Prospex Energy reports reduced first-half loss
By Josh White
Date: Thursday 19 Sep 2024
(Sharecast News) - Prospex Energy reported a significantly reduced loss in its interim results on Thursday, announcing that it has fully repaid all outstanding debt, positioning itself for future growth and development.
The AIM-traded firm recorded a first-half loss after tax of £0.28m from continuing operations, a notable improvement from the £0.89m loss reported for the same period in 2023.
It put the reduction in losses partly down to the absence of unrealised losses on the revaluation of financial assets, which amounted to £0.49m a year earlier.
The company repaid £0.17m in loan capital and £6,753 in interest during the reporting period.
All debt and accrued interest from the convertible loan notes issued in September 2022 were fully settled using accumulated cash reserves.
As a result, Prospex now had no outstanding debt, with the board saying the company was in a strong cash-generative position.
As of 30 June, the company held cash and cash equivalents of £10,991, compared to £395,202 at the same point last year.
Prospex's net share of cash held in euros across its non-consolidated investment and joint venture companies was €0.79m.
The firm's investment projects in Italy and Spain continued to operate on a fully self-funded basis during the first half of the year.
It reported no significant health, safety, or environmental incidents across its operations.
In Italy, the annulment of the country's Plan of Areas, which previously restricted hydrocarbon exploration and production, created new opportunities for domestic gas production.
Spain meanwhile saw Prospex actively working to permit five new wells on the El Romeral concessions, with the goal of increasing the gas-to-power plant's capacity use from the current 33% to 100%.
Following the reporting period, Prospex acquired a 7.2365% interest in the Viura gas field in northern Spain, marking its third onshore producing and revenue-generating well.
The acquisition was funded through a successful £4.2m capital raise, achieved by issuing 69,955,393 new shares at 6p each.
Prospex used the funds to purchase a 7.5% stake in HEYCO Energy Iberia (HEI), which has majority ownership in the Viura field.
The company said it would finance 15% of the Viura development programme's cost to earn its stake in HEI, with an agreement to receive a 10% coupon on its capital investment.
It would be repaid its investment from 15% of HEI's production income, net of operating expenses and taxes, until payback was achieved, after which its share of net income would revert to 7.5%.
Additionally, Prospex secured a 10-year extension of its natural gas exploitation concessions at El Romeral 1, 2, and 3, extending the contract to July 2034.
The company also obtained a 12-month extension to Selva Malvezzi's gas supply contract with BP Gas Marketing.
Looking ahead, Prospex said it was well-positioned for growth with no outstanding debt and cash-generative operations.
"It has been a transitional period for Prospex, but one in which the company consolidated its position as an onshore gas producer in two stable European countries, Italy and Spain," said chief executive officer Mark Routh.
"The company now has no debts outstanding.
"Post period-end, the company announced the acquisition of an interest in Viura, a producing gas field in Northern Spain thereby adding a third onshore gas producing asset to our portfolio."
Routh said the acquisition delivered the next step of the firm's growth strategy to increase the portfolio of onshore Europe producing gas assets.
"A development well is being drilled on Viura with two further development wells being planned next year to increase production even further.
"Applications have been submitted to permit five further wells on the El Romeral concessions in Andalucía southern Spain and preparations are in place to drill four more wells on the Selva Malvezzi concession in the Po Valley in northern Italy following the acquisition of a short low-cost 3D seismic survey across the concession.
"Accordingly, in the board's view, all three of Prospex's producing onshore gas investments have significant upside potential within the existing production concessions and I look forward to updating shareholders as we progress with the conversion of both our contingent and prospective resources on our three production concessions into proved developed producing reserves."
At 1000 BST, shares in Prospex Energy were down 0.93% at 5.35p.
Reporting by Josh White for Sharecast.com.
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