Prospex Closes Spanish Gas-to-Power Deal
London-listed Prospex Energy announced on March 1 the closure of the acquisition of the El Romeral gas and power project in south Spain.
Under a deal agreed in December 2019, Prospex has taken a 49.9% interest in the El Romeral project, while Australia's Warrego Energy has taken 50.1%. The former owner was Petroleum Oil and Gas Espana. The transaction was cleared by Spanish regulators in December last year.
El Romeral comprises three licence areas hosting three wells that supply gas to a 8.1-MW power station. There is also "significant" development potential, according to Prospex, with the acreage containing two development locations and 11 very-low risk prospects with gross contingent and prospective gas resources of 5bn ft3 (141mn m3) and 90bn ft3 respectively.
Prospex and Warrego plan to ramp up gas production by drilling new wells and potentially working over existing ones. In turn, they aim to boost electricity generation. The power plant currently operates at only 22% utilisation.
"For a net consideration of €375,000, the acquisition, in our view, represents excellent value," Prospex chairman Bill Smith said in a statement, noting that the 8.1-MW power plant had cost €10mn to build. "El Romeral however was not just acquired for the value on offer but also for the potential to add value."
If the power station works at 100% capacity, this would generate €4mn in annual revenues, Smith said, with much of this sum flowing through to the bottom line.
Prospex’s other main focus is in the Po Valley of northern Italy, where it has a 17% interest in the Po Valley Energy-operated Podere Gallina exploration permit. Podere Gallina contains the Selva gas field, where the project partners plan to start production before mid-year. The field will initially flow at a rate of up to 150,000-m3/day.
Prospex also had a 50% interest in an onshore Romanian block but sold it last October.