TIDMPXOG
RNS Number : 2132X
Prospex Oil and Gas PLC
26 April 2019
Prospex Oil and Gas Plc / Index: AIM / Epic: PXOG / Sector: Oil
and Gas
26 April 2019
Prospex Oil and Gas Plc ('Prospex' or the 'Company')
Resource upgrade at Podere Gallina investment and Selva gas
field ('Selva')
Significant production expansion potential at Selva
Prospex Oil and Gas Plc, the AIM quoted investment company, is
pleased to announce that operator, Po Valley Energy Limited ('Po
Valley'), has informed its partners of a substantial upgrade to the
resource estimate for the Podere Gallina Exploration Permit
('Podere Gallina'), and specifically the Selva gas field resources
in the Po Valley region of Italy to 14.1bcf contingent resources
('2C') and 91.5bcf prospective resources (best estimate).
Previously gross resources for Podere Gallina stood at zero 2C
resources and 52.7bcf prospective resources, alongside 13.3bcf of
2P reserves. The resource upgrade for the 331km(2) Podere Gallina
licence area has been validated by independent sub-surface
technical services consultancy, CGG Services (UK) Limited ('CGG'),
via an updated Competent Persons Report. Prospex holds a 17%
interest in Podere Gallina, equating to net 2P reserves / 2C
resources / prospective resources attributable to the Company of
2.26 bcf / 2.40 bcf / 15.56 bcf respectively.
Highlights:
-- Substantial upgrade to gas resources at Podere Gallina
validated by CGG - provides significant scope for low risk
expansion of production from Selva:
o Selva assigned gross contingent resources of 14.1 billion
cubic feet (bcf) (previously zero) following evaluation of the
historical gas producing North Flank and South Flank reservoirs,
with chance of success on the prospects of between 60% and 70%, and
2C resources of 8.9 bcf and 5.2 bcf respectively
o 74% increase in aggregate gross prospective resources (best
estimate case) to 91.5 bcf from 52.7 bcf following detailed
evaluation of four large prospects
-- Upgraded resources are in addition to gross 2P reserves of
13.3 bcf already assigned to Selva by CGG
-- Prospex's 17% interest equates to 2P reserves of 2.26 bcf; 2C
resources of 2.40 bcf; and prospective resources of 15.56 bcf net
to Prospex - providing significant asset backing
-- All reserves, contingent and prospective resources lie within
the Selva Malvezzi Production Concession area within Podere
Gallina, which contains the Selva gas field
-- Production at Selva remains on course to commence in 2020 at
a gross rate of up to 150,000 cubic metres per day (5.3 million
standard cubic ft per day) following preliminary award of a
Production Concession by the Italian Government in January
2019.
The new reserve and resource estimates for Podere Gallina are
detailed in the table below and follow the successful drilling and
testing of the Podere Maiar 1 well in January 2018.
Selva Gas Field summary bcf
Gross Reserves 1P 2P 3P
----- ------ ------
4.1 13.3 29.8
----- ------ ------
Reserves Net to
Prospex 0.70 2.26 5.07
----- ------ ------
Gross Contingent
Resources 1C 2C 3C
----- ------ ------
5.6 14.1 30.7
----- ------ ------
Contingent Resources
Net to Prospex 0.95 2.40 5.22
----- ------ ------
Gross Prospective Low Best High
Resources
----- ------ ------
54.3 91.5 194.8
----- ------ ------
Prospective Resources
Net to Prospex 9.23 15.56 33.12
----- ------ ------
Prospex non-executive Chairman, Bill Smith, said, "The new
resource estimates for Podere Gallina further highlight the level
of asset-backing behind Prospex, particularly when compared to our
current market cap. It also demonstrates significant scope for a
low risk expansion of production at Selva through an additional
14.1bcf (2C) of natural gas contingent resources in the Selva North
and South Flanks. Progress is being made to bring Selva online,
specifically the preliminary award of a production concession
earlier this year which keeps the field on track to commence
production in 2020 at a gross rate of up to 150,000 cubic metres
per day. At this rate and subject to gas prices, we estimate Selva
will generate significant net revenue to Prospex.
"Prospex, however, is a growth as well as a value play. With
gross contingent and prospective resources of 14.1bcf and 91.5bcf
respectively, Podere Gallina offers considerable run room.
Elsewhere, a work programme to de-risk gross prospective resources
of up to 2tcf of gas, including an historical discovery at the
Tesorillo gas project in southern Spain is ongoing. Meanwhile
preparations are underway to drill a second well later this year at
the Suceava Concession in North East Romania targeting a lookalike
structure to the Bainet discovery which was successfully drilled in
2017 and is currently on production. This is an exciting period for
the Company and I look to forward to providing further updates on
our progress, as we look to deliver multiple value trigger events
for our shareholders."
