the ownership of the Viura Field Development are Sociedad de Hidrocarburos de
Euskadi, S.A. ("SHESA") (owner of the 37.6901% of the Concession) and Oil and
Gas Skills, S.A. (owner of the 3.5135% of the Concession).  On 5 April 2024,
HEI entered into an asset purchase agreement with SHESA for the acquisition of
the participation of SHESA in the Viura Field Development, which is subject to
the fulfilment of certain conditions precedent.  Prospex through its 7.5%
shareholding in HEI indirectly owns 7.2365% of the Viura concession, its
reserves and the existing surface production facilities of the Viura gas
plant, which is connected to the Spanish national grid.

HEI acquired its interest in the Viura gas field and became operator in
2022.  A new 3D seismic survey was acquired in 2013.  The production well in
the field Viura-1 ST3 has not been in production in 2025.  The Viura-3 well
was worked over to convert it into a water injection well in December
2024/January 2025.  However, it was determined that Viura-3 is not a
candidate for water injection.  Consequently, the Viura plant is continuing
current water abatement procedures, and the Viura-3 well has been capped and
suspended.

The Viura-1B well commenced drilling operations on 22 June 2024.  The new
investors (including Prospex) into HEI funded 31.58% of the development costs
to earn 15.79% ownership of HEI.  Prospex are funding 15% of the development
costs of the HEI development programme comprising the Viura-1B well and the
proposed 2025 two well drilling programme to earn 7.5% ownership of HEI and
indirectly 7.2365% of the Viura asset.

Other new investors are funding 16.58% of the development costs to earn an
8.29% ownership in HEI.

The two new wells to be drilled from the first half of 2025 and completed in
the second half of 2025 are to be funded from revenues from existing and new
production from Viura or from new funds if required.  Since 29 November 2024,
Viura-1B has been generating revenues from production from the start of the
testing programme.  The 2025 development programme is to be funded by future
cash calls or from Phase 1 production or both.

There is a preferred pay-back mechanism for Prospex and all participants
(including HEGI and new investors) of this new investment in HEI, the ("HEI
Investors").  The HEI Investors will enjoy a 10% interest on their capital
investments paid out from the existing and future production from Viura.
Until the HEI Investors have recovered their full capital commitments, plus
the 10% preferred interest return, HEGI will not receive production income on
their other 50% ownership of HEI over and above operating expenses and an
allowance for Spanish taxes and royalties.  This means that Prospex will earn
14.473% of the revenues from the gas production from the Viura field until it
has achieved payback of its total expected ≈£8 million capital
investment.  The gross cost (including the current Viura-1B well which has
already been funded) of the three phase, three-year Viura development
programme is estimated at a total of £55.4 million ($70.4 million).  HEGI is
funding over 50% of that programme and the new HEI Investors are funding
31.58% through their interest in HEI which earns them an indirect 15.2368%
ownership of the Viura asset (net 7.2365% to Prospex).

 

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.

 

About El Romeral and Tarba:

The El Romeral power plant is operated by Tarba, which is based near Carmona
east of Seville in the province of Andalucía, Spain.  Prior to the
completion of the acquisition of the Warrego Shares, the El Romeral asset was
co-owned through Tarba by Prospex with a 49.9% working interest and Warrego
Energy Limited with a 50.1% working interest.  Warrego Energy is wholly owned
by Hancock Energy (PB) Pty Ltd in Perth Western Australia.

When Prospex completes the 100% acquisition of Tarba, the prospective
resources acquired as part of that transaction, assigns gross un-risked
mid-case prospective resources in the three El Romeral concessions of 90 bcf
across 11 low-risk prospects that have been mapped on the concessions
according to the CPR 2 .

The El Romeral gas and power project in Spain, has natural gas production
wells which supply gas to an 8.1MW power plant near Carmona in Southern
Spain.  It is currently operating at about 30% of its full capacity because
Tarba is waiting on the permits to drill five further infill wells on the
concessions to increase production.  Tarba is already categorised as a hybrid
energy provider with the successful installation of photovoltaic panels on the
roof of the plant in August 2022.  Tarba sells electricity generated from the
plant on the spot market in Spain.  The El Romeral licences comprise three
contiguous production concessions.

