Prospex Energy’s (PXEN) 37%-owned subsidiary Po Valley Energy has successfully recovered a €757,000 performance bond deposited with SNAM, the Italian national Transmission System Operator, of which a net €280,090 accrues to Prospex. The bond was returned after completing the SNAM pipeline tie-in, gas sales agreement, and transportation arrangements.
The approval for the first gas supply from the Podere Maiar-1 well in the Selva field depends on the final Ministry approval following the completion of the gas treatment plant's operation and safety inspection, which had been expected by the end of May.
However, the inspection has been delayed due to severe flooding in the Emilia Romagna region, but the gas treatment facility and preparatory activities for first gas remain unaffected. “The Operator has been assured that the necessary inspections by the fire department will take place as soon as resources become available", said Prospex CEO Mark Routh.
Last week, Prospex said that the gas plant is completed and connected to the gas grid, having earlier signed a joint gas sales agreement to offtake and sell gas from the field. “Prospex is in a strong operational position to scale up its onshore European gas production and photovoltaic projects in the near term to generate internal revenues that can be deployed to develop the asset base and increase production further” said broker SP Angel.
The company remains on the lookout for potential acquisitions, and is also awaiting permits to further expand its 49%-owned El Romeral hybrid gas and power project in Spain, which is currently operating at 30% of capacity.
After a strong run, permitting delays and ownership changes at it El Romeral JV-partner have weighed on the shares of late. But the huge scope to increase production – including the 5MW solar installation to be built adjacent to El Romeral that will increase its output by 60%, as well as the imminent switch-on at Po – underpins a virtuous circle of cash generation and reinvestment.
Prospex continues to have significant asset backing relative to its market cap, and today’s news means another welcome addition to a cash pile that had already risen materially over the last year.