Copyright © 2021
Po Valley Energy Limited
All rights reserved.
Po Valley Energy Limited
All rights reserved.
News & ASX Releases
Po Valley Announces 2013 First Half Results
August 8, 2013
Po Valley Energy Ltd. (ASX: PVE) announced today its 2013 half year results for the six months ended 30 June 2013.Financial Results
Half year operating results were adversely affected by reduced gas production at both of the Company’s producing fields and lower realised gas prices. The Company has also impaired the carrying value of its Castello field in view of its lower and less certain production prospects. This impairment is a non-cash item and has resulted in a half year statutory loss.
Half year revenues from gas sales totalled €2,999,368 which was about 30% lower than the prior corresponding period. As a result, earnings before interest, tax, depreciation, amortisation and impairment charges (EBITDA) amounted to €905,666 compared to €2,651,645 for the prior corresponding period. The lower EBITDA achieved during this period resulted from gas production being around 11 percent lower relative to the prior corresponding period and also to a lower average gas price during the half year of €27 cents per cubic metre compared to the price of €36 cents per cubic metre achieved during the prior corresponding period which coincided with a significant spike in global oil prices.
The Company’s gas sales are now based on the Italian spot market prices rather than a reference rate pegged to oil and other hydrocarbon benchmark prices. In addition, operating costs were higher during this half year period, mainly due to a number of non-recurring operating expenses incurred during the installation of the condensate separator at Sillaro and technical expenses related to the reserve and resource audit and Competent Person’s Report. But for these one-off items, operating expenses and corporate overheads would have been broadly in line with the prior corresponding period.
The Company reported a statutory consolidated loss of €5,625,677 for the half year including a non-cash write down of €5,021,112 relating to its Vitalba (Castello) well and related production assets. Excluding the write down, the net loss would have been €604,565.
| 1H 2013 €m |
1H 2012 €m |
YoY Change €m |
|
| Total Revenue | 2.99 | 4.40 | (1.41) |
| EBITDA | 0.90 | 2.65 | (1.75) |
| Net Profit after Tax | (5.62) | 0.30 | (5.92) |
| Earnings per share (€cents) | (4.65) | 0.28 | (4.93) |
| Cashflow from operations | 0.93 | 4.08 | (3.15) |
As at 30 June 2013 the Group had €2,409,995 in cash and net current assets of €2,365,185 with borrowings standing at €5.0 million. The Company’s cash reserves were boosted during the period by receipt of funds of €359,000 representing the second tranche of the share placement approved by shareholders in February 2013 and by a net increase in borrowings under its new banking facilities of €1.0 million less transaction costs associated with the creation of that new facility.
During the first half of 2013, average daily gas production from the combined Sillaro and Castello fields was approximately 60,000 cubic metres per day. Following the commissioning of the condensate separator at Sillaro in July 2013, average daily production across the combined fields is currently 77,000 cubic metres per day.
As previously announced, the Castello gas field experienced increased water production in May and production was reduced by approximately two-thirds to around 5,000 cubic metres per day to avoid the risk of further water intrusion. While production appears to have stabilised at this new, low level, the prospective future returns from the well are uncertain pending completion of well testing and analysis scheduled in second half 2013. Accordingly, the Board has decided to write-down the value of the well and associated production plant substantially, reducing its value to a nominal amount. Meanwhile, we will continue to monitor the well with a view to maximising its ability to continue producing, albeit at a reduced level.
Significant Developments
Despite a number of challenges faced by Po Valley in the first half of 2013, the Company achieved some important milestones which lay the ground for improved results in the second half of 2013 and beyond.
- Installation of the three phase condensate separator at the Sillaro gas field.
- A new € 20 million Reserve Based Lending facility (RBL) with NedBank providing the Company with the financial capacity to continue to progress its future work programme.
- Progressing towards the final production concession of the Bezzecca gas field. Commencing development of the field is a key priority for the next 12 months. Final award is expected towards the end of calendar 2013. The Company then plans to start field development including the construction of a 7km pipeline to connect Bezzecca with the Castello production plant.
- Preparatory work for the development plan for the offshore gas discovery Teodorico, a critical step in obtaining the production concession. The Competent Person Report (CPR) finalized in May doubled the Teodorico best estimate Contingent Resources to 47.3 bcf of gas and resulted in a material increase in the Company’s Contingent Resources.
- Preparation for drilling the exploration well Gradizza-1 in August. The Company farmed out a 25% working interest in this well, reducing its financial exposure while maintaining operatorship. This exploration prospect is estimated to have a 27% chance of success and its best estimate of Prospective Resources is 9 bcf of gas.
- Significant progress was made by our technical team with respect to several G&G projects, among others the award of an exploration licence for a new high-potential exploration asset, Tozzona, a drilling application lodged for the new low risk Selva Stratigraphic prospects and progress toward the preliminary production concession award for the Sant’Alberto gas field.
The Board and Management share the disappointment of shareholders in the reduced financial results for the half-year compared to prior periods. The Company is undertaking a review of its cost structure and organisation with the aim to reduce fixed and overhead costs. The Company expects to report improved results in upcoming months in light of the increase in production from the Sillaro field, stronger forecast gas prices in the Italian market and careful management of operating expenses.
MEDIA CONTACTS:
Giovanni Catalano
CEO & MD
Po Valley Energy
+39 06 4201 62 75
About Po Valley Energy
The Po Valley region is the main gas production zone in Italy. Po Valley Energy (ASX: PVE) is an oil and gas producer and exploration company listed on the Australian Stock Exchange. It has an expanding portfolio of hydrocarbon assets in northern Italy. Po Valley holds 12 license areas, encompassing 2,000 square kilometres and owns and operates two gas treatment plants, Sillaro and Castello which provide the Company with steady cash flow.
For more information please visit: http://www.povalley.com
Competent Person’s Statement
Information in this report that relates to Hydrocarbon Reserves and or Resources is based on information compiled by Mr. Giovanni Catalano, MD & CEO of Po Valley Energy who have consented to the inclusion of that information in the form and context in which it appears. Mr Catalano has over 30 years experience in Exploration and Development in the Oil and Gas Industry. He is a member of SEAPEX and AAPG and holds a master degree in Geology from the University of Ferrara, Italy.