Good afternoon, welcome to the Prospex Energy PLC Investor Presentation. Now, this is a recorded presentation, investors will be in listen-only mode. Questions are encouraged, can be submitted anytime via the Q&A tab situated in the right-hand corner of your screen. Just click Q&A, scroll to the bottom, type your question, and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company review all questions submitted and publish responses where appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Mark Routh, CEO. Good afternoon, sir.
Good afternoon, ladies and gentlemen. My name is Mark Routh. I'm the CEO of Prospex Energy. I'm going to be running through the corporate presentation, which has been updated for this month. I'm not gonna talk to every point on the slide. I'm gonna use it as an aide-mémoire to remind us where we've all come from and where we're going. The new corporate presentation will be uploaded to the website at the end of this presentation. The website is being upgraded as well, and in the coming days or weeks, you're gonna see a new website up and running. Without further ado, I'm going to lead through the presentation. Like I said, I'm not gonna talk to every slide. Standard disclaimer.
For those of you that don't know about Prospex is an AIM-listed company. We have operations in onshore in Italy, in the northern part of Italy, in the Po Valley, and we have operations in the southern part of Spain, at the El Romeral concessions and the power station at Carmona, which is near Seville, and then the exploration permit down in the south called Tesorillo. The percentage shares are on the screen there, you can see what ownership we have. We are a non-operator. We're an investment company. We have operators that operate on our behalf in both Spain and Italy, and we are a very supportive joint venture partner to those operators.
We have a highly competent, technically-led team, and they support the operators on both the technical side and on everything we do in both Spain and Italy. In Italy, we got gas production happening last week on the 4th of July. Bit before last week. That we've been waiting for for a very long time. It took a while to get the permits for the production concession, but first gas on the 4th of July was a big milestone for the company. Now we are producing in 2 countries, sorry, both Italy and Spain. We're producing gas to our power station in El Romeral in Spain, and we are producing gas from the Selva field into the national grid, operated by Snam, the network operator in Italy.
The recent impacts to our company, obviously, the biggest impact just recently is the first production from Italy. Now, our gas is being sold, indexed to the TTF. The buyer of the gas is BP Gas Marketing, and the TTF index is as most people know, is the natural gas hub in the Netherlands, where it's quoted in EUR per megawatt hour. Now, the price at the moment has softened a bit since the crisis we've seen in the global crisis with the Ukraine war. We're seeing now that the prices have come down to around EUR 30 per megawatt hour, which is equivalent to 72 pence per therm in the U.K. Now, those prices are high compared to what we've seen in the past. when we...
When I started in the industry, prices were 12 GBP per therm, and they went up to 25 GBP per therm. People thought, "Would that go any further?" It has. What we're seeing is in 2024, prices are heading towards 50 EUR per megawatt hour, that's more like 125 GBP per therm. The point is, we're cash generative at 30 EUR per megawatt hour. I see the forward curve strengthening from here, we're going to be even more cash generative. In Spain, we've got the power station continuing to produce electricity from our wells in the Romeral concessions, we have submitted to the Spanish regulator permission to drill 5 more wells on the production concession.
It has to be said, the Spanish regulator is a little slow. There are some political things happening in Spain with the elections, happening in less than 10 days now. The 23rd of July, we see elections happening in Spain. We'll see some movement, we think, in the environmental impact assessment process, which has kicked off already. The other thing we're very proud of doing is we have installed solar panels on the roof of the power station. We've leased the land adjacent to the plant in order to install a solar farm next to the plant, which will be a 5-megawatt array of solar panels.
We will be able to connect to the grid at our power station, where the grid is already, the grid connection is already there and has capacity and ullage to accept the further power to be generated from the solar power panels that are being installed. We're going to grow. I'm going to go into some detail in the Italy, the Italian asset. Here you've got a picture of the processing plant in Bologna. This is the Podere Maiar-1 wellhead, and the processing kit that's been installed next to it. These pictures show you have a brand new plant installed, which I visited the well site in April of this year, and we were ready to go in May.
We were ready for production in May, but we needed sign-off from the local fire department for the safety of the kit. The fire department were busy rescuing people from the floods in the Po Valley. That's what delayed us, our first gas from May to July. Here we are, we're now in production, and production is now ramping up. The reserves in Selva is a 13.4 BCF gross 2P reserve gas field. That's 5 BCF net to Prospex. We have prospective resources on the permit, which are drillable in the near future, which I'll come on to.
