Prospex Energy (LSE:PXEN) — Investor Presentation

0:02 Good morning, ladies and gentlemen, and welcome to the PROSPEX ENERGY Investor Presentation. Right hand corner of your screen. Just please simply type in your question and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today, and we will publish responses where it's appropriate to do so. These will be available via your Investor Meet company dashboard, and we will send you an e mail

0:34 to notify you when they're ready for your review. I'd also like to remind you that this presentation is being recorded. Before we begin, I would like to submit the following poll, and I'd be grateful if you could just respond to that, and that will clear that from your screen. And I'd now like to hand over to Edward Dawson, CEO and Carlos Venturin, Technical Director of PROSPEX ENERGY. Good morning to you both. Good morning. Good morning, and good morning, listeners. Thank you much for for joining us today. You know, we're pleased to talk you through our latest corporate presentation. And, also, often, I I do this alone, but I'm delighted that Carlos has joined us, and he's gonna talk us through some of the more technical details of Spain.

1:23 We've added a few extra slides in on Spain. We feel people may be interested in geology and understand a bit more why we like it so much. So For those who who don't follow the company or this is the first time they've listened to a presentation, we are an AIM listed investment company investing in the energy sector. We've got a portfolio that diversifies risk in terms of we have multiple assets, multiple jurisdictions that that we work in. We are, you know, focused on a a mature market with with infrastructure and variable capacity.

2:12 Europe, you know, imports a lot of gas, and and therefore, we, you know, expect to continue a strong market. As a team,

2:23 you know, we are highly experienced. We've been through a number of companies together. We do have a a strong technical record and a technical a high working standard that is appreciated by industry. We've grown several companies and taken through full cycle. People will have have note that we've just completed on a transaction buying the l into the El Romero project, which is a gas to power project in Spain. So the focus of the presentation is is largely there. But we have the other primary asset, which is silver.

3:09 Silver is gonna be key in in transforming the company during the rest of this year. It's going to come on production once permitted, and it will generate significant cash flows for the company.

3:27 So Carlos is here. He's gonna talk a little bit about Spain. That is a picture from inside the power station. It's one of the gas engines. Carlos, over to you. Yeah. I am. Yeah. Good morning again. You can see me now. Well, this map, I don't know how to start, but very quick one. I like to tell show and tell a story. You see a series of of, let's say, areas here in yellow. This is actually in the subsurface. It's the representation of where the gas is in subsurface. Basically, it's located between five hundred and six hundred meters depth in elongated channels under the ground.

4:14 So this is how these gas appear here. And we are in this corner of Spain here somewhere. If you all of you have probably been in Malaga, I'm sure, and in Granada, I'm sure, well, this mountain chain here is to the south of this area. And these rocks, these channels were formed when these the two plates, Africa and and and and Europe were colliding, and they were depositing sediments that created these channels, like, kind of, let's say, they'll take of fluvial tile systems. The history is that the area has been explored since 1983. And at the beginning, they were finding some gas here and there. The original company working there was Chevron. Eventually, they applied a technique called AVO analysis. It's a geophysical processing technique to the data, and they start seeing gas.

5:15 Basically, it worked because it was shallow. And then they recorded and they processed with this technique and they start drilling with a much higher rate of success. In what has happened today is that in the concession we have actually, have originally five wells went into production. And then in this case, two wells, what we call PUD, they are undeveloped discoveries were also highlighted. Today, the plant has the area has between eleven and thirteen different locations that we are ready to start drilling to extract the gas. And in this area here, where you see the third concession, Rommel 3, there is a power plant that is located and is absorbing gas to convert it into electricity from three wells that are El Sierra, Santa Clara and Seville one. El Sierra is here, so it's a long little pipe there that is in our concessions.

6:23 Then you got Sevilla Sevilla Santa Clara one and Sevilla one, this one here. So all these come into here, the electricity generated, and later on is sent to the Greek to the Spanish Greek and sold. The capacity of this plant is up to 50,000 meters cube a day. Now it's underused because these two, three wells that I mentioned are old. They are going down in production. That's why we are encouraged to drill all these concessions that this is the asset. This is the real asset of the concession. I I say as a geologist more than the plant, but possibly the plant is important. But what is going to produce gas and then electricity and gain revenue is the is this little guys down here.

