Annual General Meeting Statement

RNS Number : 4306E

Prospex Oil and Gas PLC

04 July 2019

 

Prospex Oil and Gas Plc / Index: AIM / Epic: PXOG / Sector: Oil and Gas

4 July 2019

Prospex Oil and Gas Plc ('Prospex' or the 'Company')
Annual General Meeting Statement

Prospex Oil and Gas Plc, the AIM quoted investment company, is holding its Annual General Meeting ('AGM') later today.  At the meeting, Ed Dawson, CEO of Prospex, will make the following statement:

"The commencement of gas production at our 50%-owned Bainet field in Romania, the assignment of 2P gas reserves of 2.26Bcf to our 17% interest in the Selva field onshore Italy, the reporting of a £779,904 net profit for the year ended 31 December 2018 - all the above represent firsts for Prospex Oil & Gas and all have been achieved in just over a 12-month period.  These milestones and the speed in which they have been met are testament to the quality of our portfolio of late stage European onshore projects, which also includes the large Tesorillo gas project in Spain; our management and technical teams who are responsible for securing material interests in viable projects at attractive prices; and the successful execution of defined work programmes to unlock value.

"With first production, first reserves and first profits all now booked, we are hungry for seconds.  Specifically, bringing a second field into production and, subject to further success on the ground, reporting a second net profit for 2019 are targets for the Company over the next twelve months.  Progress is being made.  Following excellent test flow rates at the Podere Maiar well in January 2018, the Selva field on the Podere Gallina licence onshore Italy was declared a commercial discovery.  Since then we have been working with our partners to bring Selva online as rapidly as possible.  With this in mind, January 2019's preliminary award of a production concession for Podere Gallina keeps first production on course to commence in 2020 at a gross rate of up to 150,000m3/day.  

"The final award of the production concession will not just cover the Selva field, but also multiple follow-on targets and prospects on Podere Gallina, including targeting the up dip of two of Selva's historic gas producing North Flank and South Flank reservoirs.  These are estimated by geophysical services consultancy, CGG Services (UK) Limited ('CGG') to have a 60% - 70% chance of holding 14.1Bcf of gross contingent resources ('2C').  In addition, CGG has assigned aggregate gross prospective resources (best estimate) of 91.5Bcf to four further large prospects.  In all, our 17% interest in Podere Gallina currently equates to net 2P reserves / 2C resources / prospective resources of 2.26Bcf / 2.40Bcf / 15.56Bcf respectively, providing significant asset backing to the Company, particularly when compared with our current market valuation. 

"Activity in the year ahead will not be confined to Italy.  At the 38,000ha Tesorillo Project in southern Spain, multi-strand work programmes are ongoing.  These are centred on de-risking targets ahead of drilling, confirming the location of two new exploration wells to test a historic gas discovery and proving up the huge resource base.  According to a report by Netherland Sewell and Associates in 2015, Tesorillo could hold gross unrisked Prospective Resources of 830Bcf of gas (Best Estimate), with upside in excess of 2Tcf.  With numbers such as these, drilling success in Spain would be transformational.

"In Romania, it was disappointing to report earlier this week that the Bainet-2 well failed to encounter commercial volumes of hydrocarbons.  While this well was targeting a look alike prospect to the nearby producing Bainet field, the result demonstrates how discoveries are only made via the drill bit.   At an estimated all in cost of €260,000 net to Prospex, Bainet-2 was a low cost well with an attractive risk / reward trade-off.  As the Suceava Concession itself and nearby area already hold multiple producing fields and historic discoveries, Bainet-2 has limited bearing on the additional prospects at Suceava which we can target.  We intend to fully evaluate the technical data gained from the well and work with the operator, Raffles, to draw up a forward plan for the licence.

"All three of our projects hold historic discoveries, multiple prospects and leads, and benefit from easy access to infrastructure.  Our existing asset base therefore provides us with considerable run-room to build on the two discoveries we have already made in Romania and Italy and grow the value of the Company further.  Last month, we reported a 77% increase in the net book value of our investments to £4,307,617, a figure which is more than twice our current market valuation.  In our view, this is very much the start.  With much activity planned across our assets over the next 12 months, including bringing Selva online, I look forward to providing further updates on our progress, as we look to continue to expose our shareholders to value trigger events and in the process generate value for our shareholders."

* * ENDS * *

For further information visit www.prospexoilandgas.com or contact the following:

Edward Dawson	Prospex Oil and Gas Plc	Tel: [phone]
Rory Murphy Ritchie Balmer Jack Botros	Strand Hanson Limited	Tel: [phone]
Colin Rowbury John Belliss	Novum Securities Limited	Tel: [phone]
Duncan Vasey	Peterhouse Corporate Finance	Tel: [phone]
Frank Buhagiar Priit Piip	St Brides Partners Ltd	Tel: [phone]

Notes

Prospex Oil and Gas Plc is an AIM quoted investment company focussed on high impact onshore and shallow offshore European opportunities with short timelines to production. The Company's strategy is to acquire undervalued projects with multiple, tangible value trigger points that can be realised within 12 months of acquisition and then applying low cost re-evaluation techniques to identify and de-risk prospects. 

 

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