Prospex Energy (PXEN) , an investor in European gas and power projects, announced the successful ramp-up and commissioning of its Podere Maiar-1 (PM-1) natural gas facility at the Selva field in Northern Italy.
PM-1 provides gas directly to the domestic Italian market under an 18-month supply agreement with BP Gas Marketing announced on 14 February 2023. Operator Po Valley has a 63% working interest in Selva field while Prospex has the remaining 37% working interest.
Prospex said the 4-week ramp-up and commissioning programme at PM-1 was completed during the week ending 4 August 2023, exactly a month after the project achieved first gas on 4 July 2023. The process officially concluded with the slick line rig removal of data-gathering memory gauges from the lower C2 production zone as part of a 3-day scheduled shutdown.
Production at PM-1 then recommenced with forecast daily production levels of 72,000 standard cubic meters per day (scm/d) until all data analysis is complete. Results from the detailed analysis of well data are expected in 3 weeks to determine optimal production levels.
Gas produced during the ramp-up period is estimated at 1.8 million scm with 100% sold to BP Gas Marketing under the aforementioned agreement.
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Another significant milestone for Prospex, coming a month after first gas was achieved at Podere Maiar-1 in Northern Italy. The successful ramp-up is the final stage to ongoing production at PM-1, pending analysis of downhole pressure and temperature data over the next 3 weeks. From there, further upside is expected as operator Po Valley intends to advance other projects within the concession (see map below).
Selva Malvezzi production concession
The ramp-up at PM-1 saw gradual increases in volume starting at ~35,000 scm/d, then moving to ~50,000 scm/d, followed by steps up in volume of 10,000 scm/d per week until production in the final week reached ~80,000 scm/d. With the ramp-up complete, investors can look forward to initial gas production cashflows before the end of August 2023.
Despite today's news being widely anticipated since last month's announcement of first gas, PXEN shares jumped 8.7% in early trading. Adding PM-1 and the Italian SNAM grid market to Prospex's portfolio is a significant milestone and value inflection point for the company.
As mentioned, 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. Investors should expect further announcements on development plans.
Prospex's strategy is to develop a diversified portfolio of onshore European assets in lower risk 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.
Investors continue to cheer on PXEN, with its share price rising 348% in 2022, and currently up 23% in the past 12 months after some consolidation following normalisation of gas prices. Prospex continues to have significant asset backing relative to its market cap.
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