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Prospex Energy PLC
14 May 2024
 

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

 

14 May 2024

 

Prospex Energy PLC

('Prospex' or the 'Company')

 

Final Results for Year ended 31 December 2023

and

Notice of Annual General Meeting

 

Prospex Energy plc, the AIM quoted investment company, is pleased to announce its audited Final Results for the year ended 31 December 2023 and Notice of Annual General Meeting ("AGM") on 12 June 2024.

 

Corporate and Financial Highlights

·    Exemplary safety performance by our operators, contractors and partners with just one minor lost time incident at our Spanish asset and no environmental issues or incidents.

·    Two operating and revenue generating onshore natural gas investments situated in stable European countries.

·    The Company recorded a loss for the year of £1,231,400 (2022: profit: £7,136,907).  This was caused by the re-adjustment of commodity prices to more normal levels, following the unsustainable and inflated high prices of 2022 attributable to the commencement of the Russian-Ukraine conflict.  This resulted in the revaluation of investments at fair value leading to a reduction of 2.9% to £15,594,931 from £16,064,640 in 2022 and the unrealised loss of £469,709 compared to an unrealised gain in 2022 of £9,367,435 (which was largely due to the Company's increased working interest in Selva from 17% to 37% in April 2022).

·    By September 2023, all of the convertible loan notes issued in July 2022 were converted to equity at 4.25p per share.  The £1.87 million raised through the issue of these convertible loan notes helped to fund the Selva development project to first gas.

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

·    Significantly strengthened the balance sheet as a result of the conversion or repayment of the bulk of its interest-bearing debts.

Post period highlights

·    All remaining interest-bearing debt outstanding plus accrued interest, was repaid by 31 March 2024.

·    No further debt or equity raises have occurred between the reporting date and the date of this report.

·    The Company is debt free, cash generative and well positioned for growth.

 

Operational Highlights

Selva Field - Northern Italy

·    18-month gas sales contract with BP Gas Marketing ("BPGM") signed by Po Valley Operations Limited ("PVO"), on behalf of the Joint Venture in February 2023.

·    In May 2023, construction of the gas processing facility at the Podere Maiar-1 wellsite at the Selva field was completed on schedule and within 3% of budget with successful connection to the Italian National Transmission System Operator ("SNAM") gas grid.

·    PVO successfully recovered the €757,000 performance bond (€280,090 net to PXEN) previously deposited with SNAM.

·    In June 2023, Italian Energy Ministry issued the formal documentation to enable the commencement of gas production from the Selva field.

·    First gas was achieved from the Selva field on 4 July 2023.

·    By year end, following completion of the commissioning of the new gas processing facilities at Selva, production has steadily increased to a stable rate of ≈ 80,000 scm/d.

 

El Romeral - Southern Spain

·    In 2023, the El Romeral power plant generated gross revenues from electricity production of €1.8 million (≈€0.9 million net to PXEN).

·    In May 2023 through Tarba Energía Srl ("Tarba") the operating company, 20 hectares of land adjacent to the El Romeral power plant was leased for 25 years for Project Helios a 5MW solar photovoltaic project.

 

Notice of Annual General Meeting

 

The Company also gives notice that its AGM will be held at the offices of Shakespeare Martineau LLP, 6th Floor 60 Gracechurch Street, London, United Kingdom, EC3V 0HR at 11.00 a.m. on 12 June 2024.

The Financial Results for the year ended 31 December 2023 together with the Notice of AGM will be available to download from the Company's website: https://prospex.energy/ and will also be posted to shareholders on or around 15 May 2024.

Commenting on the results, Mark Routh, Prospex's CEO, said:

"It has been an extremely successful year for Prospex, with the Company having reached a number of significant milestones.  Perhaps the most noteworthy being the start of gas production from the Selva Field in Italy, further de-risking our business with two onshore producing and revenue generating investments in two European countries.

"Despite having strengthened the balance sheet during the year, the Company is reporting a loss for the period.  This in my view, is in no way reflective of the performance of the Company but attributable to events outside of our control, mainly an adjustment of the inflated and unsustainable commodity prices attributable to global tensions in 2022 and the subsequent revaluation of our assets.

"Nevertheless, we remain well positioned for growth.  The Company is debt-free, has no warrants outstanding and is self-sustaining on a business-as-usual basis.  Prospex is in a much stronger financial position than it was at the end of the prior year.  None of this would have been possible without the continued support of our existing and new shareholders and importantly the debt holders, who demonstrated continued belief in our vision by converting their debt into equity, having funded the development and transition of Selva into a producing field."

 

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR") and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

 

* * ENDS * *

 

For further information visit www.prospex.energy or contact the following:

 

Mark Routh

Prospex Energy PLC

Tel: +44 (0) 20 7236 1177

Ritchie Balmer
Rory Murphy

Strand Hanson Limited

Tel: +44 (0) 20 7409 3494

Lional Therond / Daniel Fox-Davies

Fox-Davies Capital Limited

Tel: +44 (0) 20 3884 8450

Andrew Monk (Corporate Broking)
Andrew Raca / Alex Cabral (Corporate Finance)

VSA Capital Limited

Tel: +44 (0) 20 3005 5000

Ana Ribeiro / Susie Geliher

St Brides Partners Limited 

Tel: +44 (0) 20 7236 1177

 

Notes

Prospex Energy PLC is an AIM quoted investment company focused 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.  The Company will 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.

