Prospex Energy (PXEN) , an investor in European gas and power projects, released an operational update for Q3 ended September 30, including production rates and income from its 37%-owned Podere Maiar-1 (PM-1) gas facility at Selva field, Italy. Operator Po Valley has the remaining 63% interest in the project.
The highlight of the quarter was PM-1's commencing of gas production on July 4. Following a 4-week ramp-up and commissioning programme, the well flowed at daily production levels of 72,000 standard cubic meters per day (scm/d) during the initial testing period, which is expected to end in December 2023.
October production is temporarily running at 62,000 scm/d as part of the testing programme and is expected to increase again in November. Prospex is targeting long-term production from the well of at least 80,000 scm/d.
All of PM-1's gas is sold to BP Gas Marketing under an 18-month supply agreement at a price linked to Italy's "Heren PSV day ahead mid" price assessment, which tracks the Dutch TTF spot prices.
Gross quarterly production from Selva field was 5,658,117 scm (2,093,503 scm net to Prospex) and gross revenue for the quarter was €1.94m (€717k net to Prospex).
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The main event for Prospex in Q3 was the completion and subsequent commissioning of the PM-1 well site at Selva field, Italy. The facility has delivered stable production, expected to ramp up to at least 80,000 scm/d after the initial testing period concludes in December. More than 5.6 million scm has so far been produced and sold to BP Gas Marketing under an agreement announced in February, resulting in revenues of £717k net to Prospex.
There is further upside potential as the new revenue stream from PM-1 should enable Prospex to develop more wells within the concession. Agreements with landowners and permitting are already in progress to deliver drilling programmes at Selva North, South and East.
Gas prices have increased recently from €30.3/MWhr to a current spot price of €50.3/MWhr. The forward curve TTF gas prices are currently above €50/MWhr through to the end of Q1 2025, which should further boost revenues from Selva field.
The commissioning of PM-1 made Prospex an onshore gas producer in 2 countries, adding to its El Romeral gas plant in Spain. El Romeral remains a significant producer of gas for electricity generation in southern Spain, with permitting for 5 new wells pending that will boost nameplate capacity to 8.1MW, to be later supplemented with 5 MW from adjacent solar.
Prospex's strategy is to develop a diversified portfolio of onshore European assets in lower risk, onshore markets with ready access to infrastructure, such as Selva field. In its 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.
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