Prospex Eyes Spanish Gas-to-Power Project

UK-listed Prospex Oil & Gas has bought an indirect 49.9% stake in El Romeral, an integrated gas production and power station project in southern Spain, it said December 17. But it says it will have to raise the cash.

El Romeral has three production licences where three producing wells supply gas, through its own network, to a 100%-owned 8.1-MW power station. In addition, the area also contains two development locations and 11 very-low risk prospects with gross contingent and prospective gas resources of 5bn ft³ and 90bn ft³, respectively.

Based on today's gas output, electricity generation and revenue per MWh, the project generates small amounts of free cash from annual revenue of about €800,000 ($892,000). There is the potential to increase the number of generating days at the project, which has been equivalent to five days/week; and in the medium-term increase the use of the generation equipment from today's 22% by sourcing new gas supplies from the area, specifically from its assigned 90bn ft³ of very-low risk prospective resources.

When gas was not a limiting factor the power station regularly produced c. 60,000 MWh/yr, yielding revenue above €4.2mn/yr based on current revenue/MWh. El Romeral is being acquired by Tarba Energia with funding provided by Tarba's shareholders, Warrego Energy and Prospex. Warrego will fund the initial consideration of €750,000. Prospex has three months to decide an ownership stake in the project (up to 49.9%) and refund to Warrego the corresponding proportion of the initial consideration. Warrego will indirectly own the balance of the project.