 

About Selva:

The Selva Malvezzi Production Concession is in the Po Valley region of northern Italy.  The concession contains the Selva gas-field as well as exciting exploration and development opportunities.  The Podere Maiar-1 well at Selva was completed in December 2017 and successfully found a commercial gas accumulation up-dip of the previous wells on the Selva field.  The Company has a 37% working interest in the Production Concession held via Prospex's two wholly owned subsidiaries, PXOG Marshall Ltd (17% of the Concession) and UOG Italia Srl (20% of the Concession).

 

The Selva Malvezzi Production Concession holds independently verified 2P gross proven reserves of 13.4 Bcf (5.0 Bcf net to Prospex at 37% WI) in Selva, gross Contingent 2C Resources of 14.1 Bcf (5.2 Bcf net) and a further 88.2 Bcf of gross Best Estimate Prospective Resources (un-risked) (32.6 Bcf net).[1]

 

An independent Competent Person's Report of the Podere Gallina Licence which was converted into the Selva Malvezzi Production Concession at first gas in July 2023, was prepared by CGG Services (UK) Limited in July 2022 on behalf of the joint venture.[1] It attributed a total of 379 MMscm (13.4 Bcf) gross 2P reserves for the Selva redevelopment project.

 

References:

[1] Source: "Competent Person's Report Podere Gallina Licence, Italy" prepared by CGG Services (UK) Limited in July 2022 : https://bit.ly/44VF02A

 

Glossary:

scm                  Standard cubic metres

scm/d             Standard cubic metres per day

MMscm         Million standard cubic metres

Bcf                    Billion standard cubic feet

MMscfd         million standard cubic feet per day

MWh               Mega Watt hour

TTF                   The 'Title Transfer Facility' - a virtual trading point for natural gas in the Netherlands.

 

Qualified Person Signoff

In accordance with the AIM notice for Mining and Oil and Gas Companies, the Company discloses that Mark Routh, the CEO and a director of Prospex Energy plc has reviewed the technical information contained herein.  Mark Routh has an MSc in Petroleum Engineering and has been a member of the Society of Petroleum Engineers since 1985.  He has over 40 years operating experience in the upstream oil and gas industry.  Mark Routh consents to the inclusion of the information in the form and context in which it appears.

 


Prospex Energy Plc

 

Chairman's Report

for the year ended 31 December 2023

Business Development

Outlook

Bill Smith

 

 

Non-Executive Chairman

14 May 2024



 

 

Statement of Profit or Loss and Other Comprehensive Income

for the year ended 31 December 2023

 













 

Statement of Financial Position

31 December 2023

 






























































 


 

Statement of Changes in Equity

for the year ended 31 December 2023




























Fair value reserve - the cumulative fair value changes of the company's fixed asset investment, net of deferred tax


 

Statement of Cash Flows

for the year ended 31 December 2023

 

 





























 

 

 

Notes to the Statement of Cash Flows

for the year ended 31 December 2023

 














 






 


 

           


 

- Fair value reserve represents the cumulative fair value changes of the company's fixed asset investment, net of deferred tax.


Investment entities

Impairment of assets

Share based payments

Deferred tax assets

 

 



















 












The main UK corporation tax rate changed from 19% to 25% with effect from 1 April 2023, resulting in an effective rate in the year of 23.52%.  The deferred tax liability arising on the revaluation of the Company's fixed asset investments has been calculated using 25%, reduced by the availability of tax losses.



































 

For 2023, the loss and weighted average number of shares used for calculating the diluted loss per share are identical to those for the basic loss per share.  The outstanding share options (note 23) would have the effect of reducing the loss per share and would therefore not be dilutive under IAS 33 'Earnings per share'.







£



















 






 
































years.  The DCF model has also been updated to account for a decelerated annual production rate which lengthens the cashflow period from 10 years to 15 years.  The decreased annual production rate is based on actual and planned production rates.  The





































 


























































-



-


-


July 2022 Convertible Loan note

September 2022 Convertible Loan note






Financial assets at fair value through profit or loss

Financial instruments that are measured at fair value are classified using a fair value hierarchy that reflects the source of inputs used in deriving the fair value.  The three classification levels are:

- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable market inputs).

The following table presents the Company's assets carried at fair value by valuation method:

The fair value is determined to be equal to the cost of the investment and is reviewed periodically based on information available about the performance of the underlying business.  Where cost is deemed to be inappropriate, the following table shows the valuation technique used in measuring Level 3 fair values for financial instruments measured at fair value in the statement of financial position, as well as the significant unobservable inputs used.  The only method used is that of NPV.

Financial risk management

Credit risk

Liquidity risk and interest rate risk

Foreign currency exposure



Share options

 







 







 

 










 

 































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