It's a bit small, but you've got a map, a satellite map of where the well site is in conjunction with the tie-in point to the Snam gas grid. It's less than 600 meters away, line of sight, but we've laid a 985-meter pipeline to connect to the grid. As I said, that is now producing. The production rates are being slowly increased. We've been in production for just over a week now, and when we've got some firm numbers from the operator, and I'll be able to publish those when the time comes. There's some history on the timeline that took us to get to first gas in Selva. As you can see, it's been a fairly long, old process.
The well was drilled and suspended in 2017, 18 over Christmas. It's 2018, it was completed. It takes quite a while to get permits and environmental impact assessments and production concessions granted. As I said before, we're going to be drilling some more wells. Here's the position of the new wells. Now, the law of the land is that certain areas are observed for special reasons and cannot have oil and gas activities on them. Those are the purple areas that you can see on this map.
What you've got on the map, you have the Selva field, which you can see in red, in the middle, and just next to that, you have Selva North and Selva South, which are contingent resources ready to be drilled. We just need to permit the wells to get them drilled up. The larger exploration prospect on the concession is East Selva. It's about 35 BCF gross resources. We are applying for permits now to get those wells drilled, and also talking to the landowners about using the fields in the neighborhood from which to drill these wells. It has to be said, the local community is very supportive of the activity here.
It creates jobs in the Po Valley and the Italian locals and the Italian local government and national government now see the need for local gas to help with the energy crisis in Italy. We have a very supportive local following in Italy, which is always good to know. As I said, I'm not gonna dwell on too much detail here, but here's the background of the assets in Spain. What we have here is a picture of inside the power plant, outside the power plant, and an aerial view that you can see the solar panels on the roof. We've got development opportunities around here. Project Apollo is the roof panels on the roof.
Project Helios is, we call it, the solar farm adjacent to the plant. We have infill well drillings coming up for the 5 wells. There's a possibility to connect all of this, if we have excess gas, to a 26-inch pipeline, which traverses the concessions. You can see it there marked on the map. That 26-inch pipeline, we have charted the route to connect that from the power station, and that can be done at low cost in the future if we have drilled 5 wells where we will have excess gas.
We only need 2 of the 5 wells to come in at the rate of some 25,000 standard cubic meters a day, and we will get up to 100% utilization of the 3 generators, which you can see in the picture here. Those are the 3 generators in the plant. We only can use 1 at a time because we don't have enough gas behind the pipe to run more than 1 generator at this point. As soon as we get the wells drilled, we can get to 100% capacity on the power station, which brings us from 2.7 megawatts up to 8.1 megawatts. That would be a big boost to income in the plant. There's potential in the future to use the suspended wells for gas storage.
There's a well called Rio Corbones-1, which we worked over in October 2021. That is actually watered out and it is a prime candidate for future use as a gas storage reservoir, but we need to connect to the Eni gas pipeline at the same time to inject gas to it. That's a project for the future. Now, this is something my team have been leading, is the seismic reprocessing over the concessions. For those that know about these things, you have the AVO, that's amplitude versus offset reinterpretation of the seismics, which gives you direct hydrocarbon indicators.
You can see here, for those that understand these things, you can see the bright spots appearing on the reprocessed data, which gives us a much better insight on the chance of success of drilling a hydrocarbon well. More detail there on the seismic. This is a snapshot and a histogram of the reserves and resources and prospective resources according to the competent person's report, CPR. This is the public data that we know. We have further analysis done by management to fine-tune these numbers. Brief update on Tesorillo. Tesorillo is still suspended. This is an exploration permit which was suspended back in 2019. We have applied to have it reinstated and converted to an exploitation concession. That's an important language difference to the nature of the permit.
That was submitted in May 2021. We are still waiting for the permit to be converted and reinstated. It's potentially a very large project. It could be up to the mid case is up to 831 Bcf gross reserves in a well that has been drilled in 1956. We think this is an appraisal project, not an exploration project. Some detail on there on what could happen with Tesorillo once it's reinstated. At the bottom of our presentation, we have a timeline here. This is indicative only. The drilling is my team would say, an optimistic view of when we could get drilling. We could bring it forward if permits came quickly, but it could slip.
We have to come up with a plan, and the plan is in Q2 2024, we could be drilling in both Spain and Italy, those five wells in Spain and the three wells in Italy. What we're waiting on there is not any further well planning. It's all down to permitting, and we have to wait for the permits to come through. As I said, I'm not gonna read every single page. This is just a summary of the proven, contingent and the prospective resources, net to Prospex. Here are the CVs of the management team, with the new board director, Andrew Hay, appointed earlier this year. That's all I was going to run through on the presentation, which will be available on our website after this session.
I can now turn it over to from the floor. Thank you.