Further Information
The Selva gas field (and the Selva Malvezzi Production
Concession) sits within the Podere Gallina Exploration Permit and
was a significant historical producer for Eni S.p.A, producing
2,380 MMScm (84 bcf) from 24 wells between 1956 and 1984. The
Podere Maiar well was drilled in Q4 2017 into Selva and during
testing, peak flow rates of 148,136 scm/day (5.2mmscf/d) on a 3/8
inch choke and 129,658 scm/day (4.6 mmscf/d) on a 3/8 inch choke
were recorded from the C1 and C2 reservoirs respectively. Prospex
holds a 17% interest in Podere Gallina alongside Po Valley (63%
interest and operator) and United Oil & Gas Plc (20%).
North and South Flanks Reservoirs
The Selva gas field previously produced significant quantities
of gas from reservoirs in the North and South Flanks. The new
reservoir and resource estimates of 14.1 bcf (2C) of natural gas
resources in the Selva North and South Flanks announced today were
prepared by the operator and have been validated and signed off by
CGG. They quantify material remaining gas in both reservoirs and
which can form the basis of an expansion in production at
Selva.
Selva Gas Contingent Resources
Selva Gas Contingent Resources (Bcf) by Prospect April
(2019)
--------- -----------------------------------------------------------------------
Gross Net Attributable to Prospex CoS%
--------- --------------------------- -------------------------------- --------
1C 2C 3C 1C 2C 3C
--------- --------- ------ -------- ---------- --------- --------- --------
Level B
North 3.5 8.9 17.8 0.60 1.51 3.03 70%
Level B
South 0.97 3.4 9.3 0.16 0.58 1.58 60%
Level A
South 1.0 1.8 3.6 0.17 0.31 0.61 60%
Development of Selva Gas Field
Selva remains on course to commence first production in 2020
following the preliminary award of a Production Concession by the
Italian Government in January 2019 ('Production Concession'). The
operator has now submitted the Environmental approval documentation
to the Ministry and is prioritising development of the successfully
drilled Podere Maiar 1 production well. Gross reserves of 13.3bcf,
as previously reported in February 2019, remain.
Large East Selva, Riccardina, and Fondo Perino prospects
Detailed geological and geophysical evaluation incorporating
seismic and historical well data has led to a significant upgrade
in the size of the Prospective Resources within the Selva
preliminary awarded Production Concession area to 91.5 bcf from
52.7 bcf. This includes a significant increase in the estimated
size of the Riccardina prospect and an increase in the chance of
success (COS) of East Selva prospect due to the positive results of
the Podere Maiar 1 well.
A summary table of the Selva Prospective gas Resources is
detailed below:
Selva Gas Prospective Resources (Bcf) by Prospect
(April 2019)
-------------- -------------------------------------------------------------------
Gross Net Attributable to Prospex CoS%
-------------- ------------------------- -------------------------------- ------
Low Best High Low Best High
-------------- ------- ------- ------- --------- --------- ---------- ------
East Selva 29.1 34.8 40.6 4.95 5.92 6.90 40%
Fondo Perino 10.2 14.6 20.5 1.73 2.48 3.49 34%
Cembalina 2.1 3.3 4.7 0.36 0.56 0.80 51%
Riccardina 12.9 38.8 129 2.19 6.60 21.93 21%
------- ------- ------- --------- --------- ---------- ------
The estimated prospective resources quantities of petroleum that
may potentially be recovered by the application of a future
development project relate to undiscovered accumulations. These
estimates have both an associated risk of discovery and a risk of
development. Further exploration appraisal and evaluation is
required to determine the existence of a significant quantity of
potentially moveable hydrocarbons.
All the above structures are located within the Production
Concession area. Following the anticipated final grant of the
Production Concession, East Selva will be a priority for drilling.
The chances for success at East Selva were significantly upgraded
to 30% following the successful Podere Maiar 1 well.
Competent Person Review
Carlos Venturini, Fellow of the Geological Society of London,
Exploration Manager has reviewed and approved the technical
information contained within this press release in his capacity as
a qualified person, as required under the AIM Rules.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
* * ENDS * *
For further information visit www.prospexoilandgas.com or
contact the following:
Edward Dawson Prospex Oil and Gas Plc Tel: +44 (0) 20 3948
1619
Rory Murphy Strand Hanson Limited Tel: +44 (0) 20 7409
Ritchie Balmer 3494
Jack Botros
Colin Rowbury Novum Securities Limited Tel: +44 (0) 20 7399
John Belliss 9427
Duncan Vasey Peterhouse Corporate Finance Tel: +44 (0) 20 7469
0932
Frank Buhagiar St Brides Partners Ltd Tel: +44 (0) 20 7236
Priit Piip 1177
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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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