Prospex Energy (PXEN), an investor in European gas and power projects, announced the start of gas production from its Podere Maiar-1 (PM-1) natural gas facility at the Selva field in Northern Italy. The project was cleared by Italian regulators last week, paving the way for first gas on 4 July 2023.
Construction and the grid connection of PM-1 to the SNAM grid in Italy was previously announced by Prospex on 16 May 2023. The energy company confirmed the project was completed "on schedule and within 3% of budget".
PM-1 will provide gas directly to the domestic Italian market under an 18-month supply agreement with BP Gas Marketing announced on 14 February 2023. Po Valley Operations has a 63% working interest in Selva field while Prospex has the remaining 37% working interest.
Despite the start of gas production from PM-1 widely anticipated since Prospex's announcement last week, PXEN shares jumped 8.8% on the news in early trading on 5 July. First gas from Selva makes Prospex an energy producer in Italy, a significant milestone and value inflection point for the company.
There is further upside potential, as the new revenue stream from PM-1 should enable Prospex to develop more wells within the concession, with several targets already identified. Investors should expect further announcements on development plans.
Prospex's strategy is to develop a diversified portfolio of onshore European assets in lower risk markets with ready access to infrastructure, such as the Selva field. In its most recent final results for FY22, the company laid out a transformational year ahead. With gas production achieved at Selva, and its El Romeral gas plant in Spain on schedule for several new wells in addition to an adjacent 5MW solar project, Prospex is firmly set on a growth path.
Investors continue to cheer on PXEN, with its share price rising 348% in 2022, and currently up 91% in the past 12 months after some consolidation following normalisation of gas prices. Prospex continues to have significant asset backing relative to its market cap.
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