Prospex Energy, the AIM quoted investment company, has announced its unaudited Interim Results for the six months ended 30 June 2023.
H1 2023 Financial and Corporate Overview:
Financial
- The Company reports a £888,473 loss after taxation from continuing operations for the six-months ended 30 June 2023 (H1 2022 profit: £5,120,408).
- This includes a £489,037 unrealised loss on revaluation of financial assets at fair value (H1 2022 unrealised gain: £7,645,980).
- The loss on revaluation in the current reporting period takes account of forward gas prices and exchange rates at 30 June 2023. The revaluation gain in H1 2022 was attributable to the revaluation, on a basis consistent with the 17% already held, of the additional 20% working interest in Selva Malvezzi production concession acquired during that period.
- The revaluation at 30 June 2023 resulted in a reduction in the net book value of investments to £15,575,603 (31 December 2022: £16,064,640).
- Administrative expenses during the period were £461,322 (H1 2022: £501,967).
- Loan capital repayments in the period were £107,227 and interest payments were £162,739. Convertible loan notes converted to equity in the reporting period totalled £195,006.
- In April 2023, the Company strengthened the board of directors with the appointment of Andrew Hay as a Non-Executive Director.
- Fox-Davies Capital appointed as Joint Corporate Broker in June 2023.
Post period end:
- First gas sales receipts from gas sales in Italy during July were received in August 2023.
- As at 12 September 2023, a further £1,407,723 of convertible loan notes have been converted to equity.
- The Company and its investment vehicles are expected to be fully funded to meet all existing operational and financial commitments.
Mark Routh, CEO of Prospex, said:
'During the first half of 2023, Prospex laid the groundwork for the Company to become an onshore gas producer in its second European country. Post period-end, we delivered gas through our new gas processing facilities at the Selva field in Italy and the Joint Venture is selling the gas via BP Gas Marketing. Being a gas producer from two assets in stable countries puts Prospex on a sound footing both operationally and financially to enable further growth opportunities to be evaluated.
'The El Romeral power plant in Carmona is already a significant producer of gas for electricity generation in southern Spain with the ability to Increase this further once the necessary permits to drill further wells are granted. The permits to drill five further wells on the concessions are currently with the Spanish regulatory authorities and we hope to update shareholders in the not so distant future.
'We also have the opportunity to develop our assets on the Selva Malvezzi production concession near Bologna in Italy and the Joint Venture is actively pursuing the necessary steps to drill at least three further wells on the concession to boost our proven developed producing reserves.
'Prospex is very conscious of its HSE responsibilities, and it is notable that operations both in Italy and in Spain have been executed this year with no Health and Safety events, lost time incidences nor any reportable environmental issues.'
Operational Highlights:
The company made significant progress in the first six months of the financial year:
Selva
- In February 2023, the Operator of the Selva Malvezzi production concession in the Po Valley region of northern Italy, in which Prospex has a 37% working interest, signed an 18-month gas sales agreement ("GSA") with BP Gas Marketing Limited to offtake and sell gas from the Selva field in Italy.
- During the period, development work was also completed at Selva field by Po Valley Energy (ASX:PVE) ("Po Valley" or the "Operator"). Construction of the new gas plant facilities at the Podere Maiar-1 ("PM-1") well site was completed on schedule and with just a 3% cost difference to budgeted expenditure. The connections to the gas grid operated by SNAM were completed, enabling the delivery of gas to the Italian gas grid.
- With the SNAM connection and transmission arrangements finalised, Po Valley Operations recovered the €757,000 performance bond funds (€280,090 net to Prospex), previously deposited with SNAM.
- Final inspection and production commencement at the new gas plant was delayed due to severe flooding in the Emilia Romagna region. Inspections and approvals were finally received at the end of June 2023.
- In February 2023, the 12-month background seismic monitoring programme was completed - the final environmental regulatory hurdle prior to the commencement of gas production.
El Romeral
- Operations continued at El Romeral in Andalucía, southern Spain where the Company's investment is in the operator, Tarba Energía s.l.
- The Romeral power plant continues to be cash generative and self-sustaining. However, no further development can be committed to in Spain until progress is made with the relevant Spanish authorities on the permitting of up to five new wells on the Romeral licenses.
- Significant effort is focussed on securing permitting for additional wells at Romeral as well as conversion of the Tesorillo exploration permit to an exploitation permit. Drilling permit applications were resubmitted in early 2023.
- Gross monthly electricity sales from the El Romeral power plant averaged €160,677 between January and June 2023.
- The El Romeral production concessions officially run until 28 July 2024. On 12 May 2021, Tarba requested, under the provisions of article 36 of Law 21/1974, the extension of the El Romeral production concessions for two successive periods of ten years. On 9 December 2022, Tarba received a draft of the Royal Decree in which the first ten-year extension was granted until 28 July 2034. The draft Royal Decree was approved by the Spanish Ministry and forwarded to the Council of Ministers on 4 April 2023, and we are now waiting for the official publication. This step has not yet been taken by the Council of Ministers and we look forward to an early completion of this matter.
Post period end:
- PM-1 commenced gas production and delivered first gas on 4 July 2023.
- The four-week ramp-up and commissioning programme at the PM-1 production facility was completed during the week ended 4 August 2023 and daily production of about 72,000 standard cubic metres per day (scm/d) achieved since.
Business Development
The Company is actively evaluating a number of assets for potential investment. The assets under consideration are all onshore in North-West Europe and include high impact exploration targets. The Company will keep shareholders updated as these projects come to fruition.
Source: Prospex Energy
