17th Dec 2019 10:49
(Alliance News) - Prospex Oil & Gas PLC on Tuesday said it has agreed to buy up to a 50% indirect stake of El Romeral, an integrated gas production and power station operation in southern Spain.
El Romeral is being acquired by Tarba Energia SL, with funding provided by Tarba's shareholders, Warrego Energy Ltd and Prospex.
Warrego will fund the initial consideration of EUR750,000. Prospex said it has three months to elect an ownership 50% stake in the project and refund to Warrego the corresponding proportion of the initial consideration.
The AIM-listed investment firm said the project generates small amounts of free cash from revenue of EUR800,000 per year. However, Prospex noted that there is a potential to increase the number of generating days - which currently stand at five days per week - and in the medium-term increase utilisation of the generation equipment.
"Located in a proven hydrocarbon region with very low geological risk, it is the substantial development opportunity, specifically the combination of the power station operating at only 22% capacity and the presence of two undeveloped discoveries and 11 prospects, which excites us most," said Prospex Non-Executive Chair Bill Smith.
The stock was trading 12% higher in London on Tuesday at 0.11 pence a share.
By Evelina Grecenko; [email protected]
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