Source - LSE Regulatory
RNS Number : 9690M
Prospex Energy PLC
20 September 2023
 

 

Prospex Energy Plc / Index: AIM / Epic: PXEN / Sector: Energy

 

20 September 2023

 

Prospex Energy Plc ("Prospex" or the "Company")

Half-Year Report

 

Prospex Energy Plc, the AIM quoted investment company, is pleased to announce its unaudited Interim Results for the six months ended 30 June 2023.

 

H1 2023 Financial and Corporate Overview:

Financial

·    The Company reports a £888,473 loss after taxation from continuing operations for the six-months ended 30 June 2023 (H1 2022 profit: £5,120,408). 

·    This includes a £489,037 unrealised loss on revaluation of financial assets at fair value (H1 2022 unrealised gain: £7,645,980).  

·    The loss on revaluation in the current reporting period takes account of forward gas prices and exchange rates at 30 June 2023.  The revaluation gain in H1 2022 was attributable to the revaluation, on a basis consistent with the 17% already held, of the additional 20% working interest in Selva Malvezzi production concession acquired during that period.

·    The revaluation at 30 June 2023 resulted in a reduction in the net book value of investments to £15,575,603 (31 December 2022: £16,064,640).

·    Administrative expenses during the period were £461,322 (H1 2022: £501,967).

·    Loan capital repayments in the period were £107,227 and interest payments were £162,739.  Convertible loan notes converted to equity in the reporting period totalled £195,006.

·    In April 2023, the Company strengthened the board of directors with the appointment of Andrew Hay as a Non-Executive Director.

·    Fox-Davies Capital appointed as Joint Corporate Broker in June 2023.

Post period end:

·    First gas sales receipts from gas sales in Italy during July were received in August 2023.

·    As at 12 September 2023, a further £1,407,723 of convertible loan notes have been converted to equity.

·    The Company and its investment vehicles are expected to be fully funded to meet all existing operational and financial commitments.

 

 

Mark Routh, CEO of Prospex, said:

"During the first half of 2023, Prospex laid the groundwork for the Company to become an onshore gas producer in its second European country.  Post period-end, we delivered gas through our new gas processing facilities at the Selva field in Italy and the Joint Venture is selling the gas via BP Gas Marketing.  Being a gas producer from two assets in stable countries puts Prospex on a sound footing both operationally and financially to enable further growth opportunities to be evaluated.

"The El Romeral power plant in Carmona is already a significant producer of gas for electricity generation in southern Spain with the ability to Increase this further once the necessary permits to drill further wells are granted. The permits to drill five further wells on the concessions are currently with the Spanish regulatory authorities and we hope to update shareholders in the not so distant future.

"We also have the opportunity to develop our assets on the Selva Malvezzi production concession near Bologna in Italy and the Joint Venture is actively pursuing the necessary steps to drill at least three further wells on the concession to boost our proven developed producing reserves.

"Prospex is very conscious of its HSE responsibilities, and it is notable that operations both in Italy and in Spain have been executed this year with no Health and Safety events, lost time incidences nor any reportable environmental issues."

 

Operational Highlights:

The company made significant progress in the first six months of the financial year:

Selva

·    In February 2023, the Operator of the Selva Malvezzi production concession in the Po Valley region of northern Italy, in which Prospex has a 37% working interest, signed an 18-month gas sales agreement ("GSA") with BP Gas Marketing Limited to offtake and sell gas from the Selva field in Italy.

·    During the period, development work was also completed at Selva field by Po Valley Energy (ASX:PVE) ("Po Valley" or the "Operator").  Construction of the new gas plant facilities at the Podere Maiar-1 ("PM-1") well site was completed on schedule and with just a 3% cost difference to budgeted expenditure. The connections to the gas grid operated by SNAM were completed, enabling the delivery of gas to the Italian gas grid.

·    With the SNAM connection and transmission arrangements finalised, Po Valley Operations recovered the €757,000 performance bond funds (€280,090 net to Prospex), previously deposited with SNAM.

·    Final inspection and production commencement at the new gas plant was delayed due to severe flooding in the Emilia Romagna region. Inspections and approvals were finally received at the end of June 2023.

·    In February 2023, the 12-month background seismic monitoring programme was completed - the final environmental regulatory hurdle prior to the commencement of gas production.

