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

16 April 2025

Prospex Energy plc

("Prospex" or the "Company")

Completion of 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 on 15 April 2025, its wholly owned subsidiary, PXOG Muirhill Limited ("Muirhill") completed the acquisition of Tarba Energía S.L. ("Tarba") through the purchase of the entire shareholding held by Warrego Energy Pty Ltd ("Warrego") in Tarba (the "Warrego Shares") (the "Acquisition").  Tarba is the company through which Prospex holds its interest in the El Romeral production concessions and the associated El Romeral gas-to-power plant situated near Carmona in southern Spain.  Tarba also holds the Tesorillo and Ruedalabola exploration permits located in the Cadiz province of southern Spain. 

Highlights

·    Prospex now owns a 100% indirect working interest in both the El Romeral asset and the Tesorillo and Ruedalabola exploration permits.

·    Under the terms of the Acquisition, Muirhill shall pay to Warrego a total consideration of €662,725, of which €100,000 is payable upon securing drilling permits.

·    The Acquisition has been funded entirely by the Company's existing 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.

·    New senior member of staff appointed to the Company's executive management team as Chief Operating Officer - already a shareholder of the Company, having supported the Company in funding rounds.

·    No objections received from the public and statutory consultees on the Environmental Impact Assessment to drill the five wells on the El Romeral concessions.

·    This transaction delivers on the strategy of increasing the Company's investments in European gas and specifically gas production.

Mark Routh, Prospex's CEO, commented:

"I am extremely pleased to announce the completion of our acquisition of Tarba, which includes the El Romeral production concessions and the related gas-to-power plant in Carmona.  Importantly, the acquisition was funded entirely by 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.

"As announced in the RNS of 16 March 2025, the prospective gas resources Prospex has acquired in the El Romeral asset alone, is at an equivalent price of US$0.092/Boe.  This acquisition delivers on the Company's strategy to acquire undervalued projects with multiple, tangible value trigger points that can be realised within 12 months of acquisition.  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.

"I am also pleased to announce the appointment of Richard Jameson as Chief Operating Officer of Prospex Energy, a senior and highly qualified engineer with whom I have worked previously.  Richard will assist the executive management team in managing our growing investment portfolio, which now includes 100% of Tarba and, subject to the award of the onshore licence block applications, will expand into Poland.  Significantly, Richard is an existing shareholder in Prospex having participated in funding the company since July 2022, owning 9,757,666 shares, approximately 2.42% of the Company."

El Romeral and Tarba Acquisition

Environmental Impact Assessment Consultation for the El Romeral 5-Well Permit Applications

Following the public gazetting of the Statutory Consultation of the Environmental Impact Assessment ("EIA") for the application to drill five new natural gas wells on the El Romeral concessions on 19 February 2025, the 30-working day statutory consultation period closed on 4 April 2025.  Significantly no objections have been received from the public and statutory consultees.  Tarba is waiting for the completion of the reports from the sub-delegation of the Government in Seville before the results on the consultation is reported back to the Ministry in Madrid.  From this point, the Ministry in Madrid targets between 90 to 180 days for the final review and approval, before it can issue an approval resolution granting the permits to drill the five wells.

Whilst Tarba waits for the regulatory approvals process to complete, it is progressing with key drilling preparatory work, including detailed well design, sourcing of essential long-lead items and securing the necessary contractors to deliver the five new production wells.

Background information on the Tarba Acquisition

Under the terms of the Tarba shareholders agreement with Warrego (the "SHA"), Prospex, through its wholly owned subsidiary Muirhill, 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.  That notice was served on 19 March 2025 and Muirhill had a further 30 days in which to complete the transaction.  Completion occurred on 15 April 2025 within that timescale.

The total consideration for the Warrego Shares is €662,725, €100,000 of which becomes payable when the permits to drill just three of the five wells currently going through the regulatory permitting application process are approved.  Prospex has funded 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 Tesorillo and Ruedalabola permits are currently suspended.

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 €662,725 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 8 April 2025, the El Romeral asset currently represents 12% of the net production of the Company, with a 45% 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.  Now that the acquisition of 100% of Tarba has completed, 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 8 April 2025, Prospex has been informed by HEYCO Energy, the operator of the gas field in northern Spain, of its decision to wait for the completion of the 3D seismic reprocessing project and the reinterpretation of that new data, before it starts the drilling programme on site.  This data driven approach will increase the operator's chance of success and further optimise the subsurface well targets of the future wells.  HEYCO  is also working on optimising the production from the recently drilled Viura-1B well including managing its water production.  Establishing stable rates from the field will facilitate negotiations with the banking syndicates for project financing.  As such, drilling operations on the Viura project are not expected to commence before 1 July 2025.

Appointment of Chief Operating Officer

The Company is pleased to announce the appointment of Mr Richard Jameson as the Chief Operating Officer ("COO") of Prospex Energy.  Richard will also take the role of COO of Tarba to support the increased workload in the management of the assets in southern Spain.  Richard will be appointed as a Director of Tarba as soon as the legal proceedings for that appointment can be concluded.  Until that point Mark Routh, the CEO of Prospex, will be the sole director of Tarba upon the resignation of Mr Dennis Donald, up until yesterday Warrego's representative on Tarba's Board of directors.  Richard's role in Prospex will initially be part-time, but his role will expand as the Company continues with its growth strategy.

Richard is a highly qualified engineer with more than 40 years of experience in the industry.  He is also an existing shareholder of Prospex Energy having participated in recent fund raises of the Company and acquiring further shares on the market.  Richard is now the beneficial owner of 9,757,666 shares in Prospex Energy which represents 2.42% of the current issued share capital.

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.

* * ENDS * *

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.  Prospex now owns an indirect 100% working interest in Tarba which includes the three El Romeral concessions and the gas-to-power plant.

The El Romeral gas and power project in Spain, has gas production wells which supply gas to the 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.  Prospex now owns an indirect 100% working interest in Tarba and therefore 100% of the Tesorillo and Ruedalabola permits.  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