RE: Pxog value27 Dec 2018 11:43
Ed Dawson talks us through some of the potential triggers for a re-rate in 2019.
Tesorillo Spain
Next year, he says the company has plenty to be getting on with at the project ahead of drilling and increasing its stake to nearly 50pc: ‘We are working to come up with one or possibly two drilling locations. Drilling will likely take place alongside us increasing our stake. Once we are ready to drill, we will then bolster our position. Work on getting to this stage is ongoing. For example, re-processing the seismic data will take a month or two. The big steps are permitting and making the applications for the well. We will also produce an updated CPR for the project next year. That’s a step we can control, as it is all internal.’
Bainet Romania
Bainet was the first ready-to-drill prospect out of many leads at Suceava. As such, Dawson tells us that the firm is looking to replicate its Romanian success in 2019:
‘Romania is up and running, we are producing gas, selling gas, and we are getting paid for gas. I hope we will drill something similar in 2019. It is cheap drilling, and we can get it onto production very easily.’
Podere Gallini Italy
Dawson hopes to develop this considerably next year ahead of expected output by 2020:
‘We have put in the application for a production permit on the Selva discovery. We have had positive meetings so far with regard to moving that forward. We are looking to formalise and update the market on that progress.’
Alternative funding
The beginning of production in Romania has also opened up Prospect to significant non-equity funding. In October, the business announced that it had raised $480,000 via the issue of unsecured loan notes to new and existing investors. This included several directors of the company. The loan notes will pay 10pc interest biannually, capitalised to 30 June 2019 with cash payments beginning on December 2019.
Also, subscribers were issued with 55 warrants for each £1 of loan note subscribe. Each of these gives the subscriber the right to acquire one ordinary share at 0.6p
Prospex will use the money to fund its share of the budgeted early-stage development costs in Italy. It will also cover the company’s general expenditure next year. It added that it expects to be able to fund the full development of the gas discovery and further exploration in Italy from this and additional non-equity funding as the project progresses.
In the update, the firm said its ability to secure non-equity financing options to fund future developments is reflective of the progress it has made over the last 12 months. Dawson reiterates this to us, adding that he is excited about where the business can build on these new options moving forward, as it continues to bolster production:
‘We offer a whole portfolio these days, and we are continuing to look at other projects as well. This has allowed us to look at different forms of financing as opposed to straight equity, which is dilutive for our shareholders.
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