El Romeral

·    Operations continued at El Romeral in Andalucía, southern Spain where the Company's investment is in the operator, Tarba Energía s.l.

·    The Romeral power plant continues to be cash generative and self-sustaining.  However, no further development can be committed to in Spain until progress is made with the relevant Spanish authorities on the permitting of up to five new wells on the Romeral licenses.

·    Significant effort is focussed on securing permitting for additional wells at Romeral as well as conversion of the Tesorillo exploration permit to an exploitation permit.  Drilling permit applications were resubmitted in early 2023.

·    Gross monthly electricity sales from the El Romeral power plant averaged €160,677 between January and June 2023.

·    The El Romeral production concessions officially run until 28 July 2024.  On 12 May 2021, Tarba requested, under the provisions of article 36 of Law 21/1974, the extension of the El Romeral production concessions for two successive periods of ten years.  On 9 December 2022, Tarba received a draft of the Royal Decree in which the first ten-year extension was granted until 28 July 2034.  The draft Royal Decree was approved by the Spanish Ministry and forwarded to the Council of Ministers on 4 April 2023, and we are now waiting for the official publication.  This step has not yet been taken by the Council of Ministers and we look forward to an early completion of this matter.

 

Post period end:

·    PM-1 commenced gas production and delivered first gas on 4 July 2023.

·    The four-week ramp-up and commissioning programme at the PM-1 production facility was completed during the week ended 4 August 2023 and daily production of about 72,000 standard cubic metres per day (scm/d) achieved since.

 

Business Development

The Company is actively evaluating a number of assets for potential investment.  The assets under consideration are all onshore in North-West Europe and include high impact exploration targets.  The Company will keep shareholders updated as these projects come to fruition.

 



 

CHAIRMAN'S STATEMENT

Operational Report

The first six months of 2023 was a period of consolidation for the Company.  The main event was the completion of construction and permitting of the new gas processing facilities at the PM-1 well site of the Selva field in northern Italy.  This secured the delivery of first gas sales post period end commencing on 4 July 2023, with first receipts the following month. 

In Spain, electricity generation continued at El Romeral with prices achieved during the period averaging more than €100/MWh.  This is more than double the price of electricity at the time of the El Romeral asset acquisition in March 2021.  Further investments made at the power plant have increased revenue, improved efficiency and have diversified the source of electricity being generated to include photovoltaic.  Surplus funds generated since acquisition are being retained in the joint-venture vehicle (Tarba Energía) to fund future development and diversification.

Prospex is now a company with a reliable income stream from onshore assets in Europe.  As a result, the Company is expected to be fully funded to meet all existing operational and financial commitments.

Financial Review

For the six months ended 30 June 2023, the Company is reporting a net loss after taxation from continuing operations of £888,473 (H1 2022: profit £5,120,408).  Included in this is an unrealised loss of £489,037 arising on revaluation of financial assets at fair value (H1 2022: gain £7,645,980).

The 2023 unrealised loss results from a revaluation of the Company's share in its subsidiary PXOG Marshall Limited in which the assets in the Podere Gallina licence in Italy are held.  This loss reflects the impact on the underlying asset valuation caused by the decline in the forward curve of European gas prices and a weaker EUR:GBP exchange rate at 30 June 2023.  Applying a conservative view on European gas prices in valuations performed at prior reporting dates has successfully limited the impact of extreme volatility seen in this market since 2021.

Administrative expenses of £461,322 were incurred in H1 2023, compared with £501,967 in the same period last year.   

At 30 June 2023, the Company held cash and cash equivalents of £395,202 (30 June 2022: £181,628).

 

Outlook

Subsequent to 30 June 2023, a further significant proportion of the interest-bearing debt of the Company in the form of convertible loan notes has been converted to equity.  As a result and combined with a return of funds invested in Italy enabled by first gas sales there, we expect a strengthening of the Company's balance sheet during the course of 2023.

The Board and management continues to focus on developing and growing the Company's portfolio of assets and income streams, both by increasing the productivity and profitability of existing assets, and through active search and investigation of new investment opportunities which meet the Company's discerning investment criteria.

