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

20 March 2025

Prospex Energy plc

("Prospex" or the "Company")

Proposed Acquisition of 100% of Tarba Energía and Viura Drilling Schedule Update

Prospex Energy plc (AIM: PXEN), the AIM quoted investing company focused on European gas and power projects, is pleased to announce that it has signed a binding agreement to become the sole shareholder of Tarba Energía S.L. ("Tarba") by purchasing the entire shareholding that Warrego Energy Ltd ("Warrego") holds in Tarba (the "Warrego Shares").  Tarba is the company through which Prospex holds its investment in the El Romeral production concessions and associated El Romeral gas-to-power plant situated near Carmona in southern Spain and in the Tesorillo and Ruedalabola exploration permits (currently suspended) in the Cadiz province in southern Spain. 

Highlights

·    On completion, Prospex will own a 100% indirect working interest in both the El Romeral asset and the Tesorillo and Ruedalabola exploration permits

·    Total consideration of €652,725

·    Acquisition is being funded entirely by the Company's capital resources

·    Competitive acquisition price equating to US$0.016/mcf or US$0.092/Boe

·    Potential to significantly increase production and revenues on the El Romeral concession once the permits to drill the five new wells are approved

·    This transaction demonstrates further momentum in building the Company's investment strategy in European gas and production

Mark Routh, Prospex's CEO, commented:

"I am extremely pleased to announce the increased ownership in Tarba, the El Romeral concessions and the related gas-to-power plant in Carmona.  Importantly the acquisition is being made using accumulated cash reserves from our investment portfolio and is expected to lead to significantly increased production revenue once the permits to drill the five new wells on the EL Romeral concessions are approved.

"In terms of prospective gas resources acquired in the El Romeral asset alone, the equivalent price of US$0.092/Boe is an excellent price by almost any measure.  Prospex sees further upside in the concessions with further mapped structures to evaluate and drill once the first five wells have been permitted and drilled."

Further information

Under the terms of the Tarba shareholders agreement with Warrego (the "SHA"), Prospex, through its wholly owned subsidiary PXOG Muirhill Limited ("Muirhill") has exercised its pre-emption right to buy all of the Warrego Shares following the execution of a Share Sale and Purchase Agreement (the "SPA") between Warrego and a Third-Party buyer which triggered a right for Muirhill to acquire the Warrego Shares.  Pursuant to the SHA, Muirhill had 30 days in which to give notice to match the price offered for the Warrego Shares, which it elected to do on 19 March 2025 and it has a further 30 days in which to complete the transaction.  Completion therefore will occur on or before 19 April 2025.

The price to be paid for the Warrego Shares is a total of €652,725, €100,000 of which becomes payable when the permits to drill three of the five wells currently going through the regulatory permitting application process are approved.  Prospex is funding this acquisition entirely from its existing cash resources.

In addition to the cash purchase price, the SPA requires the buyer to pay Warrego a 5% gross overriding royalty on the gross revenues from any future Tesorillo Project development (the "Tesorillo Project Royalty").  There is no monetary cap or maximum amount payable in respect of the Tesorillo Project Royalty.

The price offered to Warrego by the Third-Party buyer is required under the SHA to be matched exactly and therefore the purchase price can be considered as an independently derived value for the increased interests in the assets.

With respect to prospective resources acquired as part of this transaction, the CPR^[1] assigns gross un-risked mid-case prospective resources in the three El Romeral concessions of 90 bcf across 11 low-risk prospects that have been mapped on the concessions.  For the total acquisition price of €652,725 for 50.1% of the 90 bcf of prospective resources, this translates to an acquisition price of US$0.016/mcf or US$0.092/Boe.

As referenced in the RNS published on 25 February 2025, the El Romeral asset currently represents 10% of the net production of the Company, with a 55% contribution coming from the Viura asset in Northern Spain and 35% of the Company's net production coming from the Selva Malvezzi asset in northern Italy.  Following completion of this transaction, the El Romeral asset will represent approximately 20% of the Company's enlarged net production.

Schedule Four disclosure

As of 31 December 2024, Tarba reported unaudited total assets of €2.9 million and for the year ended 31 December 2024, an unaudited loss after tax of €0.57 million.  Given that Prospex is classified as an investment entity under applicable accounting standards (IFRS10), consolidation of Tarba's results going forward will not be required.

