GCIProspex Energy notes favourable regulatory changes in Italy, boosting exploration prospects
() noted an announcement by Po Valley Energy that the annulment of Italy's Plan of Areas has not been appealed by the Italian Ministry of Environment and Energy Security. The Plan previously limited the extent of hydrocarbon prospecting, exploration and production in Italy.
Po Valley operates the Selva Malvezzi production concession in northern Italy where Prospex has a 37% interest and Po Valley has the remaining 63%. The concession contains the Selva gas field and Podere Maiar-1 (PM-1) gas facility, which outputs c. 80,000 scm/d sold to BP.
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As previously announced, Italy recently lifted certain hydrocarbon exploration and extraction restrictions for certain areas of the country, also referred to as Plan of Areas or PiTESAI. Today's announcement confirmed that the annulment of these restrictions has not been appealed by the Italian Ministry of Environment and Energy Security, further validating the regulatory move.
While 's Po Valley portfolio was not materially impacted by the plan, the Ministry's decision can be seen as another sign of the Italian government's commitment to strengthen its energy security and reduce reliance on Russian natural gas imports. The overturning of PiTESAI is part of a broader trend in Europe to promote more domestic gas production to address energy security challenges.
The new regulatory conditions have enabled fast-tracking approvals for all discoveries and prospects in Selva Malvezzi, which should bring more wells into production more quickly than originally planned. has already applied for 4 new wells on the concession. Additionally, as a result of the regulatory changes, the East Selva prospect may now be drilled from an optimum location, no longer requiring a highly deviated well. All of this should translate to a material boost in future revenues.
Selva's PM-1 gas facility is currently outputting 80,000 scm/d sold to BP under an 18-month contract with the option to extend. As production ramped up, revenues from the well continued to climb in Q1/Q2, reaching €2.6m net to as of May 24, 2024 after a total of €1.3m was generated from the concession in FY23.
Selva has further upside as operator Po Valley is advancing agreements with local landowners and permitting in order to deliver planned drilling programmes at Selva North, South, and East. Production income from PM-1 will help fund development drilling for Selva North and Selva South, and to convert prospective resources at Selva East into proved, developed and producing reserves in the near term.
Markets welcomed today's update, sending shares 5% higher.
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