Prospex Energy raises £1.87m for Selva gas field development

The proceeds of the unsecured Convertible Loan Notes will be used to fund the company's 37% share of the development costs

Prospex Energy has raised £1.87mn via unsecured Convertible Loan Notes which it will use to fund the development of the Selva gas field on the Podere Gallina Permit in Italy's Po Valley.

The proceeds of the Loan Notes will be used to fund the company's 37% share of the development costs at the Selva gas discovery, and general corporate purposes. It is on schedule to produce first gas in Q2 2023, according to CEO Mark Routh.

"We are experiencing significant increases in budgeted costs related to our planned development activity due to many factors including global supply chain complexity, increased costs of energy, materials and staffing, all of which put pressure on schedule and costs," said Routh.

"The Board examined a number of options to finance our 37% stake of Selva and given the challenging market conditions, this was the best alternative at this time."

The Loan Notes are convertible at 4.25p per ordinary share at any time at the election of the investor. Existing share authorities are sufficient to satisfy any potential conversion of the maximum approved amount of £2.3mn plus any accrued interest

Interest at 12% is payable quarterly compounded monthly, with the first interest payment on September 30 to be capitalised and added to the loan principal rather than paid in cash. The loan principal is to be paid in three tranches (end of September 2023, end December 2023 and end March 2024).

Selva’s development plan has low CAPEX (net to PXEN €c400,000) bringing Podere Maiar-1 well into production.

The first phase sees the installation of a fully automated gas plant, at the existing well site, with capacity to produce 150,000 cm/d (5.3 mmscf/day) of gas, which will be followed by the tie-in of a 70bar SNAM pipeline to the National Grid, 800m away from Podere Maiar-1 well.

There are minimal gas processing requirements, as the Selva gas is very high in methane (99%) and low liquid content.

The company received the penultimate approval for production at the Podere Maiar gas field located in onshore northern Italy, which lies within the Selva Malvezzi Production Concession, on June 6. Prospex holds a 37% working interest in the Podere Gallina Exploration Permit with the 0perator holding the remaining 63%.

The first of two projects in solar generation diversification at the El Romeral power plant in southern Spain (El Romeral) has also started.

Prospex Energy holds a 49.9% working interest in El Romeral through its interest in Tarba Energía S.L. with the remaining 50.1% working interest owned by Warrego Energy. Installation work to place solar panels on the roof of the power plant was approved by Tarba and expected to be completed by the end of July. Investment in automation enables it to run round the clock.

Investing in onshore local projects key to addressing challenges

The El Romeral Project has three producing wells; El Ciervo-1, Santa Clara-1 and Sevilla-3, with gross 2P reserves of 0.30 Bcf. The produced gas is supplied to the 100% project-owned 8.1 MW El Romeral power station, where a low maintenance cost contract is in place with General Electric. 

Project Helios, the second solar generation project, involves the installation of PV panels on land adjacent to the plant. Front-end engineering and design ('FEED') studies for Project Helios were approved by Tarba earlier this year and have now begun.

The current energy crisis has highlighted the need for long-term energy independence and security of supply.

"Investment in onshore, indigenous local projects such as El Romeral, is key if we are to address the challenges posed by the rise in global energy prices and volatility in international markets," said Routh.

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