Research Centre

Prospex Oil&Gas

2015 and the first part of 2016 was a transformational period for PXOG. In April 2015, Prospex became an AIM investing company. Since April 2015, the new management team has reviewed over 20 projects and over the period the Company made several investments. The most significant investment to date is the acquisition of 49% of the shares of Hutton Poland which in turn holds the Kolo license.

Following extensive due diligence and assessment of geological data, the management team concluded that the Kolo license provides an attractive opportunity for the Company.

Gross Best Estimate Technical Unrisked Prospective Resources for the Boleslaw prospect (within the Kolo Licence) are estimated at 87.1 Bscf. All estimates are expressed as reservoir gas quality at surface conditions, and include N2 and other inerts.

·      The prospect comprises two objectives within the Cretaceous sequence; a Santonian objective (geological possibility of success, POSg, estimated at 40%) supported by distinct seismic amplitude anomalies, and a Deep Cretaceous target (POSg 20%) with possible amplitude indications.

·      Economic assessments clearly indicated that in the case of a gas discovery with N2 content less than 50mol% a Gas-to-Power (combined heat and power, "CHP") development concept would be economically robust above a minimum threshold of around 25Bscf GIIP of gas.

·      The economic results assuming the CHP notional development were used to interpolate indicative unrisked NPVs (based on a 10% discount rate) for the Mean resource cases under the four N2 thresholds less than 50mol%. The indicative NPVs ranged from $44m to $95m (net to Prospex). These Mean NPVs were combined in decision tree analysis along with the POSg and the N2 risks in order to derive indicative Expected Monetary Values ("EMVs"), which include the potential dry hole costs and failed exploration wells with well test costs where required.

·      The notional CHP development scenarios were based on a single well assuming production rates of 20MMscf to 40MMscf per day (3333 to 6666 boe/d)  

·      The economic assessment based on the AGR TRACS N2 risk profile indicated a risked EMV of $7.1mln/£5.0mln (net to Prospex), while corresponding evaluations assuming Prospex's N2 risk profile suggested a risked EMV of $12.2.mln/£8.4mln (net to Prospex), where both estimates were derived assuming current electricity prices. 

PXOG have raised a further £775,000 via a placing at 1.1p per share, the proceeds of which will be used to further support activities at Kolo, if required,  as well as provide scope to explore additional investment opportunities and for general working capital. The next steps will involve pad construction and the securing and mobilisation of the drill rig ahead of the commencement of drilling operations in early Q4 2016. 

 

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Vox Market Podcast - 11 August 2016

Ed Dawson Talks PXOG

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