Good morning, and welcome to the Prospex Energy PLC Annual General Meeting. Throughout this recorded meeting, attendees will be in listen-only mode. Questions are encouraged, and they can be submitted at any time via the Q&A tab situated in the right corner of your screen. I'd now like to hand over to CEO, Mark Routh. Good morning to you, sir.
Good morning to all shareholders, and welcome to the Prospex Energy 2025 AGM. We're going to run through this formal business of the meeting first, and then I'll open the floor to the Q&A session and then run through that, and we can take questions from the floor as they come in through the Investor Meet Company platform. I'll endeavor to answer all the questions that are tabled. W ithout further ado, I'm going to [audio distortion] . I t's now just after 11:00 A.M., and I declare the meeting open. We'll now proceed with the meeting. May I take the notice of the meeting as read? Yes, so that's [actually] positive. We still have some shareholders arriving, I think.
I'm taking a little longer downstairs because of the logging in process.
Yeah, okay. I f there are any questions from the room, could you raise your hand and give your name before asking your question? Are there any questions? So no questions. We'll move on to the formal business of the meeting. T he formal business of the meeting is to go through the resolutions. Ordinary Resolution 1, I propose that the annual reports and audited accounts of the company for the year ended 31st December 2024 are received and adopted. I put the resolution to the meeting. Those in favour? Those against?
I declare the resolution passed. Ordinary Resolution 2 provides for the reappointment of Alasdair Buchanan as the director of the company, who retires in accordance with Article 78 of the company's articles of association. I propose that Alasdair Buchanan be reappointed as the director to the company. I put the resolution to the meeting. Those in favour? Those against? Sorry, I declare the resolution is carried. Ordinary Resolution 3 provides for the reappointment of myself as the director of the company in accordance with Article 78 of the company's articles of association. Since this resolution involves my reappointment, I will ask Ben Harber, the company's secretary, to propose Resolution 3.
Thank you, Mark. I propose that Mark Routh be reappointed as the director of the company. Those in favour? Those against? Thank you. I declare the resolution carried and pass the chair back to Mark.
Thank you, Ben. [audio distortion].
Hi.
[audio distortion] Ordinary Resolution 4 provides for the reappointment of Adler Shine LLP as the company's auditors. I propose that Adler Shine LLP be reappointed as the auditor of the company, to hold office until the conclusion of the next annual general meeting at which accounts are laid before the members. I put the resolution to the meeting. Those in favor? Those against? I declare the resolution carried. Ordinary Resolution 5 authorizes the board of directors to determine the remuneration of Adler Shine LLP as the company's auditors. I put the resolution to the meeting. Those in favor? Those against? I declare the resolution carried. Ordinary Resolution 6 provides for the authorization of the directors to allot new shares in the capital of the company. An explanation for this resolution is set out in the notice of AGM.
I propose that Resolution 6, as set out in the notice of the Annual General Meeting, to be passed as an ordinary resolution. Those in favor? Those against? I declare the resolution carried. Special Resolution 7 provides for the authorization of the directors, to allot new shares free of preemption rights. Again, an explanation for this resolution is set out in the notice of AGM. I propose that Resolution 7, as set out in the notice of the Annual General Meeting, be passed as a special resolution. Those in favor? Those against? I declare the resolution carried by unanimous vote of those present in the room. Ladies and gentlemen, that concludes the formal business of the AGM. I thank you for attending, s o we'll now turn to the Q&A section. Q uestions can be loaded onto the Investor Meet platform.
We have so far a list of seven pre-submitted questions, which I will read out and answer. Q uestion one, why aren't we seeing consolidated accounts? Investors deserve to see the full picture. This is a question which has been repeatedly asked, and the bottom line is the cost of consolidating the accounts of the parent company frankly outweighs the benefits of doing so. As an investing company, we do not consolidate to the [portfolio], and the benefits of doing that really do not justify the cost of doing so.
We know on a day-to-day basis what the cash in the businesses is on all the subsidiaries. I f we become an operating company, then we will have to suspend and relist. That at the moment isn't on the cards. It's a very expensive procedure. W e're not going to do that, but I can assure you that we are on top of the company's cash position. I'm not sure quite what investors need to see or why they need to see it, any further information than that. Brant, do you want to make any further comment on that?
I think you've summed it up pretty well. It's something we definitely aspire to. I think it's worth saying that, it's to become an operating company one day, but now's not the time. I think that's fair to say.