7:21 We got very low prospects, very sorry, very low risk prospects. And when I said, I may go to the next one.

7:29 When I say low risk, I mean, is a typical representation of one of the possible wells. As you see here, we in here in this is in time, but actually we are around 400 meters in in-depth. This is a tank underground. This would be the position of a typical well that we would we would drill. And then on the right, I put we put this into this square just to give you an idea where we are. Imagine that this is the channel systems that I was referring to that was created as a when the two plates were in motion and these systems were active unlike fluvial, deltite, turbidity.

8:15 And this is creating this next kind of thing I'm going to show you, which is this is a seismic line. As you see here, this section here, these are the map. These all these lines here are seismic sections. This is like an anechography of a mom when he's waking a baby. Basically it's the same thing. But here what we are looking at is this geometry here. This is the volume that we are looking. We're this is a representation, but actually the reality is showing this. And these bright areas and darker areas represent the contrast between areas that have gas and areas that have not gas or don't don't have any gas. And here we are at the top of this red one. This is where the gas is. So this is the technique that allowed in '80 after 'eighty five, 'eighty six to Chevron to start developing that area. And eventually, they drilled many wells from here to Cadiz basically to Seville.

9:16 So this is essentially what we have here. When we say that it's low risk, it's low risk, first of all, because the wells are very shallow. So we don't need to carry a rig that is expensive and is difficult and is not available. Is relatively cheap. The second reason why we say it's low risk is because the gas or what we call the reservoir, the container of the gas is, we would say, very noble, very resilient. It doesn't disaggregate when we suck gas at high pressure even. There is no high pressure. This is another reason why it's low risk. And essentially, many of the areas are in located the locations of possible wells are in areas that are of low agricultural value with minimal or known occupation.

10:12 So it's very relatively straightforward to arrange for land permitting, which is the rental you need to get from the farmer in order to put a well in his land. So this is the reason why we're considering very low risk. There are many locations. We are now embarked into with the government into

10:39 starting the process. As Ed said, we became operators of the plant and the concessions in full mode a few days ago, weeks ago. Now we are in a position to request to the government the final bid for start drilling, which is the permits to drill. And the permits to drill require an environmental impact assessment starting that we are undertaking now as we speak. Once this permit is granted, we have these concessions, our concessions of production or exploitation of the Spanish law of coal. And that means that you have the right inside to explore, basically, or to make holes if you find accumulations, potential accumulations of gas like this case.

11:32 In that particular case now, we expect to come out with maybe ten, twelve, 13 locations and file the applications for them to be approved. Maybe normally, the times are around a year. As far as we know, and we follow the market very well, because of COVID and even earlier to COVID, there has not been any drilling in Spain at all. So I know someone asked whether why other people have been drilling not in Spain. This is not possible. It's not it didn't happen. We have a neighbor here in the Northwest here, guys from the company called Oil and Gas Capital.

12:15 We're very friends with the technical team there, and they are drilling eventually. They were going to drill in February before COVID, and the whole thing was stopped. They were bringing the rig from France, and it was stopped. Now, eventually, with all the authorizations given, they started probably April, May, and they would drill the three wells here, three. But this is different. This is an exploration area, and we have a concession area. So they they had a a long way because of COVID, basically. So this is the situation now. We like them. It's a very exciting area. It has gas very easy to produce. Most of the areas in the new locations are connected already. So when I say connected, we got if we go back to the main slide here, there is a major pipeline that is this red line here.

13:10 This is the ENERGY PXENNAGAS national pipeline. This pipeline works at 70 barrel of pressure. The wells are bringing gas between forty and fifty bars. So either we have enough gas to put it there if it has a 70, fine, we put it straight. If not, you increase the pressure with the, what we call, a compressor, and then you inject it in. But basically, before doing that, you we will get this gas through the existing pipeline and maybe another one with the small sections here or here to get it into the small pipeline, the red fine line here to get into our power plant. So in this case, we will use up to 50,000 meter cube of gas to feed the plant.

