TIDMPXEN
RNS Number : 9690M
Prospex Energy PLC
20 September 2023
Prospex Energy Plc / Index: AIM / Epic: PXEN / Sector:
Energy
20 September 2023
Prospex Energy Plc ("Prospex" or the "Company")
Half-Year Report
Prospex Energy Plc, the AIM quoted investment company, is
pleased to announce its unaudited Interim Results for the six
months ended 30 June 2023.
H1 2023 Financial and Corporate Overview:
Financial
-- The Company reports a GBP888,473 loss after taxation from
continuing operations for the six-months ended 30 June 2023 (H1
2022 profit: GBP5,120,408).
-- This includes a GBP489,037 unrealised loss on revaluation of
financial assets at fair value (H1 2022 unrealised gain:
GBP7,645,980).
-- The loss on revaluation in the current reporting period takes
account of forward gas prices and exchange rates at 30 June 2023.
The revaluation gain in H1 2022 was attributable to the
revaluation, on a basis consistent with the 17% already held, of
the additional 20% working interest in Selva Malvezzi production
concession acquired during that period.
-- The revaluation at 30 June 2023 resulted in a reduction in
the net book value of investments to GBP15,575,603 (31 December
2022: GBP16,064,640).
-- Administrative expenses during the period were GBP461,322 (H1 2022: GBP501,967).
-- Loan capital repayments in the period were GBP107,227 and
interest payments were GBP162,739. Convertible loan notes converted
to equity in the reporting period totalled GBP195,006.
-- In April 2023, the Company strengthened the board of
directors with the appointment of Andrew Hay as a Non-Executive
Director.
-- Fox-Davies Capital appointed as Joint Corporate Broker in June 2023.
Post period end:
-- First gas sales receipts from gas sales in Italy during July were received in August 2023.
-- As at 12 September 2023, a further GBP1,407,723 of
convertible loan notes have been converted to equity.
-- The Company and its investment vehicles are expected to be
fully funded to meet all existing operational and financial
commitments.
Mark Routh, CEO of Prospex, said :
"During the first half of 2023, Prospex laid the groundwork for
the Company to become an onshore gas producer in its second
European country. Post period-end, we delivered gas through our new
gas processing facilities at the Selva field in Italy and the Joint
Venture is selling the gas via BP Gas Marketing. Being a gas
producer from two assets in stable countries puts Prospex on a
sound footing both operationally and financially to enable further
growth opportunities to be evaluated.
"The El Romeral power plant in Carmona is already a significant
producer of gas for electricity generation in southern Spain with
the ability to Increase this further once the necessary permits to
drill further wells are granted. The permits to drill five further
wells on the concessions are currently with the Spanish regulatory
authorities and we hope to update shareholders in the not so
distant future.
"We also have the opportunity to develop our assets on the Selva
Malvezzi production concession near Bologna in Italy and the Joint
Venture is actively pursuing the necessary steps to drill at least
three further wells on the concession to boost our proven developed
producing reserves.
"Prospex is very conscious of its HSE responsibilities, and it
is notable that operations both in Italy and in Spain have been
executed this year with no Health and Safety events, lost time
incidences nor any reportable environmental issues."
Operational Highlights:
The company made significant progress in the first six months of
the financial year:
Selva
-- In February 2023, the Operator of the Selva Malvezzi
production concession in the Po Valley region of northern Italy, in
which Prospex has a 37% working interest, signed an 18-month gas
sales agreement ("GSA") with BP Gas Marketing Limited to offtake
and sell gas from the Selva field in Italy.
-- During the period, development work was also completed at
Selva field by Po Valley Energy (ASX:PVE) ("Po Valley" or the
"Operator"). Construction of the new gas plant facilities at the
Podere Maiar-1 ("PM-1") well site was completed on schedule and
with just a 3% cost difference to budgeted expenditure. The
connections to the gas grid operated by SNAM were completed,
enabling the delivery of gas to the Italian gas grid.
-- With the SNAM connection and transmission arrangements
finalised, Po Valley Operations recovered the EUR757,000
performance bond funds (EUR280,090 net to Prospex), previously
deposited with SNAM.
-- Final inspection and production commencement at the new gas
plant was delayed due to severe flooding in the Emilia Romagna
region. Inspections and approvals were finally received at the end
of June 2023.
-- In February 2023, the 12-month background seismic monitoring
programme was completed - the final environmental regulatory hurdle
prior to the commencement of gas production.
