Placing to Raise £750,000

RNS Number : 5554R

Prospex Energy PLC

09 March 2021

 

Prospex Energy PLC / Index: AIM / Epic: PXEN / Sector: Oil and Gas

Prospex Energy PLC ('Prospex' or the 'Company')
Placing to Raise £750,000

Prospex Energy PLC, the AIM quoted investment company focused on European gas and power projects, is pleased to announce that it has raised £750,000 gross via a placing of 50,000,000 new ordinary shares of £0.001 each in the Company ('Ordinary Shares') (the 'Placing Shares') at a price of 1.5 pence per Placing Share (the 'Placing Price') (the 'Placing'). 

Warrants will also be issued to Placing subscribers, on the basis of one warrant per two Placing Shares subscribed for, with an exercise price of 3p (the 'Warrants'), and a term of two years from Admission. The Placing was undertaken with new and existing investors as well as a Director of the Company who is acquiring Placing Shares with an aggregate value of £30,000.

Use of Proceeds

The net proceeds of the Placing will primarily be used to fund planned programmes at the El Romeral integrated gas production and power station operation in southern Spain ('El Romeral'), and the Podere Gallina licence onshore Italy where first gas at the Selva field is expected to commence later in 2021, subject to the granting of a production concession.  The balance of the net proceeds will be used for general working capital purposes, including the evaluation of new business opportunities.

El Romeral

As announced on 1 March 2021, the acquisition of El Romeral by Tarba Energia ('Tarba') in which Prospex owns a 49.9% interest in Tarba B shares, completed on 28 February 2021.  A proportion of the proceeds raised will go towards supporting operations during the post transition period at El Romeral, which includes three producing wells that supply gas, through its own network, to a 100% project-owned 8.1 MW power station. 

In addition, the proceeds will help fund a further evaluation, and permit supporting studies, of already identified opportunities to increase gas production and electricity generation at El Romeral's power plant towards its nameplate capacity from the current 22% level.  These opportunities include development locations and very-low risk prospects (where there is a chance of success of over 70%) which have been assigned gross contingent and prospective gas resources of 5Bcf and 90Bcf respectively, as well as the potential to undertake workovers on existing wells to enhance recovery rates. Historically, the power station at El Romeral regularly produced c. 60,000 Mwh per annum when gas was not a limiting factor.

Podere Gallina

With formal technical environmental approval from the Italian Environment Ministry in place, the development of the Selva Malvezzi Gas-Field ('Selva') in northern Italy, in which Prospex holds a 17% interest, is awaiting final sign off by ministerial decree, the issuing of the required INTESA (intergovernmental agreement) and the final grant of a production concession from Italy's Economic Development Ministry.  As previously disclosed, the Company intends to finance its share of the development of Selva, which has gross gas reserves of 13.3bcf (2P), via non-equity funding, however, in order to be in a position to move quickly on receipt of final approvals, a portion of the proceeds of the Placing may be used to fund the purchase of the next phase of production equipment.

Under the proposed development plans for Selva, which historically produced 83Bcf of gas between 1960 and 1984, a fully automated gas plant will initially be installed at the existing Selva/ Podere Maiar 1dir well site, along with a one-kilometre-long pipeline to connect the well with the nearby Italian National Gas Grid. Based on dynamic reservoir studies, an initial daily production rate is being targeted at Selva of up to 150,000 cubic metres (5.3 mmscf/d) from two gas-bearing reservoirs, C1 and C2, in the Medium-Upper Pliocene sands of the Porto Garibaldi formation.  The planned Selva development has a small footprint of less than half a hectare and will have no emissions from any future commissioning of its gas inventory. 

Director Dealing

As part of the Placing, James Smith, Non-Executive Director, is acquiring the following number of Placing Shares:

	No. of Placing Shares acquired	Resultant no. of Ordinary Shares	% of share capital as enlarged by the Placing
James Smith	2,000,000	3,733,200	2.69

James Smith, as a Director of the Company, is classified as a related party under the AIM Rules for Companies and his participation in the Placing is deemeda related party transaction pursuant to AIM RULE 13 .   Accordingly, the Directors, other than Mr James Smith, having consulted with Strand Hanson Limited, the Company's nominated adviser, consider that the participation of Mr James Smith in the Placing is fair and reasonable insofar as the Company's shareholders are concerned.

Prospex non-executive Chairman, Bill Smith, said, "With the acquisition of the El Romeral gas and power project complete and the appointment of a new government in Italy, which has the potential to speed up the final approval process for the development of the Selva gas field, the funds raised will enable us to move quickly at both projects. 

"As previously disclosed, the acquisition of El Romeral and the development of Selva could see Prospex exit 2021 with an annualised net production run rate equivalent to 7,500,000 scm per day.  At current gas prices, this equates to annualised revenues several times greater than our historic annual corporate costs. We anticipate this level of production would propel Prospex into a position whereby the significant revenues and cashflow generated will enable us to pursue the additional low risk exploration and development opportunities that have been identified across both assets to grow production and revenues further.  With a fair-wind and non-equity development financing in Italy, we do not anticipate raising any further equity capital prior to our Italian assets coming on stream.  We now have the assets to build a highly cash generative business focused on European gas and power opportunities and I look forward to providing further updates on our progress."

Admission to Trading on AIM and Total Voting Rights 

The Placing Shares will rank pari passu with the existing Ordinary Shares.  Application will be made for the Placing Shares to be admitted to trading on AIM ('Admission') and Admission is expected to occur on or around 23 March 2021.

Following Admission, the Company will have in issue a total of 138,543,800 Ordinary Shares.  The Company has 7,361 shares in treasury, therefore the figure of 138,536,439 should be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules.

Broker Warrants

The Placing was completed by Novum Securities Limited ("Novum"). As part of Novum's compensation for their work undertaken pursuant to the Placing, Novum shall be issued with 1,920,000 warrants to subscribe for, in aggregate, 1,920,000 new Ordinary Shares at an exercise price of 2.25 pence per new Ordinary Share for a period of two years from Admission.

This announcement contains inside information.

* * ENDS * *

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

Edward Dawson	Prospex Energy PLC	Tel: [phone]
Rory Murphy Ritchie Balmer Jack Botros	Strand Hanson Limited	Tel: [phone]
Colin Rowbury Jon Belliss	Novum Securities Limited	Tel: [phone]
Duncan Vasey	Peterhouse Corporate Finance	Tel: [phone]
Frank Buhagiar Cosima Akerman	St Brides Partners Ltd	Tel: [phone]

Notes

Prospex Energy PLC is an AIM quoted investment company focussed on high impact onshore and shallow offshore European gas and power opportunities. The Company acquires undervalued projects and then applies low cost re-evaluation techniques to identify and de-risk prospects.  Prospex currently holds a portfolio of three projects: the Podere Gallina Permit in Italy where first gas at the Selva field is targeted for 2021; the El Romeral gas and power project in Spain which includes three producing wells that supply gas to a 100% project-owned 8.1MW power plant; and the large scale Tesorillo gas project in southern Spain which has the potential to hold gross un-risked Prospective Resources of 830 Bcf of gas (Best Estimate), with upside in excess of 2 Tcf. The Company's strategy is to rapidly scale up gas production in the short term to generate internal revenues that can then be deployed to develop the asset base and increase production further.

 

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