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Oilman Jim's Private Blog


Prospex Oil and Gas - Placing to Raise £720,000

Prospex Oil and Gas Plc, the AIM quoted investment company, is pleased to announce that it has raised £720,000 gross via an oversubscribed placing of 600,000,000 new ordinary shares of £0.001 each in the Company ("Ordinary Shares") (the "Placing Shares") at a price of 0.12 pence per Placing Share (the "Placing Price") (the "Placing").  The net proceeds of the Placing will primarily be used to fund the Company's acquisition of a 49.9% indirect stake in El Romeral, an integrated gas production and power station operation located in the Guadalquivir basin in southern Spain ('El Romeral' or 'Project') (please refer to the Company's announcement of 17 December 2019 for further information). The Placing was undertaken with new and existing investors as well as certain Directors of the Company who are acquiring Placing Shares with an aggregate value of £140,000 based on the Placing Price.

Use of Proceeds

As previously announced, El Romeral is being acquired by Tarba Energia S.L ("Tarba") which is jointly owned by Prospex and Warrego Energy Limited ("Warrego").  Warrego funded the initial consideration of €750,000 for a 100% interest in El Romeral. Tarba has advised the Company that this has been paid to the vendor and the vendor has initiated the transfer process.

Following the Placing, Prospex will elect to participate with a 49.9% interest in the Project and will therefore refund to Warrego the corresponding proportion of the initial consideration (€374,250). Following this, Warrego will indirectly own the balance of the Project, being 50.1%.

El Romeral includes three production licences on which three wells supply gas to a Project-owned 8.1 MW power station.  The acquisition of a 49.9% interest in El Romeral will therefore lead to a step-up in Prospex's production profile to five producing gas wells, which have the potential to generate over 9,000,000 scm net in 2021.  In addition to the three producing wells at El Romeral, Prospex has a 50% interest in the Bainet-1 well on the Suceava Concession in Romania and a 17% economic interest in the Podere Maiar-1 well on the Podere Gallina Exploration Permit in Italy which is expected to commence production in 2020 at rates up to 150,000 scmpd (5,300 mscfd), subject to regulatory approvals and installation of production equipment.

El Romeral offers significant development upside to increase gas production and, in turn, electricity generation at the Project's plant, which was constructed in 2001-2002 at a cost of c. €10 million and currently operates at c. 22% capacity.  Gross contingent and prospective gas resources of 5 Bcf and 90 Bcf have been assigned to two development locations and 11 very-low risk prospects at El Romeral respectively.  A planning and permitting process for a three well campaign targeting these prospects is expected to commence in Q1-Q2 2020.

The proceeds of the Placing will also go towards funding the 2020 work programme planned for Prospex's 15%-owned 830 Bcf Tesorillo gas project in Spain as well as general working capital purposes.

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