El Romeral
-- Operations continued at El Romeral in Andalucía, southern
Spain where the Company's investment is in the operator, Tarba
Energía s.l.
-- The Romeral power plant continues to be cash generative and
self-sustaining. However, no further development can be committed
to in Spain until progress is made with the relevant Spanish
authorities on the permitting of up to five new wells on the
Romeral licenses.
-- Significant effort is focussed on securing permitting for
additional wells at Romeral as well as conversion of the Tesorillo
exploration permit to an exploitation permit. Drilling permit
applications were resubmitted in early 2023.
-- Gross monthly electricity sales from the El Romeral power
plant averaged EUR160,677 between January and June 2023.
-- The El Romeral production concessions officially run until 28
July 2024. On 12 May 2021, Tarba requested, under the provisions of
article 36 of Law 21/1974, the extension of the El Romeral
production concessions for two successive periods of ten years. On
9 December 2022, Tarba received a draft of the Royal Decree in
which the first ten-year extension was granted until 28 July 2034.
The draft Royal Decree was approved by the Spanish Ministry and
forwarded to the Council of Ministers on 4 April 2023, and we are
now waiting for the official publication. This step has not yet
been taken by the Council of Ministers and we look forward to an
early completion of this matter.
Post period end:
-- PM-1 commenced gas production and delivered first gas on 4 July 2023.
-- The four-week ramp-up and commissioning programme at the PM-1
production facility was completed during the week ended 4 August
2023 and daily production of about 72,000 standard cubic metres per
day (scm/d) achieved since.
Business Development
The Company is actively evaluating a number of assets for
potential investment. The assets under consideration are all
onshore in North-West Europe and include high impact exploration
targets. The Company will keep shareholders updated as these
projects come to fruition.
CHAIRMAN'S STATEMENT
Operational Report
The first six months of 2023 was a period of consolidation for
the Company. The main event was the completion of construction and
permitting of the new gas processing facilities at the PM-1 well
site of the Selva field in northern Italy. This secured the
delivery of first gas sales post period end commencing on 4 July
2023, with first receipts the following month.
In Spain, electricity generation continued at El Romeral with
prices achieved during the period averaging more than EUR100/MWh.
This is more than double the price of electricity at the time of
the El Romeral asset acquisition in March 2021. Further investments
made at the power plant have increased revenue, improved efficiency
and have diversified the source of electricity being generated to
include photovoltaic. Surplus funds generated since acquisition are
being retained in the joint-venture vehicle (Tarba Energía) to fund
future development and diversification.
Prospex is now a company with a reliable income stream from
onshore assets in Europe. As a result, the Company is expected to
be fully funded to meet all existing operational and financial
commitments.
Financial Review
For the six months ended 30 June 2023, the Company is reporting
a net loss after taxation from continuing operations of GBP888,473
(H1 2022: profit GBP5,120,408). Included in this is an unrealised
loss of GBP489,037 arising on revaluation of financial assets at
fair value (H1 2022: gain GBP7,645,980).
The 2023 unrealised loss results from a revaluation of the
Company's share in its subsidiary PXOG Marshall Limited in which
the assets in the Podere Gallina licence in Italy are held. This
loss reflects the impact on the underlying asset valuation caused
by the decline in the forward curve of European gas prices and a
weaker EUR:GBP exchange rate at 30 June 2023. Applying a
conservative view on European gas prices in valuations performed at
prior reporting dates has successfully limited the impact of
extreme volatility seen in this market since 2021.
Administrative expenses of GBP461,322 were incurred in H1 2023,
compared with GBP501,967 in the same period last year.
At 30 June 2023, the Company held cash and cash equivalents of
GBP395,202 (30 June 2022: GBP181,628).
Outlook
Subsequent to 30 June 2023, a further significant proportion of
the interest-bearing debt of the Company in the form of convertible
loan notes has been converted to equity. As a result and combined
with a return of funds invested in Italy enabled by first gas sales
there, we expect a strengthening of the Company's balance sheet
during the course of 2023.
The Board and management continues to focus on developing and
growing the Company's portfolio of assets and income streams, both
by increasing the productivity and profitability of existing
assets, and through active search and investigation of new
investment opportunities which meet the Company's discerning
investment criteria.
