Prospex Energy (PXEN) , an investor in European gas and power projects, released an interim update for the 6 months ended June 30 2023.
Prospex hit a number of operational milestones during the period and into the summer. In July, the company achieved first gas, commissioning, and successful ramp-up at its 37%-owned Podere Maiar-1 (PM-1) natural gas facility at Selva field, Italy. In February, Prospex signed an 18-month sales agreement with BP Gas Marketing to offtake and sell gas from Selva field. The plant is currently producing 72,000 scm/d.
Prospex's El Romeral gas plant in Spain continues to be cash generative while awaiting permitting for 5 new wells on the licence. Gross monthly electricity sales from El Romeral averaged €160k between January and June 2023. Prospex is also building a 5 MW solar PV project adjacent to El Romeral.
Financially, Prospex reported a net loss after tax of £888k, including an unrealised loss of £489k arising on revaluation of financial assets at fair value. Specifically, the loss reflects the impact on Selva field caused by the decline in the forward curve of European gas prices and a weaker EUR/GBP exchange rate on June 30 2023. The revaluation resulted in a reduction in the net book value of Prospex's investments to £15.6m from £16m on December 31 2022.
Prospex held cash of £395k on June 30 2023, up from £181k last year.
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The main event for Prospex in H1 2023 was the completion and subsequent commissioning of the PM-1 well site at Selva field, northern Italy. First gas sales receipts from PM-1 were received in August 2023 from 72,000 scm/d of gas production sold via BP Gas Marketing, following last month's successful ramp-up. 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. 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. Electricity prices in Spain during the period averaged over €100/MWh, which is double electricity prices were when Prospex acquired El Romeral in March 2021.
A revaluation of Selva was expected as gas prices have begun to normalise in Europe. Consistently applying a conservative view on European gas prices in previous valuations has enabled Prospex to limit the impact on its balance sheet of extreme volatility seen in the market since 2021.
Return on investment from Selva in addition to a significant proportion of Prospex's interest-bearing debt being converted to equity post-period should result in a material strengthening of the company's balance sheet by year-end. Revenues from its two producing assets should keep Prospex fully funded to meet all current operational and financial commitments.
Prospex also announced it is actively evaluating a number of assets in onshore northwest Europe for potential investment.
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