Po Valley Energy Limited (ASX:PVE) is progressing towards supplying in-demand natural gas to the large Italian market through development of three projects in the country’s north.
CEO Michael Masterman informed investors at this week’s Proactive CEO Sessions in Sydney and Melbourne that only 10% of Italy’s natural gas demand is met by local supplies.
With a market twice the size of Australia’s, he said the shortage was resulting in high prices and in 2018 these surged more than 50%.
Development path of assets
Masterman said the company had a market cap of $25 million and an individual valuation of around $75 million but had a development path of assets which each had a value of around $100 million.
The onshore Selva Malvezzi field near Bologna is the most advanced and with estimated capex of $4.7 million, has potential to results in annual EBITDA of around $6.4 million.
Teodorico in gas producing region
Teodorico is an offshore project in the middle of Italy’s most prolific gas producing regions with the added benefit of being in shallow water and close to processing facilities.
The CEO said for an estimated capex of $82 million, Teodorico had potential for annual EBITDA of $31 million.
Po Valley’s third potential project, Torre Del Moro, provides further potential upside with a prospective oil target of 150-250 mmboe.
Masterman told investors that there are four strong reasons for investing in Po Valley:
- Highly economic projects;
- Market dynamics;
- Large-scale potential; and
- Strong resource upside.
The company recently posted maiden gas reserves of 13.3 billion cubic feet at Selva Malvezzi field.
This equates to 8.38 billion cubic feet of net 2P reserves attributable to the company’s 63% ownership.
The maiden reserve estimate was prepared by France-based geophysical services consultancy CGG from previously reported gross contingent resources and includes results from new drilling on the field last year.
First gas expected in 2020
At the time Masterman said: “We are totally focused on progressing Selva toward first gas in 2020 at a gross rate of up to 150,000 cubic metres per day.
“At this rate, Selva will be generating significant cash flow for Po Valley with longer-term upside from the licence’s additional prospectivity.”
Earlier this year, the Italian Government granted the Selva field a preliminary award for the Production Concession and Selva remains on course to begin first production in 2020.