Italian gas company and ASX listed Po Valley Energy (ASX: PVE) is moving closer to maiden gas production from its northern Italy fields.
Final official government approval for the installation of a commercial plant at the Castello project, east of Milan has been received.
Civil works and surface plant installation is now planned to commence on 29 June 2009 and due for completion in October 2009. The rig will be mobilized for drilling of the Sillaro 2 production well. Sillaro is expected to spud early in July. A drawdown on the Senior facility of the Company’s Bank of Scotland finance will proceed with all conditions satisfied for the bankers to the facility.
Po Valley was understandably excited by the final approval, which "is a milestone “go” decision for production development on both Castello and Sillaro gas fields" said Chief Executive Officer, Mr Michael Masterman. This moves PVE closer to generating cash flows.
PVE won sales contracts with two Italian gas distributors, Elettrogas and Italtrading SpA, for all of the first three years of gas produced at the Castello and Sillaro fields. These contracts are expected to generate up to $A150 million in sales revenue through to September 2012, subject to future gas prices.
Castello has an estimated economic reserve life of around 10-12 years, while the production profile for Sillaro extends between 15-20 years on known reserves.