Prospex Energy (PXEN) , an investor in European gas and power projects, issued a Q1/Q2 activity report from its Podere Maiar-1 (PM-1) gas facility at Selva field, Italy. Prospex has a 37% interest in Selva and operator Po Valley has the remaining 63%.
Prospex noted that PM-1 had performed consistently in Q1/Q2, reaching gross cumulative production of 20.61 MMscm and generating revenues of €2.6m for PXEN as of May 26, 2024. Average daily gross production from PM-1 kept steady at 78,000-80,000 scm/day. Additionally, gas sold at a premium to TTF in the Netherlands generated £6,100/day in free cashflow to Prospex.
In terms of development, Prospex noted that recent lifting of certain hydrocarbon exploration and extraction restrictions in Italy, known as PiTESAI, has led to increased access for activities on its Selva Malvezzi concession.
Mark Routh, Prospex's CEO, commenting: "In the first half of this year we have seen a significant change in the regulatory environment in Italy. The annulment of the areas which were restricted for hydrocarbon exploration and extraction activities (the "PiTESAI") has resulted in a reform of the permitting process and the related environmental impact assessments. Another benefit of the relaxation of the 'PiTESAI' restricted areas is that the East Selva prospect may now be drilled from an optimum location no longer requiring a highly deviated well, meaning lower cost and lower risk.
"We will continue to support the operator as it advances activities to facilitate the development drilling programmes at Selva Malvezzi with the target of converting the contingent resources at Selva North and Selva South and the prospective resources at East Selva and Riccardina into proved, developed and producing reserves in the near term."
View from Vox
More good news from Prospex and its 37%-owned PM-1 gas facility at Selva field, Italy. Revenues continued to climb in Q1/Q2, reaching €2.6m net to PXEN as of May 24, 2024 after a total of €1.3m was generated from the concession in FY23. Now that PM-1 production has settled at c. 80,000 scm/d sold to BP under an 18-month contract, production and revenues are expected to be significantly higher in FY24 over FY23.
Selva has further upside as operator Po Valley is advancing agreements with local landowners and permitting in order to deliver planned drilling programmes at Selva North, South, and East. Production income from PM-1 will help fund development drilling for Selva North and Selva South, and to convert prospective resources at Selva East into proved, developed and producing reserves in the near term.
As mentioned, the much improved regulatory environment in Italy, including a reform of the permitting process and schedules, should significantly boost development and long-term revenues from Prospex's Selva Malvezzi concession.
The most significant change was the overturening of PiTESAI in Q1 2024, which previosuly restricted hydrocarbon exploration and extraction activities in the country. The regulatory changes came as Italy aimed to strengthen its energy security and reduce reliance on Russian natural gas and imports.
The new conditions have enabled fast-tracking approvals for all discoveries and prospects in Selva Malvezzi, which should bring more wells into production more quickly than originally planned. PXEN has already applied for 4 new wells on the concession. Addition, as a result of the regulatory changes, the East Selva prospect may now be drilled from an optimum location, no longer requiring a highly deviated well. All of this should translate to a material boost in future revenues.
Markets welcomed today's update, sending PXEN shares 13.3% higher.
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