Bill Smith
Non-Executive Chairman
Prospex Energy Plc
Interim results
For the six months ended 30 June 2023
Statement of profit or loss and other comprehensive income
Six months Six months
ended ended Year ended
30 June 30 June 31 December
-------------------- ------------------------ -------------------------
2023 2022 2022
(unaudited) (unaudited) (audited)
GBP GBP GBP
CONTINUING OPERATIONS
Other income 36,936 - -
Administrative expenses (461,322) (501,967) (975,725)
Share-based payment charge (191,757) (201,774) (187,417)
-------------------- ------------------------ -------------------------
OPERATING LOSS (616,143) (703,741) (1,163,142)
(Loss)/gain on revaluation of
investments
and loans (489,037) 7,645,980 9,367,435
-------------------- ------------------------ -------------------------
(1,105,180) 6,942,239 8,204,293
Finance income 257,187 116,314 324,052
Finance costs (162,739) (26,200) (173,023)
-------------------- ------------------------ -------------------------
(LOSS)/PROFIT BEFORE INCOME TAX (1,010,732) 7,032,353 8,355,322
Income tax 122,259 (1,911,945) (1,218,415)
-------------------- ------------------------ -------------------------
(LOSS)/PROFIT AND TOTAL
COMPREHENSIVE
(LOSS)/PROFIT FOR THE PERIOD (888,473) 5,120,408 7,136,907
==================== ======================== =========================
(Loss)/profit per share
- Basic earnings (note 4) (0.31)p 2.24p 2.88p
==================== ======================== =========================
- Diluted earnings (note 4) (0.31)p 2.18p 2.66p
==================== ======================== =========================
Statement of financial position - As at 30 June 2023
30 June 30 June 31 Dec
2023 2022 2022
-------------------------- ------------------------- --------------------------
(unaudited) (unaudited) (audited)
GBP GBP GBP
ASSETS
NON-CURRENT ASSETS
Property, plant and
equipment - - -
Investment (note 5) 15,575,603 14,343,285 16,064,640
Trade and other receivables - 3,463,038 -
15,575,603 17,806,323 16,064,640
-------------------------- ------------------------- --------------------------
CURRENT ASSETS
Trade and other receivables 6,229,986 710,447 5,515,237
Investments 100 - 100
Cash and cash equivalents 395,202 181,628 1,482,762
-------------------------- ------------------------- --------------------------
6,625,288 892,075 6,998,099
-------------------------- ------------------------- --------------------------
TOTAL ASSETS 22,200,891 18,698,398 23,062,739
========================== ========================= ==========================
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 7,232,065 7,200,272 7,225,893
Share premium account 15,100,654 14,051,552 14,850,928
Capital redemption reserve 43,333 43,333 43,333
Merger reserve 2,416,667 2,416,667 2,416,667
Fair value reserve 14,388,954 11,801,302 14,755,732
Retained earnings (20,471,890) (19,181,498) (20,141,952)
-------------------------- ------------------------- --------------------------
TOTAL EQUITY 18,709,783 16,331,628 19,150,601
-------------------------- ------------------------- --------------------------
LIABILITIES
NON-CURRENT LIABILITIES
Financial liabilities -
borrowings
Bank loans - 28,768 -
Interest bearing loans and
borrowings - 107,226 799,145
Deferred taxation 1,136,550 1,952,339 1,258,809
-------------------------- ------------------------- --------------------------
1,136,550 2,088,333 2,057,954
-------------------------- ------------------------- --------------------------
CURRENT LIABILITIES
Trade and other payables 44,902 51,566 41,440
Financial liabilities -
borrowings
Bank loans - 9,736 -
Interest bearing loans and
borrowings 2,309,656 217,135 1,812,744
-------------------------- ------------------------- --------------------------
2,354,558 278,437 1,854,184
-------------------------- ------------------------- --------------------------
TOTAL LIABILITIES 3,491,108 2,366,770 3,912,138
-------------------------- ------------------------- --------------------------
TOTAL EQUITY AND LIABILITIES 22,200,891 18,698,398 23,062,739
========================== ========================= ==========================
Statement of changes in equity
For the six months ended 30 June 2023
Capital
Share Share Retained redemption Merger Fair value
capital premium earnings reserve reserve reserve Total
GBP GBP GBP GBP GBP GBP GBP
Unaudited
At 1 January 2023 7,225,893 14,850,928 (20,141,952) 43,333 2,416,667 14,755,732 19,150,601
Total comprehensive
income for the period - - (888,473) - - - (888,473)
Issue of shares 6,172 249,726 - - - - 255,898
Share-based payment
charge - - 191,757 - - - 191,757
Transfer to fair value
reserve - - 366,778 - - (366,778) -
At 30 June 2023 7,232,065 15,100,654 (20,471,890) 43,333 2,416,667 14,388,954 18,709,783
