Prosex Energy (PXEN ), an oil and gas investment company, announced it has successfully raised £1.87m via the issue of convertible loan notes to existing and new investors.
The capital will be used to fund Prospex's 37% share of development costs of the Selva gas discovery on the Podere Gallina Permit in Italy's Po Valley, totalling £2.3m.
The notes will carry 12% interest coupon to be compounded monthly and paid quarterly in three tranches - September 2023, December 2023 and March 2024.
The notes are convertible at 4.25p per share at any time, representing c.10% premium to Prospex's previous closing price of 3.85p
The debt/equity financing structure will allow Prospex to finance the initial costs of development at Selva, with the goal of achieving first gas from the field by Q2 2023, subject to further funding being secured by way of commercial debt or other means.
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This is a positive development for Prospex, given the current challenging market conditions, supply chain issues, and increased costs of energy, staffing, and materials.
Mark Routh, CEO, explained: "Currently we remain on schedule for first gas from the Selva field in Q2 2023 (subject to the balance of the funding being available), where we predict substantial revenues to be generated from the gas production. The Board examined a number of options to finance our 37% stake of Selva and given the challenging market conditions, this was the best alternative at this time".
The company has managed to beat the general downturn in equities with PXEN stock up 10.87% YTD and 36.61% over the past 12 months. May's FY21 final results revealed steady expansion with a total assets increase of 56%. Today's capital raise will ensure that Prospex's strong performance and active development across its portfolio is maintained, rewarding investors further. Unlike many recent equity fundraises, Prospex's did not rely on discounted shares as of the time of the announcement.
Last month, Prospex kick-started installation of two solar generation diversification projects - Project Apollo and Project Helios - at the El Romeral power plant in southern Spain, in which the company holds a 49.9% working interest through its interest in Tarba Energía S.L. The two projects are expected to generate over 5 MW of clean energy.
Additionally, natural gas operations at the El Romeral site have yielded strong revenues for Prospex amid rocketing energy prices in Spain. Italy faces a similar energy crisis, hence the impetus to develop Selva quickly. As Europe struggles to achieve energy independence, companies like Prospex are well-positioned to serve demand for local production, particularly in natural gas and renewables.
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