Yesterday saw Prospex Oil & Gas (LSE:PXOG) bolster its stake in a Spanish gas project containing up to 830bcf of resources. The news helped its shares to leap 11.5pc to 0.27p.
The firm has increased its position in the Tesorillo project by 12.5pc – from 2.5pc to 15pc – for €153,250. The move forms the second part of a three-stage process to achieve a 49.9pc interest in the site.
Tesorillo covers 38,000 hectares in a proven hydrocarbon region in southern Spain. It contains a known gas discovery with estimated gross unrisked prospective resources of 830Bcf at the best estimate. It is also expected to offer more than 2Tcf of upside.
The project is based 2.9km away from the North African Maghreb gas pipeline. Prospex said this provides access to high-priced European gas markets.
Today’s acquisition follows the completion of a 2018 field programme at Tesorillo focused on three strands.
The first consisted of field studies that will inform an Environmental and Social Impact Assessment. Prospex estimates that around 70pc of the necessary fieldwork has completed.
The second strand was a full-surface structural geology mapping exercise. This showed that several folds and thrust ramps form the structural subsurface geometry of the exploration target. Prospex said these could be gas traps.
The third and final strand was an Audio Magneto Telluric survey. This was delayed over the Summer by access issues. However, contractors have now completed tests in essential areas.
Prospex will use these findings to underpin new gas exploration wells within Tesorillo.
The company first entered the project in December last year, purchasing a 2.5pc stake from Schuepbach Energy International. Alongside this, it bought the option to increase this position to 49.9pc in two stages.
When we spoke to the CEO Ed Dawson in April, he said Tesorillo offers ‘company-making potential’ and called it a ‘tiger on a leash’. He added that it could be a much more significant variant of Prospex’s existing discoveries.
The business also owns a 50pc position in Suceava in Romania where it recently commenced gas production. Finally, it holds a 17pc stake in the Podere Gallina Permit in the Po Valley region of Italy. Here, it is helping to advance the Podere Maiar gas discovery through the permitting process towards first production.
In today’s update, Prospex non-executive chairman Bill Smith said the decision to increase the firm’s Tesorillo stake was ‘an easy one’.
‘With 830 billion cubic feet of gross unrisked Prospective Gas Resources and the presence of an historic gas discovery, Tesorillo is a much larger variant of the fore-deep play which Prospex successfully tested in Romania and in Italy. With this in mind, we look forward to progressing our ongoing work programme in Tesorillo, which is centered on further de-risking the company-making potential resources already identified on the licence, ahead of a future drilling programme,’ he added.
‘Today’s Exercise caps an excellent year for the Company, one which included confirmation of a significant commercial gas discovery onshore Italy, the commencement of gas production in Romania and the generation of our first cashflow. Shareholders can expect more of the same in 2019, as we look to advance all our assets, add new projects to our portfolio and expose our shareholders to more value trigger events, such as drilling or first production.’