Prospex Energy PLC, the AIM quoted investment company, has announced its unaudited Interim Results for the six months ended 30 June 2020.

Advancing a portfolio of late stage, onshore European gas projects that cover the entire energy cycle from exploration and development to production and power generation.

Portfolio Overview

Podere Gallina Exploration Permit, onshore Italy - first production at Selva gas field ('Selva') at an initial rate of up to 150,000 scm/day expected H1 2021

•    Progressing permitting process for production concession

o  Formal technical environmental approval for the development of Selva received from the Italian Environment Ministry

o  Next steps include final sign off by Ministerial decree, the issuing of the required INTESA (intergovernmental agreement) and the final grant of a production concession from Italy's Economic Development Ministry

•    Pursuing early discussions regarding non-equity linked funding of Prospex's c. €400,000 share of Selva development costs

El Romeral, onshore Spain - acquisition of integrated gas and power project

•    Acquisition of 49.9% interest in El Romeral for net consideration of €375,000, which has been paid

o  Transfer of interest to Prospex's Spanish affiliate ongoing, delayed by COVID-19

•    Multiple low risk opportunities to increase gas production via two development locations with 5 billion cubic feet ('Bcf') of gross contingent resources and 11 prospects with 90 Bcf of gross, un-risked prospective resources with high Chance of Success of >70% (in most cases)

•    Significant scope to increase power generation at plant - power plant currently constrained to operating at c. 22% capacity due to current wells' tail production

o  Full capacity at the plant can be achieved with one successful new well coming on stream

o  Operating at 100% capacity and selling electricity at Spain's historic average price of €70 per MWh (including subsidy) has the potential to generate annual revenues and profit before tax of €4.2 million and €2.4 million, respectively, (€1.8 million profit after tax) from the asset

•    Low cost preparatory work underway to ensure a three-well campaign can commence as soon as possible once the transfer has been completed

EIV-1 Suceava Concession, onshore Romania - production at Bainet field 10% above expectations

•    Average daily production 10% ahead of budgeted - at 15,000m3 per day and above the 14,000m3 per day average in 2019  

•    Ongoing evaluation of the concession's gas prospectivity to determine licence extension and next drilling targets

Tesorillo Gas Project, onshore Spain - de-risking up to 830 Bcf of gas (Best Estimate) of gross un-risked prospective resources

•    Encouraging results of ongoing work programmes, initial results include:

o  Multiple potential gas traps on exploration target identified following reprocessing and interpretation of historic 2D seismic data

o  Identification of four promising leads in the northern half of the concession following integration of new structural maps and cross sections with well reinterpretation and satellite images

•    Working towards decision to drill and increase stake to 49.9% from current 15%

Financial/Corporate Overview

•    Total Assets of £6,202,327 as at 30 June 2020, providing significant asset backing

•    14% reduction in administrative expenses to £416,885 (H1 2019: £484,713)

•    £720,000 raised via an oversubscribed placing of 600,000,000 new ordinary shares to help fund the Company's acquisition of a 49.9% indirect stake in El Romeral

o  Certain Directors acquired new shares in the Company with an aggregate value of £140,000 as part of the Placing

•    Share re-organisation effecting one new ordinary share for 25 existing ordinary shares

•    Change of Company name to Prospex Energy plc

Edward Dawson, Managing Director of Prospex, said, 
"Total asset value of £6,202,327 as at period end provides significant asset backing when compared to our current market cap, but it does not tell the whole of the story. Total Assets do not reflect the considerable run room that exists within our portfolio to grow production and revenues: the additional prospects identified on the Podere Gallina permit in Italy, which are estimated to hold aggregate gross prospective resources (best estimate) of 91.5 Bcf; the 11 prospects on the El Romeral Project, which have been assigned 90 Bcf of gross, un-risked prospective resources with high chance of success of >70% (in most cases); and the up to 830 Bcf of gross prospective resources estimated at the Tesorillo Project in Spain.  With a roadmap in place to de-risk these company-making volumetrics, we are confident we can generate a substantial uplift in the value of the Company for our shareholders.

"Prospex is not just an asset play but a revenue growth one too. Starting with first gas at the Selva field in Italy in H1 2021 and the transfer of a 49.9% interest in the El Romeral project to our Spanish affiliate, our annual production could reach 7,800,000 scm net to Prospex in 2021. This would translate into a significant revenue stream even at current gas prices, which in turn will enable us to pursue the additional prospectivity and opportunities that have been identified across our asset base. COVID-19 may impact exact timings, but the roadmap we have to build a highly cash flow generative investment company focused on cleaner natural gas and power projects remains very much in place and I look forward to providing further updates on our progress in the months ahead."

KeyFacts Energy:   Prospex Oil and Gas Italy country profile   l   Prospex Oil and Gas Spain country profile   l   Prospex Oil and Gas Romania country profile