Prospex Energy (AIM:PXEN ) has signed a sale and purchase agreement with H2Oil to sell the entire issued share capital of its 100% owned subsidiary, PXOG Massey ('Massey').
Back in August 2017, the Company acquired a 50% interest in the economic rights of the Exploration Area of the EIV-1 Suceava Concession which is an onshore asset in North East Romania, through Massey. The Suceava concession remains Massey’s sole asset.
Today’s sale of Massey follows a long-term strategic review by Prospex of its late stage European onshore gas projects, which the group instigated at the time of its acquisition of a 49.9% interest in the El Romeral gas and power project in Spain at the beginning of the year.
“With the proposed addition of another 11 high quality, very low risk prospects it became clear that Suceava would be less core as time progressed,” said Managing Director, Edward Dawson.
Under the terms of the SPA, the Company will receive up to £0.215m in cash in respect of historical debt owed to the Company by Massey and nominal consideration for shares in Massey of which 85% of the funds (£0.182m) has already been received by Prospex.
Following the sale of Massey, Prospex said it will concentrate on advancing its three core projects; The Podere Gallina Exploration Permit, onshore Italy, The El Romeral integrated gas and power project, onshore Spain and The Tesorillo Gas Project, onshore Spain.
Shares in Prospex Energy have increased over 35% since September to open up 9.5% this morning at 2.3p following the announcement.
At the Podere Gallina Exploration Permit, first production at the Selva gas field at an initial rate of up to 150,000 standard cubic meters per day remains on course for H1 2021.
El Romeral is operating at 100% capacity and selling electricity at Spain's historic average price of €70 per megawatt hour (including subsidy) which Prospex said has the potential to generate annual revenues and profit before tax of €4.2m and €2.4m, respectively.
Meanwhile, at the Tesorillo Gas Project, onshore Spain, 830 Billion cubic feet of gas (Best Estimate) of gross unrisked prospective resources have been identified by the Company.
“The sale will therefore bring more focus to the remaining core projects in our portfolio, all of which have the potential to hold company-making volumetrics and, importantly, multiple targets that could unlock the substantial resources we have identified,” said Dawson.
He added, "We have a roadmap in place to progress our considerable resource base up the development curve, and in the process generate significant value for shareholders.”
The completion of the sale of Massey is subject to a number of typical conditions including Romanian government regulatory sign-offs and approval of the change of control of Massey.
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