Fantastic, Mark. Thank you very much indeed for the update there. Ladies and gentlemen, do please continue to submit your questions using the Q&A tab situated on the right-hand corner of the screen, which is why Mark takes a few moments to review those questions submitted. I'd like to remind you, the recording of the presentation, as Mark said, a copy of the slides, will be available on the Investor Meet Company platform. Mark, I know you haven't had a great amount of time. We did have your pre-submitted questions. You can see you had a number of questions come through throughout today's presentation. I'm sure we'll see a few more come in.
If I may just hand back to you just to click on that Q&A tab, and where appropriate to do so, if you could read out your, the question and give your response, and I'll pick up from you at the end, please.
Yes, okay. I'm just finding the tab. Here it is. Well, firstly, I'll deal with the pre-submitted question, which I'll read out. It says here: "In general, obviously subject to confidentiality, what is the contractual structure with the BP Gas Marketing? For instance, obligations like take or pay, volume nominations, BP service take, and whether take related to volumes or fixed, et cetera." What I can do here is point shareholders to the 14th of February 2023 RNS that was published, announcing the BP Gas Marketing agreement to offtake the gas from Selva. The highlights say it's an 18-month gas sales agreement, commencing the 1st of April. There is no take or pay or obligations.
What we have is a gas sales contract that will... there's an estimated 37 million standard cubic meters of natural gas to be extracted under this. That's a gross number. That's 12 million standard cubic meters in 2023, and 25 million in 2024. That's the volume. The gas supply price is linked to Italy's ICIS Heren PSV day-ahead mid-price assessment. That is a privately quoted price of gas, which is linked, very strongly linked, as I said before, to the Dutch TTF. That's a title transfer facility in Holland. The important thing there is that nominations are provided by the operator, Po Valley Operations. They provide nominations monthly, weekly, and daily to BP. It only becomes firm that the binding nomination is required by 2:00 P.M. on any banking day.
That is the only commitment that we have. The well has been producing, as I said, for 10 days. We're seeing very firm production, very good wellhead pressures. We nominate on a day what we're going to sell, and BP buy that quantity through the grid at the delivery point. Like I say, there's a lot more detail on the RNS of the 14th of February this year. I'm just going to put my glasses on to read the Q&A's now. Just bear with me a second. I think I might have already answered Andy C. He says, "Are flows from PM-1 broadly meeting expectations?" The answer is yes. I will be able to publish those numbers when the operator is ready to do so.
As non-operator, I can't advance anything that they do. Okay. Board shareholders don't look aligned with shareholders. Well, yeah, that's a comment. I mean, that's often the case with the AIM-listed companies. You have institutions coming in with upwards of 29% of shares in a company. It's not unusual that it's not unusual that you have different shareholders than the directors. Not all directors participate to the level that we do. Project Helios decision is late. That is true. There are permitting issues to come through. We are looking at the viability of the Project Helios project. At the moment, we passed through the tender exercise, and we are evaluating the tenders.
It's still a project which we want to do. Excuse me a minute. These Q&A's are moving around a bit. As for directors taking options or increasing their holding, the answer is that the answer is individual to each director. I can't speak for other directors as to what they want to do or what their personal circumstances are. The options are there. Some options have a 3-year tenure, others have a 5-year tenure. The answer is that most likely there's no way we'll be losing those options, but most likely we'll be taking up those options. I can't give you the time frame on that. You will see some movement on that, I think, in the future.
As for movement on the stock market, I can't really quote on what the stock market is doing. It's very frustrating on AIM. We put out an RNS, which is the best news we've had in months, and the share price softens on that. Shareholders tend to sell into the good news and buy on the prospect of good news. I'm afraid that's the nature of AIM. I can't predict what AIM is going to do. I really can't make a comment as to why the share price is going down. We do have some global factors happening and other issues not related to the company.
All I can do is continue on doing the best we can, developing the projects, and growing the company as best we can. Will we be able to self-fund the drills between operator and our cash flows? The answer to that is it depends a lot on the timing of the drilling. Now, with the drilling, as I predict, happening in 2024, I think we will have built up a good war chest from both the Spanish and the Italian assets. I can't answer that question for definite because it depends on what gas price we get. We are related to the forward curve gas price, and that can go up and can go down, the answer is it's looking highly likely and very positive.
There might be a possibility to have to raise money in the future. We're an AIM-listed company. There's no point in being AIM-listed if you can't raise money on the market. I know that's not what everyone wants to hear, but I'm being honest with everyone that an AIM-listed company needs to turn to its shareholders for future money if it's a value accretive event. Now, the board and myself have a desire for the share price to go up, of course. I would only be recommending that to shareholders if such an acquisition or such a further activity was to ensure that we kept our share of the license and didn't get diluted in the equity ownership of the asset.
