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Prospex Energy (LSE:PXEN), a company specializing in European gas and power projects, announced the completion of a 7.5% acquisition in Heyco Energy Iberia (HEI) on Tuesday. HEI, which owns the majority stake in the Viura gas field in northern Spain, was the focus of Prospex's recent transaction.
The acquisition, finalized on August 19, followed a successful fundraising initiative that generated approximately £4.2 million. This acquisition marks a key step in Prospex’s strategy to establish itself as a mid-tier independent European energy producer.
By agreeing to fund 15% of HEI’s development program for the years 2024 through 2026, Prospex now holds a 7.5% stake in HEI. Upon completion of HEI’s acquisition of SHESA's share in the Viura concession, Prospex’s stake will translate to a 7.2365% ownership in the Viura gas field, encompassing the field's reserves, current production, and surface facilities.
The deal provides Prospex with additional financial advantages compared to a typical ‘2:1 Promote’ transaction. The company will receive a 10% coupon on its capital commitment and will be reimbursed for its investment through 15% of HEI’s production income after covering operational expenses and taxes. Once the initial investment is recouped, Prospex's share of net income will revert to 7.5%.
The Viura gas field has an estimated gross remaining reserve of 90 billion cubic feet, with around 6.5 billion cubic feet attributable to Prospex. Development of the Viura-1B well is anticipated to reach its reservoir horizon within the next two to three weeks, with production—and subsequent revenue generation—expected to commence as early as October.
Prospex will contribute £3.51 million towards the 2024 development program, including the Viura-1B well, representing 15% of the total estimated £23.4 million costs for the year. For the 2025-2026 development program, Prospex's estimated share is £4.84 million. This figure could potentially be reduced by production income, lowering the required funding to approximately £2.7 million by May 2025.
The company’s financial outlook could improve further if gas prices exceed the conservative assumption of €31 per megawatt-hour. Currently, the TTF gas price is around €39 per megawatt-hour, roughly 30% higher than the base estimate, which might eliminate the need for additional funding entirely.
