Prospex acquires 7.5pc stake in Viura gas field

27th Aug 2024 12:42

(Sharecast News) - Prospex Energy, an investment company focused on European gas and power projects, announced the successfully completed acquisition of a 7.5% stake in Heyco Energy Iberia (HEI) on Tuesday, the majority owner of the Viura gas field in northern Spain.

The AIM-traded firm said the acquisition was finalised on 19 August, following a fundraising effort which raised around £4.2m.

It described the acquisition as a significant milestone in its strategy to establish itself as a mid-tier independent European energy producer.

By committing to fund 15% of HEI's 2024 to 2026 development programme, Prospex now held a 7.5% stake in HEI.

On completion of HEI's acquisition of SHESA's interest in the Viura concession, Prospex's ownership would equate to a 7.2365% stake in the Viura gas field, including the field's reserves, current production, and associated surface facilities.

Unlike a typical '2:1 Promote' transaction, the board said the deal provided Prospex with additional financial benefits.

The company would earn a 10% coupon on its capital investment, and be reimbursed its capital investment from 15% of HEI's production income after operational expenses and taxes.

Once the initial investment was repaid, Prospex said its share of net income would revert to 7.5%.

The Viura gas field had an estimated gross remaining reserve of 90 billion cubic feet, with around 6.5 billion cubic feet net to Prospex.

It said the ongoing development of the Viura-1B well was expected to reach its reservoir horizon within the next two to three weeks, with production - and consequently revenue generation - anticipated to begin as early as October.

Prospex said it was contributing £3.51m towards the 2024 development programme, including the Viura-1B well, which represented 15% of the estimated £23.4m total costs for the year.

The company said its share of the 2025-2026 development programme was estimated at £4.84m.

However, the figure could be significantly reduced by production income, potentially lowering the required funding to about £2.7m by May 2025.

The board said the company's financial outlook could further improve if gas prices exceeded the conservative assumption of €31 per megawatt-hour.

Currently, the TTF gas price stood at around €39 per megawatt-hour - approximately 30% higher than the base estimate, which could negate the need for additional funding entirely.

"I am extremely pleased to have closed the Viura transaction with Heyco Energy which is a highly respected and competent operator in Spain," said chief executive officer Mark Routh.

"This acquisition has increased gas production and our booked gas reserves, with the potential for further upside from the very large remaining resources we have modelled in this very large gas field.

"The development well Viura 1B is approaching its reservoir target and I look forward to updating shareholders with the results from that well as soon as we have them."

Routh said that with the recent extension of the El Romeral concessions being confirmed by the Spanish regulatory authorities, Prospex was becoming a "significant" energy producer in Spain.

"With the five new wells on the El Romeral concessions advancing through the permitting process, Prospex is set to become an important supplier of energy to the Spanish nation further enhancing its energy security."

At 1153 BST, shares in Prospex Energy were up 2.34% at 6.04p.

Reporting by Josh White for Sharecast.com.