13:59 Eddie Eddie will talk about the plant later. And the remainder gas, it will go into the ENERGY PXEN grid. And I think I finished here. So this is for Ed, the next one. So we're talking about the electricity production now. Thank you, Carlos. Yeah. Again, the slide shows a picture of of the plant. The the transaction, we we bought the the the project of Natagy, which is Spain's biggest utility. And they they got into this project fifteen years ago. What they wanted to do and they bought up most of the basin around Seville. They they they wanted to produce gas, and then once they produce gas, they were interested in into gas storage.

14:55 For some reason, we don't know exactly why. They they never went particularly far with the project. I think they they got to the stage where, actually, they're such a big company. They were happy to trade cargoes of gas with the Russians as opposed to develop the assets that they've got for themselves. So we've been able to pick up, you know, this portfolio with a dozen or so prospects that have been very well defined not just by us, but other, you know, leading regional geologists and geophysicists. So we we are very comfortable with that. In terms of the power station mode, it is operating around 22% utilization.

15:43 We would anticipate being able to take that back to a 100% with one, if not two wells. Historic gas prices in in Spain, including subsidy, have been around 70 megawatts per hour. They're currently around 60. The Spanish electricity prices have, yeah, have have been very consistent. Whether you take a a two year average, a five year average, they all, you know, surprisingly, you know, sit where they are. Obviously, like most commodity prices, electricity prices weren't great last year in in Spain, but they have come back. We do see reasonable volatility in in electricity prices.

16:33 The we are gonna be a a price taker. We will run the power station effectively five days a week. We don't particularly want to run it all the time at the weekends because weekend electricity prices tend to be lower because there's less demand. We have we you can see you can see the weather through the electricity prices in Spain. Obviously, there's a reasonable amount of renewables, whether that's wind or solar. And we've we've got, you know, on windy days, there's clearly the the the wind turbines are producing a lot. But, you know, so we have had periods of of a couple of days of very low prices since the beginning of the year, but we've seen them up over 80.

17:30 People may have read about, you know, there being a big cold snap in in in in Spain in January. This is the prospects in a bit more detail. As you can see, that there were a number of probably, you know, we do have an order of what we'd like to go at. There's even, in fact, at Rommel 2 S, there is a drill pad ready and waiting to go. Carlos has has has said we have now either have in the last couple of days or will the next couple of days submit or Tava, I'm sorry, will submit a, you know, an application, effectively, at the AI work to be able to do a number of these wells.

18:28 In terms of drilling wells, I I know that there there's some interest in what the wells cost in Spain. We've looked at this in number of of ways. But, you know, as as a group, we've drilled or participated in four wells in the last few years. So all the we've had quotes from those drilling contractors.

19:01 The key thing for us here is that they're shallow. And whilst we we would have drilled a well at this sort of depth and cost us around €500,000 in Romania. If we were to bring in a rig closer than a Romanian rig, we're probably looking around after or excluding in transport cost around €1,000,000. So we are looking to reduce that. How can we do that? Well, because it's such a shallow depth, whilst there were no oil and gas rigs in Spain domestically, there are actually loads of drilling rigs. They drill lots of water wells.

19:56 So with the right components, actually, we can get local rigs to drill wells for us. And the good these local rigs, because they're not drilling so deep, aren't as powerful. They don't need to be. And therefore, you know, the costs and the day rates for for a lot lower. So, you know, we would hope to bring down the million euro cost. Just, again, the sort of macro environment, Spain, as a lot of Europe, is is a big importer of of gas. We've you know, it's quite clear that the supplies of gas or the obvious supplies of gas coming to Europe are are gonna come off, whether it be, you know, primary Algeria.

