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

27 January 2022

Prospex Energy PLC

('Prospex' or the 'Company')

Update on the Selva Field Development in Italy

Highlights

·    Production Concession for Selva Malvezzi expected at the end of March 2022

·    Po Valley Energy, the operator, starts and fully funds the installation of the seismic monitoring network to be operational ahead of the 12 months required by the regulators

·    First gas production estimated by Q1 2023

·    Prospex remains fully committed to increasing its stake to 37% in the Selva gas field

Prospex Energy PLC,) the AIM quoted investment company focused on European gas and power projects, provides an update on the Selva field development project in Italy, in which the Company currently holds a 17% working interest in the Podere Gallina licence through its wholly-owned subsidiary PXOG Marshall Limited ('PXOG') with the Selva Malvezzi concession contained in this licence.

On 10 August 2021 the Company announced the conditional acquisition of a further 20% of the Podere Gallina licence from AIM quoted United Oil and Gas plc (AIM:UOG) ("UOG") and UOG Holdings plc (a wholly-owned subsidiary of UOG) by way of a corporate transaction of 100% of UOG Italia S.r.l. ("UOG Italia") which has a 20% working interest in the Podere Gallina licence.  UOG Italia is a wholly-owned subsidiary of UOG Holdings plc.  Under the terms of the Sale and Purchase Agreement with UOG, the long-stop date by which the transaction should complete has been extended by mutual consent from 7 March 2022 to 6 April 2022.

Production Concession Progress

On 21 January 2022, the operator, Po Valley Energy (ASX:PVE) ('Po Valley') advised the Joint Venture partners that the INTESA (the agreement) for the Selva Malvezzi concession has been sent by the Ministry for Ecological Transition ('MITE') to the Emilia Romagna Region (the Regional Government).  This is the pre-award for the intergovernmental agreement and is the penultimate step for the approval of the Production Concession which Po Valley is expecting at the end of March 2022.  Once the Production Concession is awarded the field development project activity can commence.  The target for first gas is Q1-2023.

Environmental Monitoring and Funding by Po Valley

After the production concession is granted, before any gas may be extracted from the Selva field, there is a regulatory requirement to establish a 12-month baseline of local seismicity to ensure that any gas extraction from the area does not lead to increased local seismic activity.

The operator, Po Valley, has this week completed the drilling of three shallow monitoring boreholes, one at 141 metres and two shallower boreholes at 10 metres.  By the end of this week the second 140 metre borehole will be completed and equipped with piezometers.  The water level transducers and settlement gauges will be installed on 28 January 2022.  The supply and installation of transducers and datalogger are planned for 14 February 2022.  On 26 January civil works for the seismic stations commenced and the seismic monitoring network is expected to operational by 15 February 2022.

This work has been started and funded 100% by Po Valley earlier than the required 12 months and in advance of the award of the Production Concession at which time it becomes a firm commitment which all Joint Venture Partners have agreed to fund.  The Joint Venture partners, PXOG and UOG have agreed to fund their share of this work and all development costs when the Production Concession is awarded.  Po Valley has advised PXOG and UOG that failure to fund any commitments under the Joint Operating Agreement when they become due could be construed as notification to relinquish the licence.  Po Valley has indicated it wishes to take over the partners' participating interests, however, the Joint Venture partners refute that Po Valley has the right to do so and do not intend to relinquish their interest in the Licence and have informed Po Valley accordingly.  Further updates will be made in due course.

SNAM tie-in Contract

On 10 December 2021, the operator, Po Valley advanced a refundable bond payment to Snam Rete Gas S.p.A. ("SNAM") of €757,000 on behalf of the Podere Gallina Licence Joint Venture group, in order to confirm a contract with SNAM for the construction of a delivery point from the suspended gas well Podere Maiar ("PM-1") of the Selva field to the SNAM gas grid network.  Prospex, on behalf of PXOG has undertaken to pay PXOG's 17% share of the SNAM €757,000 refundable bond payment to PVO (€128,690) within 21 days of written confirmation by MITE of the award of the Selva Malvezzi Production Concession.

Mark Routh Prospex's CEO commented:

"We are working with Po Valley to achieve first gas from Selva as soon as possible, but with no guarantee on the timing of the Production Concession award, any funding of development activity prior to award is premature.  However recent events are positive, and we are now seeing the final steps towards the granting of the Production Concession.

"We are very excited that we are making encouraging progress towards gas production at Selva which will be a transformational asset for Prospex.  We fully intend to complete acquisition from UOG and look forward to further activity on the wider Podere Gallina licence in the future."

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.

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

Notes

About Selva:

The Podere Gallina Licence is in the Po Valley region of Italy.  The licence contains the currently shut‑in Selva gas-field as well as exciting exploration opportunities.  The Podere Maiar-1 well was completed in December 2017 and successfully found a commercial gas accumulation updip of the previous wells on the Selva field.  The Company currently has as 17% working interest in the Podere Gallina licence.  The Company announced on 10 August 2021 the conditional acquisition of a further 20% of the Podere Gallina licence from UOG.  Subject to securing funding Prospex is set to increase its working interest to 37% in Q2 2022. 

The Podere Gallina Licence holds independently verified 2P gross reserves of 13.4 Bcf (5.0 Bcf net to Prospex at 37% WI), gross Contingent 2C Resources of 14.1 Bcf (5.2 Bcf net) and a further 91.5 Bcf of gross Best Estimate Prospective Resources (33.9 Bcf net).

[Source: CGG Services (UK) Limited Competent Persons Report - January 2019 https://bit.ly/3nZNfYf].

The updated Corporate Presentation for Q1-2022 is available on the Company's website at https://bit.ly/3G6JtCm.