Hannam & Partners has raised its risked net asset value for Prospex Energy (PXEN) by 6% to 16.4p per share, implying ~230% upside to the company’s 5.0p share price.
The broker said record revenue from the Selva Malvezzi gas asset, stronger European gas prices and progress on permitting have improved the company’s funding flexibility ahead of planned 2027 drilling.
Selva produced 3mmcf/d gross in August at realised pricing of US$22/mcf, generating revenue equivalent to €618,000 net to Prospex’s 37% interest. H&P estimates this equates to €7m of annualised net EBITDA. European gas prices have since risen to almost US$25/mcf, increasing the company’s exposure to higher prices.
The partners have also signed a new gas sales agreement with Hera Trading for the 2026/27 gas year, while Italy’s regulator has confirmed the admissibility of the four-well environmental impact assessment. The 60-day public consultation is now underway, marking a key permitting step ahead of the planned 2027 drilling campaign.
H&P said preliminary processed 3D seismic covering Selva has now been delivered by Schlumberger, with interpretation underway. The work is expected to help refine well landing positions, update volumetrics and improve risk assessment across the drilling inventory. An updated competent person’s report is expected following the seismic interpretation, which H&P identifies as a key near-term catalyst.
The broker currently assigns 2.3p per share of risked value to Selva’s prospective resources beyond existing 2P and 2C volumes, compared with 12.2p per share on an unrisked basis.
At El Romeral in Spain, August revenue reached €179,000, while Tarba was cash self-sufficient in both July and August, removing the previous requirement for funding from Prospex. A permanent transformer is expected to be installed in September, replacing the rental unit and reducing operating costs.
H&P said the improvement at El Romeral is strategically important as it allows a greater proportion of Selva-generated cash to be directed towards development and growth elsewhere in the portfolio.
Viura also continued to perform reliably, recording 92 consecutive days of production during Q2 with no shut-ins and 100% plant availability. The asset generated €4.2m of gross cash revenue against €3.6m of operating expenditure. The recovery of a previously lost tool string preserves the option to access the lower Utrillas B discovery, while water injection testing at ST3 remains planned for Q4 and further drilling opportunities are being evaluated for 2027.
In Poland, Prospex continues to work on well and completion design for the Mniszów oil discovery, including advanced completion techniques for fractured carbonate reservoirs. H&P noted management’s focus on securing non-dilutive funding partners ahead of the 2027 programme.
H&P’s risked NAV comprises 7.9p per share from 2P and 2C reserves and 8.4p from exploration, taking total risked NAV to 16.4p per share. The broker puts total unrisked NAV at 41.8p per share.
View from Vox
H&P’s upgraded NAV reinforces the growing valuation gap between Prospex’s producing assets and its share price. The key catalysts now appear to be Selva permitting, the 3D seismic interpretation and updated CPR, alongside funding progress for the 2027 drilling programme.