​
 

Viura Project Drilling Schedule Update

Further to the operational update RNS of 25 February 2025, the schedule for the commencement of drilling operations at the Viura gas field in northern Spain, operated by HEYCO Energy, has been pushed back by 6 to 8 weeks.  For operational reasons, the operator has advised that the drilling operations on the Viura project are now expected to commence in May 2025.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018, as amended by virtue of the Market Abuse (Amendment) (EU Exit) Regulations 2019.

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

Notes

Prospex Energy 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.  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 El Romeral and Tarba

The El Romeral power plant is operated by Tarba, which is based near Carmona east of Seville in the province of Andalucía, Spain.  Prior to the completion of the acquisition of the Warrego Shares, the El Romeral asset was co-owned through Tarba by Prospex with a 49.9% working interest and Warrego Energy Limited with a 50.1% working interest.  Warrego Energy is wholly owned by Hancock Energy (PB) Pty Ltd in Perth Western Australia.

The El Romeral gas and power project in Spain, has gas production wells which supply gas to an 8.1MW power plant near Carmona in Southern Spain.  It is currently operating at about 30% of its full capacity because Tarba is waiting on the permits to drill five further infill wells on the concessions to increase production.  Tarba is already categorised as a hybrid energy provider with the successful installation of photovoltaic panels on the roof of the plant in August 2022.  Tarba sells electricity generated from the plant on the spot market in Spain.  The El Romeral licences comprise three contiguous production concessions.

Tarba is pioneering a new hybridisation model that combines natural gas and solar energy as sources for electricity generation in the ecological transition process by developing a project to produce 5MW electricity using photovoltaic solar energy ("Project Helios").

In 2023 and 2024, Tarba supplied enough energy to cover the electricity consumption of approximately 6,700 homes in the area, even when operating the facility at one third of its capacity.  With future wells to be drilled on the concessions, the plant is expected to reach its maximum nameplate production capacity to sell 8.1MW of power into the grid.  The combination of further natural gas extracted from the concessions and the new photovoltaic generation is expected to cover the energy supply of 20,100 homes per year.

About Tesorillo and Ruedalabola

The Tesorillo Project in the Cadiz province of Southern Spain comprises two petroleum exploration permits, the Tesorillo and Ruedalabola Permits that were approved as a joint investigation programme.  The Tesorillo Project covers 94,000 acres and includes a known gas discovery at the Almarchal-1 well, drilled in 1957.  Prior to the completion of the acquisition of the Warrego Shares, Prospex held a 15% working interest in the Tesorillo project via Tarba with the remaining 85% working interest held by Warrego Energy Limited.  Prospex also had the right to acquire a further 34.9% of the Tesorillo Project on payment of €1.725 million prior to the drilling of the appraisal well on Tesorillo.  On completion of the acquisition of the Warrego Shares, this obligation will fall away since Prospex will own 100% of Tarba.  The Tesorillo Project is estimated to contain 831 Bcf gross unrisked prospective resources on a best estimate basis and has excellent proximity to pipelines and infrastructure.  (Best Estimate Prospective Resource assessment independently verified by Netherland, Sewell and Associates^[2] - 5 May 2015.)

On 12 May 2021, an application was submitted to MITECO (the Spanish Regulator) to convert the vast majority of the existing Tesorillo Project to an exploitation concession, together with a field development plan for approval and all of the necessary supporting documents.  The application was submitted before the Climate Change Act 7/2021 of 22 May 2021 came into force.  The outcome of this application is still under consideration by MITECO and will not be known for some time.

The Tarba team has continued to liaise with various government agencies to progress drilling and environmental approvals for Tesorillo.  Tarba is targeting conventional sandstone gas reservoirs.  There are no financial or drilling commitments attached to the Tesorillo Project Exploitation Concession application.

Qualified Person Signoff

In accordance with the AIM note 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 more than 40 years of 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.

Glossary:

Bcf                            Billion standard cubic feet

Bcm                          Billion standard cubic metres

Boe                           Barrels of Oil Equivalent (where 1 MMBoe = 5.8 Bcf)

MMBoe                  Million Barrels of Oil Equivalent

mcf                           Thousand standard cubic feet

MMscfd                  Million standard cubic feet per day

MMscm                  Million standard cubic metres

MMscm/d             Million standard cubic metres per day

MWh                       Mega Watt hour

scm                           Standard cubic metres

scm/d                      Standard cubic metres per day

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

References: -

[1]          El Romeral CPR - Netherland, Sewell and Associates - 30 June 2019

[2]          Tesorillo CPR - Netherland, Sewell and Associates - 5 May 2015