Tarba is pioneering a new hybridisation model that combines natural gas and
solar energy as sources for electricity generation in the ecological
transition process by developing a project to produce 5MW electricity using
photovoltaic solar energy ("Project Helios").

In 2023 and 2024, Tarba supplied enough energy to cover the electricity
consumption of approximately 6,700 homes in the area, even when operating the
facility at one third of its capacity.  With future wells to be drilled on
the concessions, the plant is expected to reach its maximum nameplate
production capacity to sell 8.1MW of power into the grid.  The combination of
further natural gas extracted from the concessions and the new photovoltaic
generation is expected to cover the energy supply of 20,100 homes per year.

 

About Tesorillo and Ruedalabola

The Tesorillo Project in the Cadiz province of Southern Spain comprises two
petroleum exploration permits, the Tesorillo and Ruedalabola Permits that were
approved as a joint investigation programme.  The Tesorillo Project covers
94,000 acres and includes a known gas discovery at the Almarchal-1 well,
drilled in 1957.  Prior to the completion of the acquisition of the Warrego
Shares, Prospex held a 15% working interest in the Tesorillo project via Tarba
with the remaining 85% working interest held by Warrego Energy Limited.
Prospex also had the right to acquire a further 34.9% of the Tesorillo Project
on payment of €1.725 million prior to the drilling of the appraisal well on
Tesorillo.  On completion of the acquisition of the Warrego Shares, this
obligation will fall away since Prospex will own 100% of Tarba.  The
Tesorillo Project is estimated to contain 831 Bcf gross unrisked prospective
resources on a best estimate basis and has excellent proximity to pipelines
and infrastructure.  (Best Estimate Prospective Resource assessment
independently verified by Netherland, Sewell and Associates( 3 ) - 5 May
2015.)

 

On 12 May 2021, an application was submitted to MITECO (the Spanish Regulator)
to convert the vast majority of the existing Tesorillo Project to an
exploitation concession, together with a field development plan for approval
and all of the necessary supporting documents.  The application was submitted
before the Climate Change Act 7/2021 of 22 May 2021 came into force.  The
outcome of this application is still under consideration by MITECO and will
not be known for some time.

 

Qualified Person Signoff

In accordance with the AIM note 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 more than 40 years of 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.

 

Glossary:

Bcf                            Billion standard
cubic feet

Bcm                          Billion standard cubic
metres

Boe                           Barrels of Oil
Equivalent (where 1 MMBoe = 5.8 Bcf)

MMBoe                  Million Barrels of Oil Equivalent

mcf                           Thousand standard
cubic feet

MMscfd                  Million standard cubic feet per day

MMscm                  Million standard cubic metres

MMscm/d             Million standard cubic metres per day

MWh                       Mega Watt hour

scm                           Standard cubic metres

scm/d                      Standard cubic metres per day

TTF                            The 'Title Transfer
Facility' - a virtual trading point for natural gas in the Netherlands.

 

References: -

 1           Source: "Competent Person's Report Podere Gallina
Licence, Italy" prepared by CGG Services (UK) Limited in July 2022
: https://bit.ly/44VF02A
(https://eur03.safelinks.protection.outlook.com/?url=https%3A%2F%2Fbit.ly%2F44VF02A&data=05%7C01%7Cana%40stbridespartners.co.uk%7Ce27db61066ba4edeed3f08db94f7d5a5%7C48b7268319d344289c4b73cf144d89ed%7C1%7C0%7C638267564391602202%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=glSh9awfUUAreAZfLeRjoo%2FtRCIsIW2TSML5zO%2FUkew%3D&reserved=0)

 2           El Romeral CPR
(https://prospex.energy/wp-content/uploads/2023/06/El-romeral-estimates-2019.pdf)
- Netherland, Sewell and Associates - 30 June 2019

 3           Tesorillo CPR - Netherland, Sewell and Associates - 5
May 2015

 

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