UK Prospex buys more Italian acreage
AIM-listed Prospex Energy has provisionally agreed to buy out United Oil & Gas' Italian business, giving it another 20% in the Selva field in the Po Valley region. The field is due on stream by Q2 next year, subject to receipt of a full production licence from the authorities.
So far Italy has not stopped oil and gas production, although Spain, where Prospex also has assets, announced an end to licensing new projects in May.
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Under the August 9 conditional deal, Prospex will acquire 100% of UOG and so have a 37% working interest in the Podere Gallina Licence, increasing its share of Selva's independently verified 2P gas reserves from 2.3bn ft³ to 5.0bn ft³.
Prospex will have to find €2.2mn ($2.6mn) less the 5% deposit payable now, and also secure approval from the government for the change of ownership. The other 63% participant in the licence and operator is Australian Po Valley Operations.
CEO Mark Routh said the deal was "important" as it increases its share of one of its core assets which is also very close to first gas. It more than doubles Prospex' independently verified 2P recoverable reserves and also increases its share in the opportunities on the Podere Gallina licence.
UK reservoir engineers CGG Services estimates Selva's north and south flanks have a 60% - 70% chance of holding gross contingent resources ('2C') of 14.1bn ft³. The East Selva, Fondo Perino, Cembalina, and Riccardina prospects hold an aggregate best estimate of 91.5bn ft³. "While our immediate focus is on Selva, there is much more to go for at Podere Gallina in the medium term," Routh said.
He added that demand for gas, especially domestically sourced as opposed to imported, is expected to increase in the years ahead and the price rises this year show that this is already happening. "Prospex is well placed to play its part in the European energy transition, and with this in mind I look forward to providing further updates on our progress," he said.
UOG said the transaction proceeds, in addition to the proceeds from the UK Central North Sea divestments, would provide additional financial flexibility to drive the growth of its low-cost production business in Egypt and the Greater Mediterranean area, complemented with selected high impact exploration opportunities in the Caribbean and Latin America. As of December 31, UOG Italia reported €2.1mn of total assets, revenue of nil, and a pre-tax loss of €36,394.