 

 

Bill Smith

Non-Executive Chairman



 

Prospex Energy Plc

Interim results

For the six months ended 30 June 2023

 

Statement of profit or loss and other comprehensive income

 



  Six months ended

 

  Six months ended

 

Year ended

 


30 June

 

30 June

 

31 December

 


2023


2022


2022



(unaudited)

 

(unaudited)

 

(audited)

 


£


£


£








CONTINUING OPERATIONS

 






Other income


              36,936


                       -  


                        -  

Administrative expenses


(461,322)


(501,967)


(975,725)

Share-based payment charge


(191,757)


(201,774)


(187,417)








OPERATING LOSS

 

(616,143)


(703,741)


(1,163,142)








(Loss)/gain on revaluation of investments and loans


(489,037)


    7,645,980


      9,367,435










(1,105,180)


6,942,239


       8,204,293








Finance income


           257,187


        116,314


           324,052








Finance costs


(162,739)


(26,200)


(173,023)








(LOSS)/PROFIT BEFORE INCOME TAX

 

(1,010,732)


7,032,353


      8,355,322








Income tax


          122,259  


(1,911,945)


(1,218,415)








(LOSS)/PROFIT AND TOTAL COMPREHENSIVE (LOSS)/PROFIT FOR THE PERIOD

 

(888,473)


        5,120,408


          7,136,907








(Loss)/profit per share

 






- Basic earnings  (note 4)


(0.31)p


2.24p


2.88p








- Diluted earnings (note 4)


(0.31)p


2.18p


2.66p



 

Statement of financial position - As at 30 June 2023

 



30 June 2023

 

30 June 2022

 

31 Dec 2022



(unaudited)

 

(unaudited)

 

(audited)

 


£


£


£

ASSETS

 






NON-CURRENT ASSETS

 






Property, plant and equipment


                         -  


                       -  


                         -  

Investment (note 5)


    15,575,603


   14,343,285


    16,064,640

Trade and other receivables


                         -  


     3,463,038


                         -  



    15,575,603


    17,806,323


    16,064,640

CURRENT ASSETS

 






Trade and other receivables


       6,229,986


         710,447


       5,515,237

Investments


                 100


                        -  


                 100

Cash and cash equivalents


           395,202


         181,628


       1,482,762



       6,625,288


         892,075


       6,998,099








TOTAL ASSETS

 

    22,200,891


   18,698,398


    23,062,739








EQUITY

 






SHAREHOLDERS' EQUITY

 






Called up share capital


      7,232,065


     7,200,272


       7,225,893

Share premium account


   15,100,654


   14,051,552


    14,850,928

Capital redemption reserve


             43,333


            43,333


              43,333

Merger reserve


       2,416,667


     2,416,667


       2,416,667

Fair value reserve


    14,388,954


   11,801,302


    14,755,732

Retained earnings


(20,471,890)


(19,181,498)


(20,141,952)








TOTAL EQUITY

 

   18,709,783


  16,331,628


    19,150,601








LIABILITIES

 






NON-CURRENT LIABILITIES

 






Financial liabilities - borrowings







  Bank loans


                         -  


            28,768


                         -  

  Interest bearing loans and borrowings


                         -  


         107,226


           799,145

Deferred taxation


       1,136,550


     1,952,339


       1,258,809



       1,136,550


     2,088,333


       2,057,954








CURRENT LIABILITIES

 






Trade and other payables


              44,902


            51,566


              41,440

Financial liabilities - borrowings







  Bank loans


                         -  


               9,736


                        -  

  Interest bearing loans and borrowings


       2,309,656


         217,135


       1,812,744



      2,354,558


        278,437


      1,854,184

TOTAL LIABILITIES

 

      3,491,108


    2,366,770


       3,912,138








TOTAL EQUITY AND LIABILITIES

 

   22,200,891


  18,698,398


     23,062,739


Statement of changes in equity

For the six months ended 30 June 2023

 









Capital

 








Share

 

Share

 

Retained

 

redemption

 

Merger

 

Fair value

 




capital

 

premium

 

earnings

 

reserve

 

reserve

 

reserve

 

 Total

 


£


£


£


£


£


£


£

Unaudited

 














At 1 January 2023


   7,225,893


14,850,928


(20,141,952)


      43,333


2,416,667


  14,755,732


 19,150,601

Total comprehensive income for the period


                            -  


                          -  


(888,473)


                            -  


                     -  


                           -  


(888,473)

Issue of shares


           6,172


    249,726


                    -  


                    -  


              -  


                   -  


      255,898

Share-based payment charge


                  -  


                  -  


       191,757


                    -  


              -  


                   -  


       191,757

Transfer to fair value reserve


                  -  


                  -  


        366,778  


                  -  


               -  


(366,778)