20:49 We've also you know, we're on a cargo route of LNG, you know, Trinidad and such like, again, are all heading down. Now I really want to sort of talk about Italy. This this this is a fundamental, very core asset, probably the key asset of of the company. It was drilled in 2017 and flow tested in 2018. Telberg historically, you know, was a a a big gas field in in the Po Valley, the the heartland of domestic gas production.

21:36 And, effectively, Carlos can maybe talk you through, you know, some of the the flow tests and and the reserve figures. Carlos?

21:56 Yeah. Well, the reason why we I could save it a very short history why we went there is because, let's say, like, in Spain, it it wasn't a wonder around Europe the reason why we went into specific places. It was based on the recognition of these shallow pockets of sand, let's say, corresponding to turbidite channels and to systems like the one we used to we show you in the block diagram in block diagram in Spain. But here, the system is much bigger. We are talking about a basin. We cannot see much here, but let's say that Bologna is somewhere there, and this is the Pole Basin, and Milan is somewhere up in here.

22:47 And this is a large basin with 5,000 wells drilled. So imagine comparing with the Spain where only not even 50 wells have been drilled in the Guadalquivir

22:58 Basin here. This is a very mature basin, but it's so complex and varied that it still has juice, as we say. And that's why we went into these partners that knew the area very well, and we knew it. We had worked before there too. And eventually, the the exploration was to enter in what was considered a depleted, between brackets, field that had been left there for the purpose of gas storage, which is very common in the Pole Basin by ENI in the past. And that was the original Selva field. But actually, the examination of the seismic data allowed to show that there were areas where you could still have considerable gas reserves.

23:52 It was deeper than in Spain, so the well cost a bit more. But, it it if you can see in the right here, the difference here is that the the reservoir is a number of sands, and they when they combine, they can even get up to easily 200,300,000 meters cube a day as a production as commingled or combined production. The case is that is, again, very low risk and is we would be really happy that with the new changes in the government in our contribution here, our share here is 2.4 BCA, which is, you could say, discrete.

24:44 But it's very interesting in terms of cash flow because there are no complications in the production of these facilities are only 800 meters away. And in addition to the existing pool that we are going to produce, there are a number of other areas, locations where we still have this being a concession for production, we're still allowed to scope maybe a couple of other wells. So it's we are very hopeful with the new changes in the government in Italy. It took a long time. Now there is more

25:26 recognizing government, in a way, recognizing the efforts of the oil industry and oil and gas industry. Italy has been the gas country of Europe historically since 1946, and there is a very strong oil and gas sector. It was very strong. It was incredibly hit by the known or the the opponents to the fuel or, you know, fossil fuel. But now this is waning out. The new government is more pro industrial, and they recognize the economic value of the presence of gas in the country. Otherwise, they have to import it from Russia or from Algeria. Well, the Italians will have a lot of gas available in the Mediterranean, but that doesn't mean that they cannot extract this one.

26:16 So we hope that this new government will and, you know, it's our decree, I think, is ready for a for a signal. Ready and Yeah. Approved. Yeah. In this case, Carlos says it's we we've gone through a a number of key steps with with approvals. We are currently awaiting approval of the environment minister in in Italy. The sub subcommittee has has met and approved all the historic applications and technical work for that. So it has gone to the minister for signature.

27:04 As Carlos flagged, we've

27:07 well, listeners probably know that the Italian government fell in January. The new government now has, I think, eight or seven technocrats as ministers. Importantly for us, one of those is at the environment minister ministry. So in in our mind, this is the last semi political, arguably, decision. But, obviously, with the change of minister, we we think that is gonna happen a lot sooner. I think it's been helpful. So we can next, effectively, once the final production concession is signed by the economic so we think it's gonna take six months.

27:58 So we can see it. As I say, we believe that there's an opportunity, but most likely, it's gonna be on production this year. We know it's it's methane. It's 99% methane. It's above pipeline line standard, and it's relatively easy to, you know, that 800 meters slash kilometer pipeline to connect.