============================= =========================== ====================== ============================= ====================== ============================ =====================
Unaudited
At 1 January 2022 7,124,355 11,599,333 (18,748,005) 43,333 2,416,667 6,067,267 8,502,950
Total comprehensive
income for the period - - 5,120,408 - - - 5,120,408
Issue of shares 75,917 2,542,682 - - - - 2,618,599
Costs of shares issued - (112,103) - - - - (112,103)
Share-based payment
charge - 21,640 180,134 - - - 201,774
Transfer to fair value
reserve - - (5,734,035) - - 5,734,035 -
At 30 June 2022 7,200,272 14,051,552 (19,181,498) 43,333 2,416,667 11,801,302 16,331,628
============================= =========================== ====================== ============================= ====================== ============================ ==========================
Audited
At 1 January 2022 7,124,355 11,599,333 (18,748,005) 43,333 2,416,667 6,067,267 8,502,950
Total comprehensive
income for the year - - 7,136,907 - - - 7,136,907
Issue of shares 101,538 3,333,893 - - - - 3,435,431
Costs of shares issued - (112,104) - - - - (112,104)
Lapse of share options - 29,806 (29,806) - - - -
Share-based payments
charge - - 187,417 - - - 187,417
Transfer to fair value
reserve - - (8,688,465) - - 8,688,465 -
At 31 December 2022 7,225,893 14,850,928 (20,141,952) 43,333 2,416,667 14,755,732 19,150,601
============================= =========================== ====================== ============================= ====================== ============================ ==========================
Statement of Cash Flows
For the six months ended 30 June 2023
Six months Six months
ended ended Year ended
30 June 30 June 31 December
------------------------- ----------------------- ---------------------
2023 2022 2022
(unaudited) (unaudited) (audited)
GBP GBP GBP
Operating activities
(Loss)/profit before income tax (1,010,732) 7,032,353 8,355,322
Loss/(gain) on revaluation of
investments
and loans 489,037 (7,645,980) (9,367,435)
Finance income (257,187) (116,314) (324,052)
Finance costs 162,739 26,200 173,023
------------------------- ----------------------- ---------------------
Operating loss (616,143) (703,741) (1,163,142)
Increase in trade and other
receivables (461,870) (1,990,099) (3,126,358)
Increase/(decrease) in trade and
other payables 3,462 (1,326) (11,454)
Share-based payment charge 191,757 201,774 187,417
------------------------- ----------------------- ---------------------
Net cash outflow from operating
activities (882,794) (2,493,392) (4,113,537)
------------------------- ----------------------- ---------------------
Cash flows from investing
activities
Interest received 4,308 - 2,247
Interest paid (159,862) (26,200) (124,338)
------------------------- -----------------------
Net cash outflow from investing
activities (155,554) (26,200) (122,091)
------------------------- ----------------------- ---------------------
Cash flows from financing
activities
New loan notes - - 2,370,000
Bank loan repayment - (3,890) (42,394)
Loan repayments (107,227) (21,446) (131,353)
Issue of share capital 58,015 2,618,599 3,414,181
Costs in respect of share issue - (112,103) (112,104)
Net cash (outflow)/generated from
financing activities (49,212) 2,481,160 5,498,330
------------------------- ----------------------- ---------------------
Net (decrease)/increase in cash
and cash equivalents (1,087,560) (38,432) 1,262,702
Cash and cash equivalents at start
of period 1,482,762 220,060 220,060
------------------------- ----------------------- ---------------------
Cash and cash equivalents at end
of period 395,202 181,628 1,482,762
========================= ======================= =====================
Notes to the interim financial statements
1 General information
Prospex Energy Plc is a company incorporated in the United
Kingdom, which is listed on the Alternative Investment Market of
the London Stock Exchange Plc. The address of its registered office
is 60 Gracechurch Street, London EC3V 0HR. The Group is primarily
involved in the development, exploration and the production of
natural gas and the generation of electricity.
2 Financial information
The interim financial information for the six months ended 30
June 2023 and 2022 has not been audited or reviewed and does not
constitute statutory accounts within the meaning of Section 434 of
the Companies Act 2006. The comparative financial information for
the year ended 31 December 2022 has been derived from the audited
financial statements for that period. A copy of those statutory
financial statements for the year ended 31 December 2022 has been
delivered to the Registrar of Companies. The report of the
independent auditors on those financial statements was unqualified,
drew attention to a material uncertainty relating to going concern
and did not contain a statement under Sections 498 (2) or (3) of
the Companies Act 2006.
