Prospex Energy (PXEN ), an oil and gas investment company, updated markets this morning on its Podere Maiar license in Po Valley Italy, containing the Selva gas field. Prospex holds a 37% interest in Selva, with operator "Po Valley" holding the remaining 63%.
Prospex said Po Valley has been granted final approval to commence development at Selva as of 21 November 2022. Works to prepare the tie-in to the SNAM gas grid network commenced on 19 November, and gas plant construction work and and pipeline installation are to commence on 28 November 2022.
Selva remains on track for first gas in 2Q 2023. The final stage of production concession application for Prospex has been submitted to the Italian Ministry of the Environment and Energy Security.
Operator Po Valley is now in dialogue with off-take partners for the sale of gas from Podere Maiar.
Mark Routh, CEO of Prospex, commented: "We are extremely pleased that Po Valley has confirmed that final permissions have been granted to start the development works on site and that Podere Maiar remains on schedule and on budget to achieve first gas early in the second quarter of 2023. Initial conversations with gas off-take partners for the sale of gas have commenced, which we have decided to sell jointly with the Operator Po Valley under a joint marketing agreement, which we believe will optimise the value of our gas sales and provide better value for our shareholders."
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Having received final approvals for development at Selva, Prospex and operator Po Valley are now moving forward with construction.
Development and pipeline installation will commence on 28 November 2022. Construction has already commenced to connect the suspended well at Selva to the grid tie-in connection point of Italian energy company SNAM.
Selva field development is fully funded following Po Valley's US$4.5m share placement in August 2022 and Prospex's £1.87m capital raise in July. Prospex and Po Valley are therefore within budget and on schedule to achieve first gas from the Podere Maiar-1 well in early 2Q 2023.
Po Valley is already in discussions with several counterparties regarding offtake and sales.
2023 will be a transformational year for Prospex as the company becomes a gas producer in Italy, adding to its existing operations in Spain. Investors interested in the energy sector should Prospex as it goes through this value inflection point.
Prospex has made the right investments to answer strong European demand for locally produced energy. As has been the case with its El Romeral plant in Spain, Prospex's natural gas operations in Italy are expected to yield strong revenues amid rocketing energy prices.
Investors have rewarded Prospex's stellar financial performance in 1H 2022, including a nearly 40x increase in net profit, sending PXEN shares up 204% YTD. The introduction of a second revenue stream from Selva field will further strengthen Prospex's financial position.
Prospex's 49.9%-owned El Romeral plant in Spain is now running 24/7 following optimisation and automation carried out by operator Tarba, allowing Prospex to reap the full benefit of higher energy prices. In June, the Spanish government capped prices on gas sold for electricity generation, resulting in an expected average daily rate of €150/MWh for the next 12 months.
Investors have also welcomed Prospex's diversification into solar. The company's pilot solar Project Apollo paved the way for the much larger Project Helios, a 5 MW array to be built next to El Romeral and cogenerate with the plant, sharing its connection to the Spanish grid. Project Helios is currently at FEED stage. Solar in the Toledo province of Spain currently has an ROI of only 3-4 years, making this an ideal hedge for the company.
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