28:23 People will have seen the flow rates. They have been both sands have flowed over a 150 standard cubic meters of gas per day. The plant is being designed to handle a 150,000 standard cubic meters a day purely for budgetary purposes. I suppose we've been working on on a gross basis, a 100,000 standard cubic meters of gas a day. So for us, it will increase our production effectively, you know, four times of what we're currently at. It will generate significant free cash and allow exploration development of the wider portfolio. I think, you know, progress here will be a catalyst for rerating.

29:15 As I say, whether on the environmental ministry approvals, we've we've seen the market, you know, upgrade the stock on that or movement on that in the past and such like. Actually, before I just wanted to touch on the the capital cost. We've always talked to, you know, being a capital cost to get this on production, And we've told people that it's our firm belief that this will be a nonequity cost. Why do we believe that? We have a CPR.

30:00 It's a key document in terms of for shareholders, but also for for the financiers. There's well defined reserves in that. And, obviously, you know, the production rates are known. So in terms of if you're a banker and wanting to be known that you you're making a secure investment, you look at a number of things. One is the capital cost upfront. This is a tiny proportion of of of the NPV. You're looking at how long will it take me to get my money back. It's obviously slightly dependent on on flow rates and prices, but you in my mind, you're looking at somewhere between, you know, three to six months.

30:49 And, also, how much of the overall body do I have to deplete? It's two to 5%. So, again, it's it's right up there in terms of of lending. I'm conscious of the time, and I'm sure shareholders have lots of questions they want to answer. We've talked about Tezzarello in the past, quite some depth. It is a key part of the portfolio. It's a key part of our Spanish project. The team at Tabo, though, is relatively small, and I I do believe, you know, it it's taken a lot of time and effort. And if any of them are listening, it's appreciated in terms of becoming a operating company. So it our our focus really is on l l long morale at the moment.

31:47 You know, it's key to, you know, one, getting that taking control, running it safely, doing all all the correct stuff, and from a technical aspect, getting drilling on on there. This this slide highlights a number of things in my mind. You know, on a reserve basis, there's two and a half BCF net to the company. We've got five BCF of contingent resources, and then we've got nearly 500 BCF on the net perspective resources.

32:33 That obviously comes from two areas. In Italy, we've Selva East is effectively double the size of Selva. So, you know, we think that's a a really good follow on project for us in Italy. And we've talked through today in El Romero. At the moment, we have 15% of Tezarillo, and we can take it up to 49%. We are unlikely to do that until we're actually drill ready. Why is that, Ed? Well, be perfectly blunt. Our partner pays 85% of the costs at the moment. So why prematurely stop paying half of them?

33:21 So but but, you know, two two and a half BCF, what does that mean? You guys, you know, know the market well. But in terms of our market cap, you know, that's sub 1,000,000 per BCF, which is, in my mind, completely wrong. And but, you know, the five b c f contingent resources, again, demonstrates that we've got capacity fairly easily to increase the reserves. And the prospective reserves, we've got a great chance of of capturing those, especially El Rommel with the 70% geological chance of success. That's that that's a really big chance of success in this business. You look at in the North Sea, again, a very mature part of the world, but you're gonna get still only twenty, twenty five percent chance of success on on on the the prospects there.

34:26 You know? So that's there's there's a real good growth story in there. Again, just quickly, the outlook for 2021. El Romero, we've talked about quite a lot drilling, production, permitting, multi well campaigns. Tesarillo, move that forward. Selva, production permitting and facilities construction. So, yeah, reiterating what what what we've just said. There's there's lots of growth here. The key is the progress progression in Italy.

35:16 I reiterate that, you know, we're very we we think we're in a better position now. We've had to change government. I mean, I could be the minister was in a position to sign anyway because everyone else had signed signed it off. So we which we will be moving forward on there. We've always when we entered into these projects, not only were we looking to do something immediately, effectively with with, you know, drilling wells and and such like, we wanted organic growth in in in the portfolio. I mean, that helps on a number of levels. We, you know, we don't have to increase the admin. We don't need a new country. We don't need a new local accountant and such like.