The interim financial statements have been prepared in
accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006 as they apply to
the financial statements of the Company for the six months ended 30
June 2023 and as applied in accordance with the provisions of the
Companies Act 2006 and under the historical cost convention or fair
value where appropriate. They have also been prepared on a basis
consistent with the accounting policies expected to be applied for
the year ending 31 December 2023 and which are also consistent with
those set out in the statutory accounts of the Company for the year
ended 31 December 2022.
The interim financial statements are presented in pounds
sterling because that is the currency of the primary economic
environment in which the company operates.
3 Taxation
On the basis of these accounts the only charge to taxation is
the deferred taxation arising on the revaluation of the company's
investments.
4 Loss/earnings per share
The loss/earnings and number of shares used in the calculation
of earnings per share are as follows:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
------------------------- ------------------------ ------------------------
2023 2022 2022
(unaudited) (unaudited) (audited)
Basic EPS
(Loss)/profit for the financial
period (888,473) 5,120,408 7,136,907
Effect of dilutive securities
on loss /profit
Options and warrants - - -
Convertible loan notes - - 129,734
Adjusted (loss)/earnings (888,473) 5,120,408 7,266,641
========================= ======================== ========================
Basic EPS
Weighted average number of
shares
for basic EPS 283,657,000 228,138,764 247,635,519
Effect of dilutive securities on
number of shares
Options and warrants - 6,807,636 3,057,387
Convertible loan notes - - 22,291,906
Weighted average number of
shares
for diluted EPS 283,657,000 234,946,400 272,984,812
========================= ======================== ========================
Basic (loss)/earnings per share (0.31)p 2.24p 2.88p
========================= ======================== ========================
Diluted (loss)/earnings per
share (0.31)p 2.18p 2.66p
========================= ======================== ========================
The exercisable share options and warrants are deemed to be
dilutive in nature where their exercise price is less than the
average share price for the period and the dilution would reduce
the earnings per share or increase the loss per share.
5 Non-current investment
Shares
in
group Unlisted
undertakings investments Total
GBP GBP GBP
Unaudited
At 1 January 2023 16,014,640 50,000 16,064,640
Revaluations (489,037) - (489,037)
At 30 June 2023 15,525,603 50,000 15,575,603
================== ============================= ================
Unaudited
At 1 January 2022 6,647,305 50,000 6,697,305
Revaluations 7,645,980 - 7,645,980
At 30 June 2022 14,293,285 50,000 14,343,285
================== ============================= ================
Audited
At 1 January 2022 6,647,305 50,000 6,697,305
Revaluations 9,367,435 - 9,367,435
Reclassified to current asset
investments (100) - (100)
At 31 December 2022 16,014,640 50,000 16,064,640
================== ============================= ================
The investments in subsidiary undertakings are accounted for at
fair value through the profit and loss, as the Company is deemed to
be an Investment Entity.
6 Dividends
The directors do not propose to declare a dividend for the
period.
7 Copies of interim results
Copies of the interim results can be obtained from the website
www.prospex.energy . From this site you may access our financial
reports and presentations, recent press releases and details about
the company and its operations.
Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed
to be, forward looking statements. Forward looking statements are
identi ed by their use of terms and phrases such as "believe",
"could", "should" "envisage", "estimate", "intend", "may", "plan",
"potentially", "expect", "will" or the negative of those,
variations or comparable expressions, including references to
assumptions. These forward-looking statements are not based on
historical facts but rather on the Directors' current expectations
and assumptions regarding the Company's future growth, results of
operations, performance, future capital and other expenditures
(including the amount, nature and sources of funding thereof),
competitive advantages, business prospects and opportunities. Such
forward looking statements re ect the Directors' current beliefs
and assumptions and are based on information currently available to
the Directors.
Such statements are based on current expectations and
assumptions and are subject to a number of risks and uncertainties
that could cause actual events or results to differ materially from
any expected future events or results expressed or implied in these
forward-looking statements. Persons receiving and reading this
announcement should not place undue reliance on forward-looking
statements. Unless otherwise required by applicable law, regulation
or accounting standard, the Company does not undertake to update or
revise any forward-looking statements, whether as a result of new
information, future developments or otherwise.
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IR FLFEEAVIALIV
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