Prospex Eng Regulatory News (PXEN)

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

11 November 2022

Prospex Energy PLC

('Prospex' or the 'Company')

Potential sale of Warrego Energy interests in Spanish assets

Prospex Energy PLC, the AIM-quoted investment company focused on European gas and power projects, notes the announcements made on the ASX by Warrego Energy Ltd ("Warrego") (ASX:WGO) on 10 November 2022, regarding a potential sale of its shares in Tarba Energía S.L. ("Tarba") as a result of a proposed merger of Warrego with Strike Energy Ltd ("Strike"). Warrego is a co-owner of Tarba and the coventurer in the assets that Prospex holds in Spain.

Warrego has confirmed that it has received from Strike a confidential, non-binding indicative all-share merger proposal that may be implemented through a scheme of arrangement, which is being reviewed by Warrego. The announcement by Warrego also references its shareholding in Tarba and the Company understands that Strike does not wish to participate in assets outside of Australia. Should any scheme of arrangement between Warrego and Strike be agreed, then within a 12-month period, Strike would use best endeavours to sell Warrego's Spanish assets and additional consideration would be distributed to the Warrego shareholders. It would appear that both parties contemplate divestment of Warrego's Spanish assets.

The Spanish assets owned and operated by Tarba comprise the El Romeral gas to power plant and related gas concessions near Carmona in Andalucía, southern Spain and the Tesorillo exploration permit in the Cadiz province in Southern Spain, which is currently suspended. Prospex owns a 49.9% working interest in El Romeral and a 15% working interest in Tesorillo, with Warrego owning 50.1% and 85% respectively. There is a Shareholders Agreement governing the Tarba shares under which, among other rights, Prospex has an option to increase its working interest in Tesorillo to 49.9% upon payment of €1.725 million prior to the drilling of an appraisal well. 

Mark Routh CEO of Prospex commented:

"Should any deal be struck by Warrego the focus by any potential new owner is most likely to be on the asset base in Western Australia. This may result in the disposal of Warrego's Spanish portfolio, which is in no way a reflection of the quality of the assets. We will continue to monitor the progress of the negotiations between Warrego and Strike and update the market in due course."

A copy of the announcement released on the ASX by Warrego on 10th November 2022 can be found here: https://bit.ly/3UL91gg .

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:

Notes

About El Romeral

The El Romeral gas and power project in Spain, with gas production wells supplying gas to an 8.1MW power plant near Carmona in Southern Spain is owned and operated by Tarba. It is currently operating at about 30% of its full capacity because Tarba is waiting on permits to drill further infill wells on the concessions to increase production. Tarba can now be categorised as a hybrid energy provider with the successful installation of photovoltaic panels on the roof of the plant. Prospex owns a 49.9% working interest in the El Romeral project via Tarba. The remaining 50.1% working interest is owned by Warrego Energy Limited (ASX:WGO). Tarba sells electricity generated from the plant on the spot market in Spain. The Tarba team has continued to liaise with various government agencies to progress drilling and environmental approvals for El Romeral. The El Romeral licences comprise three contiguous production concessions. There are no financial or drilling commitments attached to the El Romeral Exploitation Concession.

About Tesorillo

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. Prospex owns a 15% working interest in the Tesorillo project via Tarba. The remaining 85% working interest is owned by Warrego Energy Limited (ASX:WGO). Prospex has 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. 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 - 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.

The Tarba team has continued to liaise with various government agencies to progress drilling and environmental approvals for Tesorillo. Tarba is targeting conventional sandstone gas reservoirs. There are no financial or drilling commitments attached to the Tesorillo Project Exploitation Concession application.