36:01 So that that that that's good. You know, in time, we would like to transfer in into an operating company to sort of try and wrap up this section of of of the talk. We are a a strong management team. We are, you know, frustrated as shareholders and experienced management about where we are at in terms of share price today. It it's disappointing. I know we are, as you say, shareholders, and we have, I think, participated in most investment rounds, if not all, in terms of the equity and and and loan notes.

36:52 We want to be European focused. We think there is a opportunity as an energy company in the next twenty years to be part of that transition. It ain't gonna happen overnight even though, you know, lots of people are really pushing for it so we can leverage off our hydrocarbons experience. And but we do want to focus in terms of of gas. We we don't see a strong future for some of the, you know, the heavies and dirtier ends of our industry. Possibly for for the very big boys, that's fine. Europe, for its frustrations, we'd like to think it it is stable.

37:45 It's certainly more stable than some of the African countries that we've worked in in the past and, you know, had successes for that. So, you know, on investment case, the market cap today, in my mind, does not represent anywhere near the true value of the the company. The the last raise is that we think and the purpose of that was was to improve the finances of the company, I mean, perfect perfectly blunt, but also what happens with Ichlion production. The company becomes it makes that causes the Rubicon from being reliant on its good shareholders and stakeholders in supporting the company to cash flow positive.

38:41 We're we're looking at, in my mind, you know, if we do exit at three three quarters million standard cubic standard cubic meters of gas sales per annum, that is 1.4 in revenue at today's prices. I'd like to think we might get a still get a bit of improvement in in gas prices. And, you know, we also have a a big delta on on daily volumes out of Italy. You know, we could see those being up to 50% above what we're sort of budgeting on. So we go from, you know, a company consuming cash to one that has not only, you know, covering its cost, which I would say, you know, I would say relatively low or lowest they can be for for an aim listed company to one that is self generating, got cash to, you know, move from Italy into to to to Spain and and then get that going, etcetera, etcetera.

39:52 Perfect. Thank you very much indeed, both to Edward and Carlos. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the right hand corner of your screen. But just while the company take a few moments to review those questions situated and submitted already today, I'd like to remind you that a copy of the presentation along with the slides and the published Q and A can be accessed via your Investor Meet company dashboard. And again, you when that's ready for you to review. I'd also like to remind you that your feedback is important to the company. Immediately after the presentation has ended, you will be redirected for the opportunity to provide feedback in order that the company can better understand your views and expectations. And that would be most appreciated if you could allocate some time to do that.

40:40 Edward Carse, obviously, I know you haven't had a lot of time to review the questions that have come in, but we did receive a number of pre submitted questions. So thank you to those investors that submitted those ahead of the event. I have seen some of the questions that have come in, in the live event. And what I might do is try to address those because they are of a similar nature. The first question, Ed, is really around the capital raising, really. I know you've raised GBP 750,000 from existing shareholders and that there are warrants attached to these new share issues. As a very long term shareholder and showing a large paper loss, why could you not offer me the same opportunity to participate in this fundraising? Another question really around the level of the fundraising, an elephant in the room, the fundraising this week, you clearly need the money, but 1.5p.

41:32 And then we had a question submitted by Adrian S. During the live presentation asking, will existing investors participate in the placing on the same terms moving forward, perhaps open offers or something like that? So I know I've put three questions into one, but if I could hand over to you, Ed, to expand on that. Yes. It it's difficult well, let let's let's address I mean, I suspect I mean, some of some of these questions are relevant to probably 90% of of of AIM companies. One is is access to its shareholders from from a company's perspective. A vast majority of our shareholders are held by nominees, so we don't actually see the underlying shareholders.

42:25 We see them when they make themselves aware to us. But also so structurally, our contact with private individual is is through their brokers. So brokers will either the company's brokers will there will be a dialogue between the company and the broker about the, you know, fundraising and and such like. So open offers and rights issues are historically expensive way of doing it and actually an unknown way of of of doing doing fundraising. The there is a and I think it is good for the company generally as an an assurance that, you know, the broker, you know, yes, this is the sum. This is the sums committed, and and it it arrives.

