News & ASX Releases

Quarterly Production and Development Report

July 11, 2017

Q2 Gas Production

Production from Sillaro (100%) and Bezzecca (90%) gas fields - which Po Valley holds through its subsidiary Saffron Energy Plc. - has increased by 104% from 862,000 standard cubic metres (30.4 mmcf) in the quarter ended 31 March 2017 to 1.762 million standard cubic metres (62.2 mmscf) in the quarter ended 30 June. This increase was driven primarily by the commencement of production from the Bezzecca field in mid-April 2017.

The Bezzecca gas field - located east of Milan within the established prolific, gas-producing Po Valley region in northern Italy - is operated by Saffron’s subsidiary Northsun Italia SPA (NSI). Gas from the now-producing Bezzecca 1 well is processed at the Vitalba processing plant and directly connected to the national grid.

Revenue from gas sales to Shell Energy Italia has also increased by 93%; in line with the increase in production. Po Valley attained a gas price of approximately €0.213 per cubic metres in Q2 compared to €0.226 in the previous winter months’ quarter.

Q1 17

Q2 17

Change (%)

YTD 17

Total production (‘000 cubic metres)

862

1,762

104%

2,624

Total production (‘000 cubic feet)

30,441

62,224

104%

92,665

Daily production (cubic metres per day)

9,370

19,368

104%

Daily production (‘000 cubic feet per day)

331

684

104%

Daily production (boepd)

57

118

104%

Revenue (€)

195,000

376,000

93%

571,000

Average gas price (€ per cubic metre)

0.226

0.213

- 6%

Current Natural Gas Production Activity

Po Valley expects that gas production and revenue will increase further in the third quarter ending 30 September 2017, driven by a full three months contribution of production from the Bezzecca field.

The Bezzecca gas field was completed and commissioned in Q2 with first gas flows on 18 April and full commercial production commencing at a steady state from Level A interval in mid-May 2017.

Over the first two weeks of July, the Company will install a downhole choke at Bezzecca and production from the field will recommence immediately afterwards from several levels, namely Level A, S and possibly R. Production rates in Level A will be adjusted down to allow for increased aggregate production from multiple levels.

Current Natural Gas Field Development Activity

Po Valley has also made significant progress during the quarter on its natural gas development assets.

At the Selva gas field, preparations for drilling the first well Podere Maiar-1 are advancing with the first stage of civil works complete and procurement of long lead items such as the casing and well head advanced. A competitive option for a drilling rig has opened up we expect to secure the drilling rig during the September Quarter in preparation for drilling in the December quarter. Funding for 40% of the well is expected to be provided by United Oil and Gas who have advanced initial funds[1].

Our offshore gas development project, Teodorico is progressing through Italian Environmental approval and we expect this process to be substantially complete by year end.

Geological and geophysical work on the recently granted Torre del Moro licence south of Bologna has also advanced during the quarter.

Chairman of Po Valley Energy, Michael Masterman commented: “After the first gas achieved at Bezzecca in April, I am pleased to announce the significant increase in our natural gas production, which translates into higher revenues. We have been able to deliver Bezzecca on time and despite the short delay on the production concession grant we are making good progress of Sant’Alberto. The Company is also evaluating additional opportunities to substantially increase production and bring more value to our shareholders. We are also making significant development progress with the substantially larger Selva and Teodorico gas fields”.




[1] For further details please refer to the ASX announcement “Po Valley advances funding for key Northern Italy gas field with United Oil and Gas farm-in”, released on 8th May 2017

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