PXOG.L Regulatory News (PXOG)

Prospex Oil and Gas Plc / Index: AIM / Epic: PXOG / Sector: Oil and Gas

Prospex Oil and Gas Plc ('Prospex' or the 'Company')

Placing to Raise £720,000 & Director Dealing

Prospex Oil and Gas Plc, the AIM quoted investment company, is pleased to announce that it has raised £720,000 gross via an oversubscribed placing of 600,000,000 new ordinary shares of £0.001 each in the Company ("Ordinary Shares") (the "Placing Shares") at a price of 0.12 pence per Placing Share (the "Placing Price") (the "Placing"). The net proceeds of the Placing will primarily be used to fund the Company's acquisition of a 49.9% indirect stake in El Romeral, an integrated gas production and power station operation located in the Guadalquivir basin in southern Spain ('El Romeral' or 'Project') (please refer to the Company's announcement of 17 December 2019 for further information). The Placing was undertaken with new and existing investors as well as certain Directors of the Company who are acquiring Placing Shares with an aggregate value of £140,000 based on the Placing Price.

Use of Proceeds

As previously announced, El Romeral is being acquired by Tarba Energia S.L ("Tarba") which is jointly owned by Prospex and Warrego Energy Limited ("Warrego"). Warrego funded the initial consideration of €750,000 for a 100% interest in El Romeral. Tarba has advised the Company that this has been paid to the vendor and the vendor has initiated the transfer process.

Following the Placing, Prospex will elect to participate with a 49.9% interest in the Project and will therefore refund to Warrego the corresponding proportion of the initial consideration (€374,250). Following this, Warrego will indirectly own the balance of the Project, being 50.1%.

El Romeral includes three production licences on which three wells supply gas to a Project-owned 8.1 MW power station. The acquisition of a 49.9% interest in El Romeral will therefore lead to a step-up in Prospex's production profile to five producing gas wells, which have the potential to generate over 9,000,000 scm net in 2021. In addition to the three producing wells at El Romeral, Prospex has a 50% interest in the Bainet-1 well on the Suceava Concession in Romania and a 17% economic interest in the Podere Maiar-1 well on the Podere Gallina Exploration Permit in Italy which is expected to commence production in 2020 at rates up to 150,000 scmpd (5,300 mscfd), subject to regulatory approvals and installation of production equipment.

El Romeral offers significant development upside to increase gas production and, in turn, electricity generation at the Project's plant, which was constructed in 2001-2002 at a cost of c. €10 million and currently operates at c. 22% capacity. Gross contingent and prospective gas resources of 5 Bcf and 90 Bcf have been assigned to two development locations and 11 very-low risk prospects at El Romeral respectively. A planning and permitting process for a three well campaign targeting these prospects is expected to commence in Q1-Q2 2020.

The proceeds of the Placing will also go towards funding the 2020 work programme planned for Prospex's 15%-owned 830 Bcf Tesorillo gas project in Spain as well as general working capital purposes.

Directors' Dealing

As part of the Placing, Edward Dawson, CEO, Bill Smith, Non-Executive Chairman, and James Smith, Non-Executive Director, have agreed to acquire the following number of Placing Shares:

Edward Dawson, Bill Smith and James Smith, as Directors of the Company, are classified as related parties under the AIM Rules for Companies and their participation in the Placing therefore constitutes a related party transaction.

Accordingly, Richard Mays, being the only Director of the Company not participating in the Placing, having consulted with Strand Hanson, the Company's nominated adviser, considers that the participation of Edward Dawson, Bill Smith and James Smith in the Placing is fair and reasonable insofar as the Company's shareholders are concerned.

Prospex Non-executive Chairman, Bill Smith, said, "Securing these funds at close to market prices from new and existing shareholders and certain members of the Board represents an endorsement of the low risk, low cost opportunity that El Romeral offers to build material production and revenues. Thanks to this Placing, Prospex is able to elect to acquire a 49.9% interest in Romeral. Following this, and once the Podere Maiar-1 well in Italy comes online later this year as we anticipate, our portfolio of producing wells will stand at five, which, when combined, will have the potential to generate over 9,000,000 scm net in 2021. At this rate and at current gas prices, our annual revenues alone will exceed our current market capitalisation.

"Prospex is not just a value play, however. Significant upside has been identified across our portfolio including at the Tesorillo Project in Spain, which has the potential to hold up to 830 Bcf of gross prospective gas resources, and at Podere Gallina in Italy where, in addition to the 13.3bcf gas reserves of the Selva field, a CPR estimates the licence area holds 14.1 bcf gross contingent resources and 91.5 bcf gross prospective resources (Best Estimate). With work programmes underway or planned to de-risk these company-making resources, the growth story behind Prospex remains very much intact."

Admission to Trading on AIM and Total Voting Rights

The Placing Shares will rank pari passu with the existing Ordinary Shares. Application will be made for the Placing Shares to be admitted to trading on AIM ("Admission") and Admission is expected to occur on or around 11 February 2020.

Following Admission, the Company will have in issue a total of 2,213,593,136 Ordinary Shares. The Company has no shares in treasury, therefore the figure of 2,213,593,136 should be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules.

Following the Placing, Mr Simon Chantler will hold 239,666,667 Ordinary Shares, representing 10.83 per cent. of the Company's issued share capital as enlarged by the Placing.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").

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For further information visit www.prospexoilandgas.com or contact the following:

Notes

Prospex Oil and Gas 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 management acquires 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.

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