We are pleased to share a report from Peterhouse Group on their client.
Prospex Oil & Gas is an AIM-quoted oil and gas investment company with an exciting portfolio of assets focused on high impact onshore opportunities in Europe. The company’s core assets include equity interests in the Podere Gallina licence in Italy and the Suceava Concession in Romania which both contain near term gas development projects. Prospex also possesses options to acquire up to 49.9% in the Tesorillo project in Spain which could represent major exploration upside to the company in the event of a successful drilling programme.
Prospex’s experienced management team transformed the business completely over the second half of 2017. In August 2017, the company acquired a 50% interest in the Exploration Area of the Suceava Concession which contains the Bainet gas field and in October 2017, Prospex secured a 17% working interest in the Podere Gallina licence in Italy which contains the Selva gas field. Both licences also possess a range of additional exploration and appraisal prospects which represent longer term upside potential to the company.
In December 2017, Prospex acquired 2.5% of the Tesorillo project in southern Spain. As part of the deal, the company has two further options to increase its interest; first to 12.5% and finally to 49.9% prior to the drilling of at least one exploration well. To complete the transformation of the business, Prospex also wrote down the value of its Polish legacy assets to zero at the end of 2017.
We have established an initial indicative value for Prospex of 2.2p per share on a fully diluted basis based on our analysis of the company’s core assets. Within this, we note that the current share price is already covered by the value of the company’s interests in the Selva and Bainet fields alone, for which the remaining work programmes required to bring each asset on stream are fully funded. Although exploration drilling is Spain is unfunded at this early stage, we believe that even our conservatively risked assessment of this asset represents potentially transformational upside to Prospex’s value over the medium term.