REG - Prospex Energy PLC - Year End Review and Business Development Update

Prospex EnergyAnnouncement

18/12/2023 07:00

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RNS Number : 0668X  Prospex Energy PLC  18 December 2023

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

 

18 December 2023

 

Prospex Energy PLC

('Prospex' or the 'Company')

 

Year End Review and Business Development Update

 

Prospex Energy PLC, the AIM quoted investment company focused on European gas
and power projects has released a review of the year and provides an update on
its business development activities in 2023.

 

Review of 2023

As we reach the end of 2023, it is important to reflect on what Prospex has
achieved during the year and the various milestones it has reached, including
the start of production at the Selva field, our second producing project in
Europe, and the significant reduction of debt, making us well positioned to
capitalise on future investment opportunities.

In February, Po Valley Operations Limited, the operator of the Selva Malvezzi
production concession, in which Prospex has a 37% working interest, signed a
gas sales agreement on behalf of the Joint Venture with BP Gas Marketing.

In April, the Company strengthened the Board with the appointment of Mr Andrew
Hay as Non-Executive Director.  Andrew has 30 years of experience in the
corporate finance sector with expertise in capital markets and a deep
understanding of the upstream energy markets.

Construction of the gas processing facility at the Podere Maiar 1 wellsite at
the Selva field in the Po Valley was completed on schedule in May and within
3% of budget with the successful connection to the SNAM gas grid.

In May, through Tarba Energía, 20 hectares adjacent to the El Romeral power
plant in Spain was leased for 25 years for Project Helios a 5MW solar panel
project.  The development of Project Helios will produce electricity through
photovoltaic solar energy and increase output from the plant by up to 60%.

Final safety checks by the local Fire Department were successfully completed
in June and formal documentation was issued by the Italian Energy Ministry to
enable the commencement of gas production from the Selva field.

Gas production started on 4 July 2023 from the Selva field in the Po Valley
region of northern Italy.  Prospex now has production income from two onshore
assets in two European countries.

Commissioning of the new gas processing facilities at the Podere Maiar-1 well
site was completed in August.

By September, all of the convertible loan notes issued in July 2022 were
converted to equity at 4.25p per share.  The £1.87 million raised helped
fund the Selva development project to first gas.

In October, Po Valley reported production at the Podere Maiar-1 gas well was
running at 62,000scm/d in line with the outlined ramp-up and testing
programme.

Gross quarterly production for the third quarter of 2023 is reported at
5,658,117 scm (2,093,503 scm net to PXEN) and gross revenue for the quarter is
€1,937,072 (€716,717 net to PXEN).

The El Romeral power plant in Spain will have generated gross revenues from
electricity production of about €1.8 million in 2023 (approximately €0.9
million net to PXEN).

Permit applications underway to drill five wells in Spain and three wells in
Italy.

 

Business Development Update

During 2023, Prospex either worked up or was offered more than 25 deals or
farm-ins in its core geographical area of interest of Europe focussing on
natural gas and power projects.  The Prospex technical team undertook in
depth evaluations on 12 of these opportunities and recommended that the Board
should progress to make an offer on two deals which were advanced to the heads
of terms stage.  One of those was ultimately not concluded since the Board
considered, on more detailed investigation, that it involved onerously high
drilling and development costs in the context of the geological chance of
success.  The other opportunity passed our due diligence process, and the
Company was ready to invest, subject to a fundraise.  Unfortunately, due to
continued challenging market conditions, we were advised that the market would
not support a fundraise of any magnitude before the New Year, so the Company
was unable to commit to the farm-in.

The Company will continue to evaluate investment opportunities in the New
Year.  However, and in order to minimise diluting investors, Prospex is
actively pursuing the self-funded acquisition of highly prospective
open-acreage in proven onshore basins in Europe.

 

Mark Routh, Prospex's CEO, commented:

"As I look back on 2023, I am proud of what the Company has achieved.  We now
have two producing, cash generative assets in Europe.  This was made possible
by issuing convertible loan notes last year, which enabled us to fund the
Selva development project to first gas production in early July 2023 - a
significant milestone.

"Regarding business development, it is very frustrating that all the hard work
and economic evaluation throughout the year cannot be reported until there is
a signed deal capable of acceptance.  Our strategy as an investment company
is to invest in projects which we believe have the potential to be value
accretive for shareholders and which generate interest and improve the
sentiment of the stock in the market.

"The Company uses its skills and experience to evaluate deals and will only
pursue those which are in the interests of our shareholders.  The Board does
not believe it is in shareholders' interests to finance deals on
disadvantageous terms.  In recent months, the state of the stock market has
made it almost impossible, in the Board's opinion, to finance good deals on
good terms.

"We acknowledge that the current share price does not reflect the real value
of the business, as is the case with many listed companies in the small-cap
arena.  However, we remain focused on delivering on our strategy and expect
that as we make progress and the general market conditions improve, this will
ultimately be reflected in the market value of the Company."

 

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 and to view the summary of the year review visit
www.prospex.energy (http://www.prospex.energy) or contact the following:

 

 

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

Rory Murphy
 Jerry Keen                                    Fox-Davies Capital Limited    Tel: +44 (0) 20 3884 7447
 Andrew Monk (Corporate Broking)               VSA Capital Limited           Tel: +44 (0) 20 3005 5000

Andrew Raca/Alex Cabral (Corporate Finance)
 Ana Ribeiro / Susie Geliher                   St Brides Partners Limited    Tel: +44 (0) 20 7236 1177

 

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