Prospex Energy (PXEN) , an investor in European gas and power projects, issued an update on its recently announced retail offer via the Winterflood Retail Access Platform (WRAP) at 6p/share. PXEN said the offer was significantly oversubscribed and raised aggregate gross proceeds of £895k. The offer initially targeted £500k.
In a related placing and subscription at the same 6p/share price, Prospex announced on August 6 that it had raised c. £3.34m. In total, the placing, subscription, and retail offer raised gross proceeds of approx. £4.20 million for the company. The combined fundraise initially targeted £3.27m. The issue price of 6p represented a discount of c. 8.3% to PXEN's closing price on 2 August. As of time of writing, PXEN was trading at 6.15p.
The proceeds from the combined fundraise will enable Prospex to acquire an indirect ownership of the Viura producing gas field in northern Spain via purchase of 7.5% of its 58.8%-owner Heyco Energy Iberia. Heyco Energy Group, the majority owner of Heyco Energy Iberia, subscribed to 41.6m shares in the fundraise amounting to £2.5m, and will own 10.35% of PXEN following admission.
Heyco Energy Iberia will use the funding to part finance a new well at Viura, the Viura 1B, which spudded on June 24, 2024 with drilling ongoing. PXEN will be responsible for a portion of the Viura project's development costs (under 20%) in 2025 and 2026, est. at a further £6.85m, which may be fully or partially funded from new production income.
For context, Heyco Energy Iberia (HEI) is a subsidiary of Heyco Energy Group, which is owned by members of the Yates family of Dallas, Texas. HEI extracts and sells natural gas in Spain from the Viura gas field as operator, representing more than 80% of Spain's natural gas production. As mentioned, HEI currently has a 58.8% interest in Viura. The other owners are Sociedad de Hidrocarburos de Euskadi (37.7%) and Oil and Gas Skills (3.51%).
The Viura gas field onshore in northern Spain has original gas in place of 211 Bcf (6 Bcm) and 2P reserves of 105 Bcf (3 Bcm). To date, just 16 Bcf (0.5 Bcm) of gas has been produced from Viura, leaving a remaining 2P reserves of 90 Bcf (2.5 Bcm).
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Prospex has completed its retail offer, and with that its combined fundraise that resulted in £4.2m of gross proceeds, to be used in the part acquisition of PXEN's third European producing gas asset - the Viura gas field onshore in northern Spain. This marks a significant milestone for the company. PXEN is already present in Spain through its El Romeral gas facility whose license was recently extended until 2034.
Viura is operated by the well-established Heyco Energy Iberia, majority owned by US-based Heyco Energy Group. The latter made a significant investment into PXEN through the placing and will own 10% of PXEN following admission, making it the company's largest shareholder. This represents further validation of PXEN's portfolio and endorsement of the company's assets and strategy by a key industry player.
The success of the fundraising round, resulting in c. £1m more than was initially planned, speaks to the potential of the Viura gas field, which has significant remaining reserves. With the proceeds, PXEN will be able to acquire a significant stake in a producing field through the purchase of 7.5% of HEI. Viura should materially increase PXEN's booked gas reserves, gas production, and cashflow in the very short term, with significant estimated upside.
At Viura, a development well Viura 1B is being drilled currently, and expected to reach its reservoir target within weeks. Two additional development wells are scheduled for 2025 and 2026. Viura is one of 3 onshore gas fields in Spain. El Romeral, where Prospex has a 49.9% interest, is another, making Prospex now a leading gas producer in Spain. Five new wells on the El Romeral concessions are currently advancing through the permitting process.
PXEN is betting on natural gas' key role in the energy transition as a low-emission source that can supplement the European and global energy mix until renewables and batteries can fully take over.
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