                    -  

At 30 June 2023

 

  7,232,065


15,100,654


(20,471,890)


        43,333


2,416,667


 14,388,954


18,709,783
















Unaudited

 














At 1 January 2022


   7,124,355


11,599,333


(18,748,005)


         43,333


2,416,667


   6,067,267


    8,502,950

Total comprehensive income for the period


                            -  


                          -  


5,120,408


                            -  


                     -  


                           -  


          5,120,408

Issue of shares


       75,917


  2,542,682


                   -  


                    -  


              -  


                    -  


   2,618,599

Costs of shares issued


                  -  


(112,103)


                   -  


                    -  


                 -


                    -  


(112,103)

Share-based payment charge


                  -  


      21,640


      180,134


                   -  


              -  


                   -  


       201,774

Transfer to fair value reserve


                  -  


                  -  


(5,734,035)


                    -  


                -  


    5,734,035


                    -  

At 30 June 2022

 

7,200,272


14,051,552


(19,181,498)


43,333


2,416,667


11,801,302


16,331,628
















Audited

 














At 1 January 2022


   7,124,355


11,599,333


(18,748,005)


       43,333


2,416,667


    6,067,267


      8,502,950

Total comprehensive income for the year


                            -  


                          -  


          7,136,907


                            -  


                     -  


                           -  


          7,136,907

Issue of shares


      101,538


  3,333,893


                    -  


                   -  


              -  


                     -  


      3,435,431

Costs of shares issued


                  -  


(112,104)


                     -  


                  -  


               -  


                   -  


(112,104)

Lapse of share options


                   -  


     29,806


(29,806)


                  -  


              -  


                     -  


                      -  

Share-based payments charge


                    -  


                  -  


      187,417


                    -  


              -  


                     -  


         187,417

Transfer to fair value reserve


                    -  


                  -  


(8,688,465)


                    -  


              -  


   8,688,465


                       -  

At 31 December 2022

 

  7,225,893


14,850,928


(20,141,952)


         43,333


2,416,667


  14,755,732


    19,150,601


Statement of Cash Flows

For the six months ended 30 June 2023



  Six months ended

 

  Six months ended

 

Year ended

 


30 June

 

30 June

 

31 December

 


2023


2022


2022



(unaudited)

 

(unaudited)

 

(audited)

 


£


£


£

Operating activities

 






(Loss)/profit before income tax


(1,010,732)


7,032,353


       8,355,322

Loss/(gain) on revaluation of investments and loans


           489,037  


(7,645,980)


(9,367,435)

Finance income


(257,187)


(116,314)


(324,052)

Finance costs


         162,739


           26,200


          173,023

Operating loss

 

(616,143)


(703,741)


(1,163,142)

Increase in trade and other receivables


(461,870)


(1,990,099)


(3,126,358)

Increase/(decrease) in trade and other payables


                3,462


(1,326)


(11,454)

Share-based payment charge


          191,757


         201,774


            187,417








Net cash outflow from operating activities

 

(882,794)


(2,493,392)


(4,113,537)








Cash flows from investing activities

 






Interest received


               4,308


                      -  


                2,247

Interest paid


(159,862)


(26,200)


(124,338)








Net cash outflow from investing activities

 

(155,554)


(26,200)


(122,091)








Cash flows from financing activities

 






New loan notes


                        -  


                      -  


      2,370,000

Bank loan repayment


                        -  


(3,890)


(42,394)

Loan repayments


(107,227)


(21,446)


(131,353)

Issue of share capital


             58,015


    2,618,599


      3,414,181

Costs in respect of share issue


                        -  


(112,103)


(112,104)








Net cash (outflow)/generated from financing activities

 

(49,212)


     2,481,160


       5,498,330








Net (decrease)/increase in cash and cash equivalents

 

(1,087,560)


(38,432)


1,262,702








Cash and cash equivalents at start of period


      1,482,762


        220,060


          220,060








Cash and cash equivalents at end of period

 

         395,202


       181,628


      1,482,762

 



 

 

Notes to the interim financial statements

 

1          General information

Prospex Energy Plc is a company incorporated in the United Kingdom, which is listed on the Alternative Investment Market of the London Stock Exchange Plc.  The address of its registered office is 60 Gracechurch Street, London EC3V 0HR.  The Group is primarily involved in the development, exploration and the production of natural gas and the generation of electricity.