Also to ensure that we could continue to grow the company on a value accretive event. A lot of the other questions are to do with what's the share price doing and why it's going down, I can't really comment any further on that than I have said already. One question here: What is the monthly value of gas revenues you expect, and what's the net margin you expect? I've already quoted the monthly gas revenues we expect from Selva, and that's in the region of GBP 300,000 per month. The net margin is going to go up and down according to our overheads. Our overheads are very small.
We are a company which is a non-operator, so it's a fraction of that number that needs to come off to cover overheads. Our cash flow position is going to be quite positive by year-end. It's going to be about GBP 300,000 is a conservative number based on the 30 EUR per megawatt hour gas price that I mentioned earlier, which I expect to increase. There doesn't look to be too much going on till Q4, Q2 2024, and we've seen a 50% decline in share price over the last six months. Are they more concerned? Well, this is again, it's much related to our share price.
There is a fair bit going on in preparing for the permits for the drilling, and we are looking at business development opportunities. This is a question I've been asked by our major shareholders. Business development opportunities, what are you looking at? Over the past 18 months, I reckon we've been in 5 data rooms per month, no, 3. 3 data rooms per month for the last 18 months, and we've looked at a lot of opportunities, and we've passed on most of them. We've bid on some and didn't get there, but it's important not to overbid for assets when you're looking at business development. We have some in the pipeline, yes, we are looking at some. We've always been looking at that.
Whether or not those will happen, and if we do want to do that, we will ask the market for some money to do that, possibly. That's not a yes, it's not a no, it's a maybe, and I'm afraid I can't really comment more than that until it actually happens. There's a question here on Hancock Energy Corporation. Are Hancock an active partner in Spain? The answer is absolutely yes. Hancock Energy Corporation is a huge company. They bought Warrego Energy with cash, a lot of cash, and they have kept much of the Warrego team in place to manage the Spanish assets for them.
What's been good about that is that as a joint venture partner in Tarba Energía, which is a Spanish company operating the plant in Spain, Prospex is roughly 50-50 joint venture with Warrego, which is now owned by Hancock, and I'm talking to exactly the same people as I was before. We know them well, we get on well, and we are jointly managing all of the assets to increase the value. Project Helios, the drilling of the wells, the unsuspension of the permits, and any further activity which we see. Yes, they are a very supportive and very good partner to have. What caused the shares to jump so much at the end of last year? I'm gonna have to pass on that question.
It'd be glib if I was to answer it. Well, people were buying lots of shares, there was a high expectation that something else was gonna happen. I don't know what that was. The gas price, however, at the end of last year, was a lot different to what it is now. It went up to some crazy numbers, beyond EUR 70 per megawatt hour, which is close to 200 pence per therm. I think that may have been a reason, is, the end of last year, we had the Ukraine War affecting gas price quite significantly. Here's a question: If an offer for assets comes that is attractive, will you be happy to sell? I'm a businessman.
If somebody offers me GBP 0.50 for my asset, the answer is no. If someone offers me GBP 50 million for the asset, the answer would be yes. Now, somewhere in between, there's a number, which is a cut-off point, and that's all gonna depend on what it is. It, it's a bit of a glib comment, but anything's for sale. We just need to know what the price is. Yes, we'd be happy to sell, but it would have to be at a good value to make sure we get returns for our shareholders. Right, I haven't seen any more question.
I think you've actually covered all those questions off, Mark. If there is anything further, we of course can review those. You can put responses back to the investors, post the presentation. Perhaps, Mark, just before redirecting investors to provide their feedback, which I know is particularly important to you, just ask you for a few closing comments then on that basis.
Okay. Well, thank you for listening to me, thank you for joining the call. Let's just say, watch this space. Prospex, I have a plan to grow the company, it's not going to be growth at any cost. It'll be done in order to increase the share price generally. I think we have a good platform here. I've had a lot of investors come to me saying, "Right, you are now a market cap company of some GBP 25 million." It goes up and down a bit, obviously, with the share price.
We're a significant company in that we're now we have producing assets in 2 countries, which are stable, defined stable, but in a politically stable environment, where we can predict the gas price and the electricity price. Those are good assets to have. Would we grow? Yes, we would. Our focus is Northwest Europe, and our focus is onshore gas. Watch this space. I've enjoyed the ride. I've been at Prospex for just about 2 years next week, and it's been a good journey, and I've been proud to be leading this company and the team that I have with it. Watch this space.
That's fantastic. Thank you very much indeed, Mark, for updating investors today. Can I please ask investors not to close this session? You should be automatically redirected to provide your feedback, in order that the Mark and the team can better understand your views and expectations. This will only take a few moments to complete, and is greatly valued by the company. On behalf of the management team at Prospex Energy PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.