July 6, 2010
Valley Energy Limited (ASX: “PVE”) has marked its commencement as a gas
producer with output topping 10 million cubic metres for the period
from production start to 30 June 2010. Po Valley joined the ranks of
Italian gas producers late in December with the commissioning of its
Castello field in northern Italy.
June quarter production was 4.6 million cubic metres (162.4 million
cubic feet), down 15% on March quarter, with the contribution of 2.3
million cubic metres from the Sillaro field (41 operating days) and 2.3
million cubic metres (81.2 million cubic feet) from Castello (70
Revenue for the quarter was approximately €1.22m (AUD1.8m), 9% down from
the March quarter. Average gas prices increased 14% to an average of
€0.30 per cubic metre (USD10.62 per thousand cubic feet) in the June
Production from the Sillaro gas field commenced during the June quarter
after being brought on stream on the Pliocene PL2-A and PL2-E levels in
the Sillaro-2 well on May 16. The rate of production from the Sillaro
field has been gradually increased since the successful commissioning of
Sillaro-2. Following the completion of coil tubing work, the Sillaro-1
well started production in mid-June on level PL2 C1/C2.
The Sillaro field was operating at a daily production rate of
approximately 95,000 cubic metres (3.3 million cubic feet/day) at the
end of the June quarter, with stable plant and pressure performance.
Po Valley passed the cumulative 10 million cubic metre (353 million
cubic feet) production milestone despite output from the Castello field
being adversely affected during the June quarter as a result of planned
well testing and intervention work.
As previously reported on May 14 the Vitalba-1 well (Castello) was
closed in mid May in preparation for down-hole pressure measurements
which were taken during May. Subsequent follow up testing was completed
in the third week of June also limited production operations time during
The results of the test work will be reported more fully to the market
once evaluations are complete. In summary, the test work indicates that
water incursions had commenced on the deeper San A2 level and that there
may be problems with the perforations on the shallower San A1 level.
The San A2 level has been closed and new perforations are planned for
the San A1 level in mid July. Production will continue at Castello at
limited rates until the new perforations are completed and optimal
production rates can be determined. Reserves will also be re-estimated
at that time.
Po Valley’s cash flow from gas sales was used to reduce the outstanding
debt under Company’s Bank of Scotland Facility from €10.3m (AUD14.9m) to
€7m (AUD10.1m) during the June quarter. Cash at Bank at the end of the
quarter was €2.5m (AUD3.6m).
Po Valley Energy
0417 851 303
Field Public Relations
(08) 8234 9555 / 0414 822 631
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