Last checked at 14 Feb 2023 07:00
Prospex Energy PLC / Index: AIM / Epic: PXEN / Sector: Oil and Gas
14 February 2023
Prospex Energy PLC
('Prospex' or the 'Company')
Italy: Selva Field Development
Gas Sales Agreement signed with BP Gas Marketing
Prospex Energy PLC (AIM: PXEN), the AIM quoted investment company focused on European gas and power projects, is pleased to announce that the Operator of the Selva Malvezzi production concession in which Prospex has a 37% working interest, has signed a gas sales agreement ("GSA") with BP Gas Marketing Limited ("BPGM"), an indirect, wholly owned subsidiary of BP International Limited ("BPI") under which BPGM will purchase the forecast gas production from the soon to be completed Podere Maiar-1 production facility in the Selva Malvezzi production concession located in the Po Valley Region of Italy. Po Valley Operations Pty Limited ("PVO"), a wholly owned subsidiary of Po Valley Energy Limited (ASX: PVE) is the Operator of the Selva Malvezzi production concession with 63% ownership interest and Prospex has the remaining 37% working interest.
Highlights
· 18-month GSA contract to commence on 1 April 2023 with potential to extend
· An estimated 37 million standard cubic metres of natural gas is expected to be supplied to BPGM under the contract
· Gas supply price will be linked to Italy's "Heren PSV day ahead mid" price assessment
· The Joint Venture is fully funded to complete the Podere Maiar-1 production facility development and first gas is on track for early Q2 2023.
Mark Routh, Prospex's CEO, commented:
"The gas sales agreement with BP Gas Marketing Ltd marks a significant milestone for the Company and its joint venture partner, Po Valley as we get closer to first gas production from the Selva field development. We are delighted that Po Valley has secured the agreement with BP Gas Marketing Limited, a recognisable brand in the industry, to take delivery and sell our gas and look forward to working with them. Prospex is selling its share of the gas production jointly with the Operator, Po Valley, under a joint marketing agreement, in order to optimise the value of our gas sales.
"First gas is still on track for early in the second quarter of 2023, on schedule and on budget."
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.
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For further information visit www.prospex.energy or contact the following:
Mark Routh | Prospex Energy PLC | Tel: +44 (0) 20 7236 1177 |
Ritchie BalmerRory Murphy | Strand Hanson Limited | Tel: +44 (0) 20 7409 3494 |
Andrew Monk (Corporate Broking)Andrew Raca/Alex Cabral (Corporate Finance) | VSA Capital Limited | Tel: +44 (0) 20 3005 5000 |
Colin RowburyJon Belliss | Novum Securities Limited | Tel: +44 (0) 20 7399 9427 |
Susie GeliherAna Ribeiro | St Brides Partners Limited
| Tel: +44 (0) 20 7236 1177 |
Notes
Prospex Energy PLC is an AIM quoted investment company focussed 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.
About the Gas Sales Agreement:
Key terms of the GSA include:
Parties | PVO and BPGM |
Start date | 1 April 2023 |
End date | 30 September 2024 (18 months duration) |
Extension of contract | No automatic right to extend, parties to commence extension discussions 30 days before 30 September 2024 |
Termination rights | Termination conditions standard for a contract of this nature including gas quality and delivery specifications and payment |
SNAM delivery point | Budrio 50202301 |
Gas supply volumes (estimate) - standard cubic metres (scm) | - 12,142,200 scm for the thermal year ending 30 Sep 2023 (6 months) - 24,970,400 scm for the thermal year ending 30 Sep 2024 (12 months) |
GSA gas pricing | - Linked to Heren PSV day ahead mid - Heren PSV day ahead mid is a virtual, market-based price assessment announced in the ICIS Heren report at 5:30pm on any Banking Day for gas prices in Italy. PSV is short for "Punto di Scambio Virtuale" which translates to "virtual trading point" - Heren PSV day ahead mid is the arithmetic mean of the Day-ahead Offer price and the Day-ahead Bid price for Natural Gas at the PSV on such Banking Day; and (ii) in respect of a Day that is a non-Banking Day, the arithmetic mean of the Weekend Offer price and Weekend Bid price for Natural Gas at the PSV on such non-Banking Day as published, in each case, on the Banking Day immediately preceding the relevant Day by ICIS Heren under the heading: "PSV Price Assessment" in "European Spot Gas Markets", and expressed in Euros per MWh - As Heren PSV day-ahead mid pricing is only available in ICIS Heren reports (private and subscription based), Dutch TTF spot price is considered a useful proxy which is publicly available. Refer to competent persons report July 2022, Section 5 'Economic Analysis' (see link below) |
PVO supply volume nominations | - PVO to provide provisional nominations monthly, weekly and daily - Actual and binding nominations required by 2pm on any Banking Day |
GSA payment terms | GSA includes detailed invoicing process for gas sales and SNAM transport costs. Settlement and payment process completes 20 days after month end |
Podere Maiar - 1 operating costs | Expected to be Euro 0.60 million per annum, abandonment costs expected to Euro 2.70 million. Refer to competent persons report July 2022, Section 5 'Economic Analysis' (see link below) |
About Selva:
The Podere Gallina Licence is in the Po Valley region of northern Italy. The licence contains the currently shut‑in 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 Podere Gallina licence held via Prospex's two wholly owned subsidiaries, PXOG Marshall Ltd (17% of the Licence) and UOG Italia Srl (20% of the Licence).
The Podere Gallina Licence holds independently verified 2P gross 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 was prepared by CGG Services (UK) Limited in January 2019 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/3JASCc2]
Glossary:
scm Standard cubic metres
MMscm Million standard cubic metres
Bcf Billion standard cubic feet
MMscfd million standard cubic feet per day
MWh Mega Watt hour
Qualified Person Signoff
In accordance with the AIM notice 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 over 40 years 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.
An Investor Presentation from January 2023 is available on the Company's website at https://www.prospex.energy/home/