Prospex Energy PLC, the AIM quoted investment company focused on European gas and power projects, is pleased to announce the completion of the acquisition (the 'Acquisition') of a 49.9% interest in El Romeral, an integrated gas production and power station operation in southern Spain ('El Romeral' or the 'Project'). El Romeral, which includes three producing wells that supply gas, through its own network, to a 100% project-owned 8.1 MW power station, has been acquired by Tarba Energia ('Tarba'). Prospex owns a 49.9% interest in Tarba B shares with its partner Warrego Energy Limited owning the balance.
Following the completion of the Acquisition, Tarba has assumed the day-to-day management and control of the Project and will look to implement a number of short-term operational enhancements and efficiencies.
The medium-term target at El Romeral is to increase on site gas production and, in turn, electricity generation at the Project's power plant towards its nameplate capacity from the current 22% level. Historically, the power station at El Romeral regularly produced c. 60,000 Mwh per annum when gas was not a limiting factor. In the medium to long-term, Tarba expects on site gas production can be increased via the drilling of new wells targeting already identified development locations and very-low risk prospects which have been assigned gross contingent and prospective gas resources of 5billion cubic feet ('Bcf') and 90Bcf, respectively. Tarba will also carry out a review of existing wells to evaluate the potential to enhance production rates via workovers.
Prospex non-executive Chairman, Bill Smith, said, "El Romeral adds to our portfolio three producing gas wells and an operating, but underutilised, 8.1 MW power station, which cost €10 million to construct. For a net consideration of €375,000, the Acquisition, in our view, represents excellent value. El Romeral however was not just acquired for the value on offer but also for the potential to add value. Specifically, increasing operations at the power plant to 100% capacity from the current 22% level could generate annual revenues of c. €4 million. Being operationally geared, a high proportion of these revenues will flow through to the bottom line. To reach this level of revenue generation, an increase in on site gas production is required. Two development locations with gross contingent resources of 5Bcf and 11 prospects with 90Bcf of gross un-risked prospective resources provide multiple, low risk opportunities to achieve this. A path to value creation at El Romeral is in place.
"Thanks to both the existing operations and the considerable development potential, El Romeral provides significant asset backing to Prospex Energy, and that is before our interest in the Selva gas field on the Podere Gallina permit in Italy is taken into account. Selva is expected to commence production at an initial rate of up to 150,000 scm/day later this year. As a result, it is not just El Romeral that is both a value and growth play, but Prospex Energy itself. With this in mind, I look forward to providing further updates on our progress as we focus on realising the underlying value and potential of our asset base."