Oil and gas company Prospex Energy (LON: PXEN) wants to raise at least £3.27m via a placing and subscription at 6p/share. There is also a retail offer of up to £500,000 and that could be increased if there is enough demand. This will finance a stake in a Spanish field that generates more than four-fifths of the country’s gas production.
Prospex Energy wants the cash to acquire an interest of up to 10% in the Vlura producing gas field. If £3.27m is raised that would be enough for a 6% stake. Additional cash will enable the percentage to increase.
If the 10% interest is acquired, Prospex Energy will be responsible for up to 20% of costs for the first three years. The initial investment will help fund the Vlura 1B development well, which has already been started. This could start generating cash in September.
The development programme in 2025 and 2026 could cost Prospex Energy £6.85m. The outcome will depend on how much the company’s share of income from the field reduces the requirement for a cash payment.
Vlura has gas in place of 211bcf and 2P reserves of 105bcf. So far 16bcf of gas has been produced. There is a gas plant connected to the Spanish national grid.
US oil and gas company Heyco Energy, which is the majority owner of the company that owns 58.8% of the Vlura field, intends to subscribe £2.5m. Prospex Energy directors will subscribe £70,000.
Retail offer
The offer is to existing shareholders via the Winterflood Retail Access Platform (WRAP). Management wants to offer its private shareholders the chance to participate. Existing shareholders have to contact their broker or wealth manager to buy shares.
The minimum subscription is £100. The closing date is 7 August at 5pm.
The AIM company will have interests in three producing assets, including two out of three producing assets in Spain. Prospex Energy recently secured a ten-year extension of the licence concessions for the 49.9% owned El Romeral project in Spain. There is potential to extend the licence for another ten years to 2044.
Prospex Energy is trying to gain permission to drill five more wells to provide gas to El Romeral so its electricity production can increase by one-third.
The current share price is 6.6p, but the announcement was after the closing of the market.