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Monday, 3 December 2012
Po Valley Energy raising A$1.35M to upgrade Sillaro gas plant
Italy focused Po Valley Energy (ASX: PVE) has secured commitments for A$1.35 million in funding to upgrade the Sillaro gas plant to enable higher production.
Production from Sillaro is presently constrained at about 1.8 million cubic feet of gas per day (MMcfd) pending installation of a condensate separator.
Po Valley managing director Giovanni Catalano told Proactive Investors that following installation of the separator, which is expected in early 2013, production will reach 3MMcfd.
The funds were raised through a private placement of about 11.3 million shares priced at $0.12 each to several Australian institutional and sophisticated investors.
Several of the company’s non-executive directors have also supported the placement though this is subject to shareholder approval.
The first tranche of 7.4 million shares will be issued on 6 December 2012 and the second tranche of 3.85 million shares will be issued to the non-executive directors if shareholder approval is obtained at an extraordinary meeting of shareholders which the company plans to hold in late January 2013.
Production from the Sillaro field started in December 2009 but experienced faster than expected decline in wellhead pressures in April 2010.
The decision was then made to drill Vitalba1dirA to access the remaining attic gas at the field, estimated at about 3.5 billion cubic feet.
However, the impact of cold weather in January 2012 resulted in an increase in condensate production at the Sillaro gas site and production was halted for four days while excess condensate was removed from the processing facility.
Investigations confirmed that the condensate production was originating from the PL2 C1+C2 producing level, leading the level to be shut-in until the condensate separator is installed.
Besides the expected return in Sillaro production to 3 million cubic feet of gas per day, Po Valley is also moving to bring its Bezzecca gas field in northern Italy into production.
The company has already secured a preliminary production concession from the Italian Ministry of Economic Development, allowing it add 4.1Bcf of gas to its proved and probable reserves.
Importantly, Bezzecca will be its third producing field and will use the existing Castello surface gas plant.
The final award is expected around the end of the calendar year once the Environmental Impact Assessment (EIA), which was submitted in February 2012, has been fully reviewed by the Lombardy Region.
Bezzecca was discovered in 2009 with the Bezzecca-1 well flowing gas at a combined rate of 3.9 million cubic feet per day during testing.
The expected increase in production from Sillaro will substantially increase the company’s revenue.
Po Valley had recorded revenue of €2.1 million (A$2.6 million) in the September 2012 quarter from production of 2.4MMcfd of gas from both the Sillaro and Castello fields.
Production could increase to about 3.6MMcfd following the upgrade, increasing revenue to about €3 million.
Po Valley held cash of about €2.2 million as of 30 September 2012.
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