 

2          Financial information

The interim financial information for the six months ended 30 June 2023 and 2022 has not been audited or reviewed and does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.  The comparative financial information for the year ended 31 December 2022 has been derived from the audited financial statements for that period.  A copy of those statutory financial statements for the year ended 31 December 2022 has been delivered to the Registrar of Companies.  The report of the independent auditors on those financial statements was unqualified, drew attention to a material uncertainty relating to going concern and did not contain a statement under Sections 498 (2) or (3) of the Companies Act 2006.

The interim financial statements have been prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 as they apply to the financial statements of the Company for the six months ended 30 June 2023 and as applied in accordance with the provisions of the Companies Act 2006 and under the historical cost convention or fair value where appropriate.  They have also been prepared on a basis consistent with the accounting policies expected to be applied for the year ending 31 December 2023 and which are also consistent with those set out in the statutory accounts of the Company for the year ended 31 December 2022.

The interim financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the company operates.

 

3          Taxation

On the basis of these accounts the only charge to taxation is the deferred taxation arising on the revaluation of the company's investments.



 

4          Loss/earnings per share

The loss/earnings and number of shares used in the calculation of earnings per share are as follows:

 



  Six months ended

 

  Six months ended

 

Year ended

 


30 June

 

30 June

 

31 December

 


2023


2022


2022



(unaudited)

 

(unaudited)

 

(audited)

Basic EPS

 






(Loss)/profit for the financial period


(888,473)


5,120,408


      7,136,907

Effect of dilutive securities on loss /profit

 






Options and warrants


                        -  


                      -  


                       -  

Convertible loan notes


         -


                      -  


          129,734

Adjusted (loss)/earnings


(888,473)


     5,120,408


      7,266,641

Basic EPS

 






Weighted average number of shares for basic EPS


  283,657,000


   228,138,764


  247,635,519

Effect of dilutive securities on number of shares

 





Options and warrants


      -


     6,807,636


      3,057,387

Convertible loan notes


   -


                       -  


   22,291,906

Weighted average number of shares for diluted EPS


  283,657,000


   234,946,400


 272,984,812








Basic (loss)/earnings per share


(0.31)p


2.24p


2.88p








Diluted (loss)/earnings per share


(0.31)p


2.18p


2.66p

 

The exercisable share options and warrants are deemed to be dilutive in nature where their exercise price is less than the average share price for the period and the dilution would reduce the earnings per share or increase the loss per share.



 

5          Non-current investment



Shares in

 






group

 

Unlisted

 




undertakings

 

investments

 

Total

 


 £

 

 £

 

 £

Unaudited

 






At 1 January 2023


    16,014,640


             50,000


    16,064,640

Revaluations


         (489,037) 


                        -  


(489,037)  

At 30 June 2023

 

  15,525,603

 

          50,000

 

  15,575,603

 







Unaudited

 






At 1 January 2022


      6,647,305


             50,000


       6,697,305

Revaluations


     7,645,980


                        -  


       7,645,980

At 30 June 2022

 

    14,293,285


             50,000


     14,343,285








Audited

 






At 1 January 2022


     6,647,305


            50,000


      6,697,305

Revaluations


      9,367,435


                       -  


     9,367,435

Reclassified to current asset investments


(100)


                            -  


(100)

At 31 December 2022

 

   16,014,640


            50,000


    16,064,640

 

The investments in subsidiary undertakings are accounted for at fair value through the profit and loss, as the Company is deemed to be an Investment Entity.

 

6          Dividends

The directors do not propose to declare a dividend for the period.

 

7          Copies of interim results

Copies of the interim results can be obtained from the website www.prospex.energy.  From this site you may access our financial reports and presentations, recent press releases and details about the company and its operations.

 

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward looking statements.  Forward looking statements are identified by their use of terms and phrases such as ''believe'', ''could'', "should" ''envisage'', ''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect", ''will'' or the negative of those, variations or comparable expressions, including references to assumptions.  These forward-looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities.  Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors.

Such statements are based on current expectations and assumptions and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially from any expected future events or results expressed or implied in these forward-looking statements.  Persons receiving and reading this announcement should not place undue reliance on forward-looking statements.  Unless otherwise required by applicable law, regulation or accounting standard, the Company does not undertake to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

 

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