Okay, thank you. O n to question two, the board needs to show some confidence in the company and buy some stock with their own money. I rather suspect this question preceded the RNSs of yesterday evening and of this morning. The board has subscribed to the fundraise. The board will subscribe to placings where the company benefits from their investment. Buying company stock on the open market does not benefit the company. The other factor is that board members are almost permanently in possession of inside information, and simply cannot purchase shares on the market anyway. T his is actually one of the first opportunities that we've had in recent months, to actually invest in the company. W e've done what we can, and that's the answer to that question. Question three, the company should be clear about costs.
For example, did Prospex have to contribute to the recent repair at Viura? If so, how much? The answer to that question is categorically yes. If we do not contribute to our share of the repair of the Viura field, then the operator under the shareholders' agreement can dilute our shareholding in Viura. Now, diluting the share of the asset in the future is a far worse outcome than doing a small dilution of shareholders at the moment. This asset is going to throw off some EUR 8 million per year free cash flow, net to Prospex from next year onwards for the foreseeable future, probably five or 10 years. D iluting our asset share in that investment is a far worse business outcome than doing a small fundraise now to fund the workover, to get us back into production on Viura.
The money that we'll raise on this placing will cover the recent repair, which is ongoing at Viura, and production is imminent. Recommencement of production from Viura is imminent. T hat's question three. I'm not going to expand any further on that. Question four, engagement with individual shareholders is [poor]. That frankly is an opinion. A ll I can say to that is some individual shareholders seem not to understand the Market Abuse Regulations, and expect me to provide them information before other shareholders. This could then get shared on bulletin boards and closed social media groups. This activity is actually a criminal offense under the MAR regulations. By law, I must communicate market-sensitive information with all shareholders at the same time. This is done by RNSs, podcasts, and webinars, and the shareholder meetings we have recently convened.
If shareholders choose not to participate in those meetings, then do not expect me to provide preferential treatment to any shareholder however large or small. The sense that larger shareholders should be entitled to preferential treatment and be privy to inside information before anyone else, is contrary to the MAR regulations and could lead to criminal prosecution. While some shareholders seem to be oblivious to the regulations, or worse still, have an attitude that it does not apply to them, I will not engage in divulging inside information to any shareholder unless it is via the RNS process, or unless all shareholders have access to that same information at the same time. Question five, why not set up a notice board on the website where questions can be asked and a representative of the company respond within a reasonable timeframe?
Again, communications with shareholders are strictly regulated, and the correct channel for that is via RNSs. Such a notice board will not provide any more information than that which is disclosed via the official channels. Question six, shareholders are particularly disappointed by missed deadlines, poor communications. Many shareholders have reached out regarding the direction of the company, and there's no acknowledgement or response from the company. The board needs to recognize the consistent disregard they are showing to shareholders is affecting the share price, and give a clear direction to achieve its aim of growing this company. I happen to disagree strongly with this statement. The direction of this company is one of growth, increasing production income by investing in onshore natural gas assets, onshore in Europe. This strategy is clear, stated, and repeated, and the company is delivering on that strategy.
Deadlines for receiving permits to drill wells in Spain and Italy are notorious for their slippage and delay, a process over which the company has no control. Communications with shareholders is important to Prospex and to me, and has been addressed in the recent past with more podcasts, webinars, and shareholder meetings and events. There is no disregard for shareholders. Clear direction to achieve growth of the company is evidenced by the deals done to date, since I have been in charge of Prospex, i ncreasing the share in Selva Malvezzi by 20% to 37% working interest in April 2022, achieving first gas from Selva Malvezzi in July 2023. The application to drill five new wells in El Romeral in May 2024, acquiring a 7.24% working interest in Viura via HEI in August 2024, leading to more than doubling the company's production income with two permitted future wells to drill.
Application for onshore licenses in Poland in October 2024, t he application to drill four wells on Selva Malvezzi in December 2024. Increasing the ownership of El Romeral via Tarba from 49% to 100% in April 2025. Increasing the ownership of Tesorillo via Tarba from 15% to 100% in April 2025. I don't really see that that is a disregard for aiming to grow the company, so I strangely disagree with this questioner. Question seven, do you think it was wise to take a bonus while Viura is going through a workover and no other drilling this year? It would have been better to post a profit, or you could have done a buyback of approximately £50,000 worth of shares for the business. The bonus is rewarded early this year to all staff in Prospex after the Viura deal was closed, and the company's production income more than doubled.