43:27 So I would encourage individual shareholders if they are not clients of our of our brokers, maybe that's the way to consider it. You know, we have looked at other things. I let me address the price. I I know that's a disappointment, and, obviously, that does you know, the the price being what it is is doesn't help dilution. As we know, the the board are, you know, our shareholders are so it is equally painful to us all, but the benefit to the company is is on a on a sound sound of footing.

44:19 And as I say, with a fair wind and Italy coming on production, you know, we we do think, effectively, that's the last fundraise book will be the last last fundraise, you know, on on us if we need to fundraise basis. And so the market's attitude will change. Historically, we have been able to, with supportive shareholders, issue new shares either very close to market or, you know, small discount. We it's quite hard.

45:05 We we will encourage our our brokers to, obviously, do it at a higher price. There was a number of conversations, but, ultimately, that is where the the the market or the order book was at. So that's why it's at 1 and a half p. Thank you very much indeed, Ed. Just more moving on to Silva. Why is Silva being so delayed two years behind the schedule currently? It we we've clearly I generally speaking, I'll I'll make it make a comment about COVID. I think that's I'll do a general comment about that, and then we can talk about PXENTIFIX because I think COVID comes into some of these answers all over the place.

45:56 We work in a well regulated industry with numerous parties who have an interest or stakeholders. You know, we are reliant on government licenses to explore and exploit. Obviously, everyone is aware of of the pandemic. There was certainly, in my mind, been some delays due to that. I can't quantify those. But in fact, we've continued to have physical access to the website in Italy, and we have installed during the pandemic environmental monitoring equipment and such like.

46:44 The various ministries at who we interact with or the operators interact with more specifically have continued to operate. Staff have have worked from home and such like. We've not had the service, I don't think, to the same level. You know? But, you know, over time, people have found out the home phone numbers or the mobile phone numbers of these people. And they have, by and large, continued to be supporters of the projects, and we are thankful for that. In terms of, other delays in in Italy, again, it is a long progress.

47:33 I I suspect I'm not quite convinced with with two years behind schedule. It would we would certainly like to have been a lot lot a lot quicker than that. Possibly, some naivety in in terms of ourselves and couple of other junior partners and some expectations of being able to deliver stuff. And as shareholders know, we we had an interest in Romania, and that was permitted. And we were probably I couldn't find at the time a company that had drilled an exploration well, got on production as quick as that. So maybe that's set some false expectations. I do believe we're very close, though.

48:22 Thank you very much indeed, Ed. Obviously, there was, as you say, a number of questions about COVID, and I think Carlos talked about, the fact that no one had joined during that time. There is a question that was following on regarding Silva, likewise in El Romero, where we were told on Christmas Eve that it would take a week to complete the deal, but it was the February 28 before it was final finalized. How did it take ten weeks when it was only meant to take one? I think when we on Christmas Eve, we put an announcement. It's it's a fair question in in board sense. I think we did say it would be the end of January, and it turned into the end of February.

49:12 Again, I I don't think you wanna get into specifics of it. We were wait this transaction has actually been, you know, a year in the making or completion has. We were waiting on the formal letter of a government agency who had faxed us that the pre Christmas. My apologies. So, you know, that that's that's the the frustration of dealing with government agencies, I suppose. Yeah. Just moving on to El Romarell, what is the likely cost to draw additional prospects?

50:01 And at its current market capitalization, can prospects afford these costs? So we've we've talked about in in the talk what we think we can we we've had a series of of costings. So I think we're looking around headlines. We we we can see it at a million per well. However, if you consider what we've drilled similar depth wells for in in Europe, So the same regulatory environment to a certain extent, we've been able to half that cost. So, you know, the team are looking at that. In terms of will we be able to participate, I firmly believe so.

50:57 As I said, we've the the important thing for us, the next stage, is cash generated in Italy. And, you know, these are, you know, low risk, low cost wells that we should be drilling. We will find a way. And there was one just final question attached to that is what revenue can PROSPEX expect to receive from El Romero come the end of twenty one? Okay. I think we prospect can expect to receive I I think TARBA will generate somewhere between 7 and 800,000 at current electricity prices for the year.

