United Oil & Gas (LSE:UOG) and Prospex Oil & Gas (LSE:PXOG) were on the move on Thursday following the release of a reserves figure for their prospective gas asset in Italy.
A competent persons report (CPR) carried out by CGG has assigned the Selva field gross 2P reserves of 13.3Bcf gas. The field is located on the Podere Gallina exploration permit in the proven Po Valley hydrocarbon region of Italy, where more than 5,000 wells have been drilled historically.
The report follows positive flow testing of the Podere Maiar-1 well from two targeted reservoirs in January last year and includes a reclassification of previously reported gross contingent resources. The Selva field is due to begin producing in 2020 at a rate of up to 150,000 cubic metres per day.
Selva’s reserves remain subject to the granting of a production concession. However, the partners are optimistic that this will occur as they have already been given preliminary approval.
Prospex owns a 17pc stake in the asset, giving it net exposure to 2.26Bcf of the new 2P reserves figure. The firm’s shares were trading up 11.1pc 0.3p following the release of the update. Meanwhile, United owns 20pc of the licence, equating to 2.6Bcf of attributable reserves. However, the company’s was down 1.4pc to 4.8p as at the time of writing.
In their respective updates, both firms highlighted the additional prospects that they have identified within Podere Gallina. All-in-all, these contain further prospective resources of up to 50Bcf in the best case scenario. The largest of these is Selva East, which includes best case gross un-risked potential resources of 34.8Bcf. Its chance of success was upgraded to 30pc last year following the progress at Podere Maiar-1.
Bill Smith, non-executive chairman at Prospex, said the development marks ‘another first’ for the business.
‘While bringing the Bainet gas field in Romania online generated our first production and revenues in 2018, Selva is the first time that valuable reserves have been assigned to one of our projects by an independent third party,’ he added. ‘Not only is this a major milestone for the Company, it provides Prospex with significant asset backing, particularly when compared to our current market valuation of approximately £3.3m.’
Meanwhile, United chief executive Brian Larkin called the CPR a ‘key milestone’, with the gas representing the company first-ever reserves:
‘With preliminary approval for the development plan received in January, we remain on course to bring Selva into production in 2020 with facilities designed to produce at a gross rate of up to 150,000 cubic metres per day. At this rate, Selva will be generating significant cash flows for United which in turn will be reinvested into further high-impact activity across our portfolio of late stage development opportunities onshore Europe and frontier exploration offshore Jamaica.’