The requirement for a workover on Viura was not known until April 2025. The Viura deal was a transformational deal for the company. We spent GBP 4 million on this deal, which will result in net cash flow to the company of EUR 8 million per year for the next five years at least from the Viura- 1B well alone. T he source of that is the Hannam & Partners research note, reference page 51, for anyone that has it. If you add the new wells to be drilled on Viura, the net cash flow rises another EUR 40 million per year from 2027 onwards. The same research note will verify that.
This deal was not open to the general market or industry. I would argue to you that the GBP 4 million deal to get that kind of cash flow in the next two years or so is an extremely worthwhile deal to have closed. It was achieved solely through my contacts with our brokers at PSA, introducing me to the owners of Heyco Energy, who then did substantial due diligence over a period of 15 months on me, the company, and all of its assets, which also resulted in Heyco becoming our largest shareholder. A GBP 50,000 bonus, by the way, under the current tax rules amounts to almost half that number after tax. I have answered the pre-submitted questions, and there are some more coming in, which I shall attempt to answer.
Give me a moment while I read the questions, and then I shall try and answer them after reading them out. I'm afraid again there's some opinions in here which are being put through the question, which I think requires some answers. A question here, it's great Prospex finally has a strong asset base that generates positive cash flows. Given this enviable position, I have noted there have been far too many placings to raise cash two in 12 months alone at almost always low share prices. Over-dilution has hence resulted. Why are directors not being more diligent in not diluting shareholders often at lows? I can assure you the directors are extremely diligent on fundraisers and prices. We are at a stage now where Viura production is shut in because of the workover, and it's disappointing that the share price has drifted downwards.
When we get back into production on Viura, the share price will go up again. A s I said before, I would argue to you that diluting shareholders slightly in this fundraise is far better than diluting the asset, which would happen if we did not stand our share of the investment required to bring Viura back into production. Next question, your recent RNS said the Viura workover was on track, cost of production would be back in mid-June as anticipated. Is that still the case? If so, why are we having to raise further cash now at very low share prices now? As stated in the RNS of yesterday afternoon, we've spent some GBP 500,000 acquiring 50% of Tarba from [audio distortion]. We've also got other costs coming in, and a cash call to be met at the end of June for the Viura workover.
This means that we have to raise money now in order to make sure that we have sufficient cash in our accounts to cover the costs. A s I said, I would argue that this is a better outcome than diluting in the asset. The workover is ongoing right now. The rig is currently running the production tubing back in the hole. Y es, it has taken a bit longer than mid-June, but we really expect to be back into production early next month. I can't give you the exact date of that because as always, operations can slip slightly. This is a complicated recompletion. The well is some 4.5 km deep, and it's an expensive operation, which is being funded by the other investors in HEI, Heyco Energy Iberia as well. I wish we weren't having to raise money at these share prices.
Unfortunately, the fact that we were doing a raise was leaked to the market. That leak was not from the company. It was not from me. I happen to know actually where it might have come from. A s I said on the market abuse regulations, be careful what you spout and post on social media. Your anonymous monikers aren't all that anonymous. Okay, I've got actually another question here. It's not really a question. It says, "Thanks for the answer. Please keep up the good work. Hopefully, dilution won't keep hurting us, and you can keep our cash flows for future opportunities. Your team is getting good at it." T hank you for that.
It's nice to see a positive remark from some shareholders, because the social media vitriol that's been put at me, and the idea that some shareholders have decided that quoting me off as a director is a good idea without proposing a new director to replace me, is simply unfathomable to me as to why you would want to do that. Next question, can you do more PR in the future?
Yes, I will endeavor to do more PR. I'm doing my best to do that. It is time-consuming, but there's nothing more important to me than communicating with shareholders, who are going to be supportive and not just throw rocks at me through the social media platforms. You shouldn't be reappointed. Thank you, Michael V. That's your opinion. I put it to you, i f you want to try and run a company on AIM, if you have the experience to do so, then fill your boots.
Next question, the last Investor Meet you said you're growing the company, but if dilution is high, the value added to shareholders may not increase. What is your plan to try and get higher share price, and not just increase market cap by issuing new cheap shares? This is the age-old question I get, that dilution is a bad thing. I put it to you that owning a small percentage of a large entity is better than owning a huge percentage of a tiny entity. My objective is and has always been to grow this company. As I have evidenced from the questions I answered before, we have numerous deals and numerous things in place which demonstrate that the growth of the company is being delivered and that I am doing so.
One question I've been asked particularly is, how are we going to fund the expansion into Poland? The Polish licenses have been delayed by a very sluggish ministry. We expect to see an announcement on that toward the end of this year. The licenses probably won't be awarded until next year, but I don't have the timeline on that. If we get awarded the licenses, they'll be awarded 100%. At that point, I would have the opportunity to farm down, to get a carried interest to drill the wells. The drilling of those wells in Poland probably would not happen until 2028.
I n the meantime, Poland will be funded from production income from the other assets. Another question about, you do not have to give consolidated accounts, but at a point in time in one of your PR updates, you can give a one-off cash picture which could be communicated. It is to give us a feel for generation. Yes, the one-off cash picture is all very well, but I don't quite see what that benefits, making it public how much cash this company has.
Correct, [Brant ] is speaking here. I think you do need to leave it to the board's discretion to some extent, what would benefit the share price. A lso, do we want to show everybody, not just shareholders, what current cash position is? I think that's necessary, and not necessarily desirable at some points.
Okay, the next question says, last year's accounts had a line explaining cash position of subsidiaries, but not this year. Why? I'm not sure that's entirely accurate. I'll have to go and look at it. [ Correct], s o another question. I got a question, h ow do you explain the pathetic share price performance? Okay, this is obviously coming from someone who is using Prospex as a platform to trade shares, to make a 5% or 2% profit within a week on buying and selling shares. I can't predict what the share price performance is going to be. We have had shut-in production from our main producing asset, which we are now going to get back into production imminently. I would put it to you that the share price will improve and increase as we grow the company.
As I said, owning a small part of a large company is better than having a large part of a small company. I can't predict what the share price is going to be or how it's going to react to market forces, and to some shareholders selling down their stock. I can't control the share price, a nd to blame me and the board directly for poor share price performance is not really fair. Please, could you confirm by what is meant by imminent? It was announced on the 9th, the same, and it was previously communicated that would be recommenced by mid-June. Please could you also provide more transparency around future funding requirements?
Okay, there's a valid question in here. Yes, mid-June was the predicted recommencement of production from Viura. It is imminent. I'm not going to give you a date. I'm actually not allowed to give you a date, but as soon as it is back in production, I will let you know. As I said, the operator is running in the production tubing on a very complex recompletion, and that will be back in production. A s soon as it is announced, I will do so. Now, the valid question here is, could you provide more transparency around future funding requirements?
Yes, I've been endeavoring to do this as much as possible. I'd like to point out that in El Romeral, we are now 100% in the asset, and the current drilling campaign is expected to commence toward the end of this year or early next year. I'm just fast- forwarding to the schedule slide on the drilling. It's going to also display here in the room, i f you just give me a moment. It's not working for me now.
Right, j ust give me a moment. Probably just the technology is getting the better of me there. What I'm showing to the people online is the drilling schedule, the earliest expected timeline we expect to be drilling in El Romeral, which is Q1 2026. This is subject to the permitting or the permitting process in Spain. Now, I'd like to point out, we are 100% of this asset. W hen we get some permits in El Romeral, my objective would be to see if we could get a farm-in, that is someone else to come in to participate in the drilling of the wells by carrying our interest in that. That would be a good outcome for funding the company. It might not be a good outcome if we are having to dilute in the asset.
This is an age-old issue of, do we dilute the shareholders by issuing shares or do we dilute in the asset, by having a lower production income but a carried interest in the wells? I will look at doing farm- outs to get participation from other companies actively. I will also do that for the Polish assets where we're 100%. We have the opportunity to farm down in these assets. The other thing is that in Viura, the workover that's about to be completed will have a run of some nine or 10 months of production. During that time, the operator is going to be talking to a syndicate of five banks for a debt facility, to fund the development wells that are scheduled for Q2 2026.
If the operator gets a debt facility, and if we have accrued production income with a robust gas price from the production from Viura in the next 10 or so months, then the requirement for funding the development wells by equity diminishes or goes to zero. I can't tell you absolutely exactly when or if we're going to need to raise money again, but I will endeavor to ensure that the company's shareholding in its assets is not diluted, because if we don't fund our share, then we get diluted in the asset.
