REG - Prospex Energy PLC - Operational Update

Prospex EnergyAnnouncement

25/02/2025 07:00

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250225:nRSY2778Ya&default-theme=true

RNS Number : 2778Y  Prospex Energy PLC  25 February 2025

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

 

25 February 2025

 

Prospex Energy plc

("Prospex" or the "Company")

 

Operational Update

230% Increase in Net Production Rates since January 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 ≈86,000 scm/d (≈3.1MMscfd), a 230% increase in production rate from
January 2024.  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 (55% of Net Production)

Gross gas production from the Viura field averaged ≈323,000 scm/d
(≈11.4MMscfd) for the month of January 2025, which net to Prospex was
≈47,000 scm/d (≈1.7MMscfd).  The original producing well on the Viura
field known as Viura-1 ST3 was not in production in this period.

 

Viura Drilling Schedule

The two new development wells Viura-3A and Viura-3B are targeted to spud in
April 2025.  The procurement of long lead items and the necessary equipment
required for drilling are progressing well.

 

The Spanish Ministry in Madrid officially approved the permit to drill
Viura-3A on 24 January 2025.  This was announced in the Official State
Gazette on 7 February 2025.

https://www.boe.es/buscar/doc.php?id=BOE-A-2025-2360
(https://www.boe.es/buscar/doc.php?id=BOE-A-2025-2360)

The permit to drill the Viura-3B well was approved in 2024.

 

 

Selva Production (35% of Net Production)

Gross gas production from the Selva field averaged ≈80,000 scm/d
(≈2.8MMscfd) for the month of January 2025, which net to Prospex was
≈30,000 scm/d (≈1.1MMscfd).  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 will now occur in
Q3/Q4 2025 since the required permitting for the equipment mobilisation and
execution of the project had to avoid the agricultural planting season in the
Po Valley, which lasts from 15 March to the end of July each year.  Since 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, it is not expected to result in any delay to the
drilling schedules.

 

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 (10% of Net Production)

Gross gas production from the El Romeral concessions in Q4-2024 averaged
≈18,000 scm/d (≈0.6MMscfd), which net to Prospex was ≈9,000 scm/d
(≈0.3MMscfd).  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).

 

On 11 January 2025, the main 9MW transformer at the El Romeral plant which
exports the generated electricity to the national grid failed, resulting in
the shutdown of the plant which occurred safely and with no harm to personnel
or other equipment.  The local team of the Tarba Energía operator sourced a
replacement transformer on rental which was successfully installed and
electricity generation re-started on 1 February 2025.  The original
transformer was more than 22 years old and its repair was deemed uneconomic
and it has been sold for its inherent and valuable scrap value.  The new
rental transformer is a higher specification at 16-20 MW and will be replaced
by a new appropriately sized transformer in due course.

 

El Romeral Drilling Schedule

Significant progress was made last week on the permitting process for the five
new wells to be drilled on the El Romeral concessions.  As announced on 20
February 2025, the Statutory Consultation of the EIA for the application to
drill the five new natural gas wells was publicly gazetted on the State
Official Bulletin on 19 February 2025.  The announcement was also published
on the Official Gazette of the Province of Seville on 20 February 2025.

This is the link to the official State Bulletin:

https://www.boe.es/diario_boe/txt.php?id=BOE-B-2025-5828
(https://www.boe.es/diario_boe/txt.php?id=BOE-B-2025-5828)

This means that the 30-working day consultation period ends on 4 April 2025.

 

A new Corporate Presentation for Q1-2025, which contains the latest estimate
of these drilling schedules in a GANNT chart is available on the Company's
website. https://prospex.energy/investors/corporate-documents
(https://prospex.energy/investors/corporate-documents)

 

Mark Routh, Prospex's CEO, commented:

"The Company is embarking on an exciting phase of its organic growth strategy
with plans to drill 11 natural gas wells across its three production
concessions within the next 18 months.  Two of these wells, Viura-3A and
Viura-3B are already fully permitted.  The four wells in northern Italy and
the five wells in southern Spain are progressing through the necessary
regulatory and permitting processes in order to secure the full legal rights
to drill once the environmental impact assessments have been evaluated and
approved.

 

"With energy security rising to the top of the agenda for most European
nations, there is now a favourable sentiment for expanding the development of
onshore, indigenous natural gas.  Such natural gas production has a fraction
of the carbon footprint when compared with the importation of natural gas by
pipeline over long distances and an even smaller fraction when compared to the
importation of liquefied natural gas.

 

"Ideally, Prospex will be able to fund the development of the new wells from
existing revenues, limiting shareholder dilution.  However, this is dependent
on a number of factors including the continued and uninterrupted production of
gas,  gas and electricity prices, the timing of bringing the new wells into
production, which is subject to permitting, and the availability of other
sources of finance. The Company has made significant operational advances in
the last six months and I look forward to updating shareholders on our
continued progress."

 

 

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)
 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)

 

Prospex also owns a 15% interest in the Tesorillo Exploration Permit in
Southern Spain, with the option to increase to 49.9% and 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 Q2-2025.

Following the shut-in of the Marismas gas concession for its conversion to a
gas storage facility, there are now only two producing onshore gas fields in
Spain: El Romeral and Viura.  Prospex is a co-owner in both of these
concessions and 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 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.  There is one well in
production in the field Viura-1 ST3, which had been shut in until recently.
This well produces intermittently as water production is managed.  There is a
workover now underway on the existing produced water disposal well Viura-3 to
reinstate its operability.  HEI has permits in place to drill one further
development well, Viura-3B, scheduled to start in the second quarter of
2025.  Permits have been submitted to drill a third development well on the
concession Viura-3A batch drilled with Viura-3B well in Q2 2025.

The Viura-1B well commenced drilling operations on 22 June 2024.  The new
investors (including Prospex) into HEI are funding 31.58% of the development
costs to earn 15.79% ownership of HEI.  Prospex is funding 15% of the
development costs of the HEI development programme comprising the current well
in 2024 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.

 

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)

 

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.  The El Romeral asset
is co-owned through Tarba by Prospex which has a 49.9% working interest and
Warrego Energy Limited which has a 50.1% working interest. Warrego Energy is
now wholly owned by Hancock Energy (PB) Pty Ltd in Perth Western Australia.

 

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.

 

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:

scm                           Standard cubic metres

scm/d                      Standard cubic metres per day

MMscm                  Million standard cubic metres

MMscm/d             Million standard cubic metres per day

Bcm                          Billion 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.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDDZGZZRDLGKZM