Prospex Energy (PXEN) has received a positive assessment from Hannam & Partners following its second quarter 2026 operational update, with the broker highlighting stronger cash generation, lower operating costs and multiple near-term catalysts. The broker values the shares at a risked net asset value (NAV) of 15.4p per share, implying about 430% upside to the current share price of 2.9p.
The broker said Selva Malvezzi continued to underpin the investment case, benefiting from stronger European gas prices despite a modest quarter-on-quarter production decline. Cash receipts rose 32% to £1.2 million, while operating costs fell 32% to €547,000 as management's cost-cutting measures took effect. End-quarter cash remained broadly unchanged at £850,000 despite royalty, tax and Polish licence payments during the period.
Hannam also highlighted progress at El Romeral, where extended production testing increased power generation from four hours per day to 15 hours per day by late June. Monthly revenue climbed from about €20,000 in April to about €73,000 in June, significantly reducing the funding requirement for the Spanish asset. The broker believes the installation of a permanent transformer in September should lower operating costs further, while drilling permits remain a major catalyst.
Meanwhile, Prospex secured the San and Dunajec exploration licences in Poland and upgraded its estimate for the Mniszów oil discovery to 3.7 million barrels of recoverable oil following historic data integration. Management views the project as a potential farm-out opportunity. At Viura, production weakened during the quarter due to reservoir testing, although output recovered from May as normal operations resumed.
Looking ahead, Hannam expects Selva alone to generate €4.7 million of pro forma EBITDA in 2026 and forecasts group production could increase more than eightfold by 2028 as development projects come online. Prospex could then trade on an enterprise value to EBITDA multiple of just 0.5x, well below comparable European producers.
View from Vox
Hannam's latest note reinforces the investment case for Prospex as a cash-generating European gas producer with multiple growth projects. While execution remains key, continued progress at Selva, improving economics at El Romeral and new opportunities in Poland provide a series of potential catalysts that could help close the substantial gap between the current share price and the broker's valuation.