Okay, another question here. I appreciate many seem to be very disappointed, the share price is still languishing at three-year lows despite all the progress Prospex has made. I'd be willing to bet that when management fixes sentiment, it will massively improve. Mark and team, keep your chins up. I just hope you keep delivering the shareholder values you follow. I can agree with that sentiment. I'm doing my damnedest to grow this company and increase its value. It's disappointing that the share price is where it is, and we've had to raise money at this price. Would the board welcome an unpaid, non-exec director added to the board to look after the shareholders' interests?
Yes, the board would welcome a non-exec director, with the qualifications to actually be on the board of the AIM-listed company. The board of directors of Prospex, t his is the best board of directors I've ever worked on, of about five that I've had experience of working with. The dynamic is quite important to us. I hope and believe that we are looking after shareholders' interests. The opinion of some on the bulletin boards is not quite the same, but I would put it to you that qualifications are probably more important than perceived shareholder interests. Okay, I've got another question here. Thanks for your answers. I do believe [audio distortion] is not getting special access. Actually, caused the recent share price damage. Anyhow, let's get the PR going and production drills progress p ermits, eight million per annum sounds nice. Would you ever consider a full company sale?
It's not exactly just a question there. We would of course consider a full company sale. I have to say that the company has not received an offer from outside. If we did, we would consider that and recommend it to shareholders if it was perceiving value for the company. There was a price at what? 5 now. We obviously don't want to be selling at 5p. If the price is 50p, we might well consider that and recommend it to shareholders. Somewhere in between, there's a number, and that is going to be down to shareholders to decide and for the board to recommend what they believe is a perceived correct value for the company, should an offer come in. I have to say that there has been no offer, and if there is, we would give it due consideration.
Next question. Share price has dropped 40% while the company has grown. I own 2x your shareholding, so it hurts me a whole lot more. I feel your pain. I understand that, and I'm doing my best to grow the company and boost shareholder value. I can't actually control what the share price does. Okay, similar to Ed, I have held for three to four years, just scratching my head why I am 30% underwater at this point. I think there are lots of people scratching their heads on that one. When do you foresee the Italian permit is to drill? On the schedule which I'm showing on the screen now, the earliest I can see the permits land on that is Q1 2026. The next question. The company has achieved great things with the asset position. Congratulations to all, but why is this not reflected in the share price?
I'm afraid I'll be glib on that. I wish I knew. AIM is a strange place. Share price performance is disappointing. I t does lead to the question as to why we're listed on AIM, but I think the benefits of being on AIM are there and I intend to continue to do that. Another question here. Mark, congratulations to you and the entire team on the successful acquisition of 100% of El Romeral. Has the recent blackout in Spain prompted any increased interest or action from the authorities regarding either El Romeral or Tesorillo?
That is a good question. The authorities have had a shock after the blackout at the end of April in Spain, and we have been to the ministry and we have spoken. However, the masters at the ministry are a political party who are not quite on the Ed Miliband spectrum of eco-zealotry, but they are trying to cancel fossil fuels in Spain, in spite of the fact that the Spanish nation imports the most LNG from overseas and is still importing some 28% of its gas requirement from Russia. These things seem to be lost on the politicians.
The people at the ministry are being very supportive in trying to get our permits done. As for Tesorillo, it's a similar subject. We're going to get El Romeral done first, and then we can turn our attention to Tesorillo, which if we ever got drilling there, would be a real game changer for the company. Next question, o nce revenue starts rolling in, would the board consider a share buyback scheme? The answer to that is yes, share buyback or dividends in the future, but having cash in the bank often trumps such activity and might not be beneficial to shareholders in the long run. Th e answer is we'd consider it, but we'd have to take advice on that.
The last question I'm seeing at the moment is, I understand this year that El Romeral will be generating negative free cash flow and will continue to do so if permits are not received. Has there been a contingency plan for the asset should permits not be obtained? The El Romeral asset is producing less and less gas, and we have cut costs in El Romeral to ensure that we are getting positive cash flows from the asset.
If permits are not received, then yes, we would have to consider what we're going to do with the asset. A t the moment, we have a good headwind and some very good indications that we are in the final straits of getting those permits done. As I said, the earliest I can see that happening is Q1 2026. I hope it will be sooner. Right, that is the end of the Q&A session online. Are there any questions in the room from shareholders we have present or from any other people? Okay, thank you very much. I think that concludes the Q&A session. Alessandro, I'll hand it back to you.
Perfect. Mark, thank you very much for updating attendees today. What I'll do is I'll close the session off now. O n behalf of the board of Prospex Energy PLC, we'd like to thank you for attending today's meeting and good afternoon to you all.
Thank you very much. Goodbye.