51:45 In terms of prospects receiving it, I suspect the funds will stay down in Taba because we're moving that project along. So I don't have in my budget any money coming from to prospects, but, you know, will will use that to progress the project they're having. Thank you. Obviously, just mindful of time. We've got about eight minutes until the hour. So there's there's a couple more presubmitted questions, but but I think we're fine finished with the the one that the CEO of PROSPEX often mentions that the stock trades at substantial discount to market valuations. Of course, you've you know, we've touched on the share price. But with that in mind, how does PROSPEX intend to deliver on its promises to create shareholder value? So can you say the question again? Yes, of course.

52:33 The CEO often mentions that PROSPEX trades at a substantial discount to market valuations. With that in mind, how does PROSPEX intend to deliver on its promises to create shareholder value? We by delivering on the ground, I I think, ultimately, because of the delivery on the ground and and the cash flows that that will, you know, demonstrate and the market will will regrade the company. It's and then that's why why we have to get it on production, and that's why it will get on production. Perfect. Thank you. Ed, Carlos, can I just ask you just to click on the q and a tab? It's on the right hand side of the slides in front of you.

53:20 The first question there, if I could ask you to start at the top, and I'll follow you down to the bottom, just obviously where it's appropriate. If I could ask you to read out the question, perhaps who it's from, and if you could give a response, that'd be great. I'll pick it up from you at the end, and then obviously, we'll dive investors' feedback. Thank you very much indeed. Yeah. I Okay. Refer the the first one looks like by sir John R. Regarding Italy, I would say. No, Ed? I don't quite understand the question. The question is why don't you install a larger diameter flow line pipe to pre invest for exploration opportunities in the last Yes. I think it may have been regarding the Italy case when I was showing in the concessions that there were other areas where we could drill. The answer to that is that every well has to pass through a number of regulatory regulatory bodies, inspections and reviews.

54:23 And there is an engineering case that has to be filed in the government at different provincial instances and at national industry instances. And each one is different. So you could eventually make a bigger a larger, let's say, thicker diameter well, but it's not economic because you are targeting a particular kind of level of production from a known reservoir that we know from the seismic and from the other studies. So normally, you do one by one. Also, once you make a discovery that is commercial and the state declares that you can produce it, like the case we have now in Italy, another discovery this side will require its own connection to the flow, to the major flow gas line or to the processing plant.

55:23 So you actually cannot do this. You go more or less one by one, I'm afraid. I don't know if I answered that properly. Maybe John r will pop up again. Who knows? Charlie, see, the presentation is useful. Prospects commit to further q and a updates over the course of the year to update on progress. We are looking at platforms to, yeah, increase dialogue. I think this has been useful today. I've certainly been happy to do it, and I think we can continue to find useful dialogue methods here. Simon, say thanks for the update. What do you view as the greatest to the business moving forward?

56:15 Not quite to the greatest. I I fill in the blank myself. Charlie, I you know, I'd say, for me, it's it's fundamental, you know, progress in Italy. That's the the key. I you know, if you the the three targets for for me. Edward Edward, sorry to cut across a I think someone's just putting great risk was the missing word that you were looking for. It just come in at the bottom. Oh, thank you. Yeah. But I'd like to think we've sort of, you know, managed managed the risk now on on a lot of fronts. I suppose let's look at the the classic risks. Geological risk, no. That's all being derisked in in Italy and in in Spain.

57:13 We in terms of financing, our capital contribution to Italy is relatively small, and I've talked about how we think that could be covered by non equity financing. Timing is obviously is is a risk. I would say that that is improving at the moment as opposed to going another way. So, yeah, I I think those are the the key ones. Environmental risk and general awareness, I think we've still got there's an underlying understanding that the world does need some energy from hydrocarbons, and we're in the right place to do it.

58:00 Yeah. If I may add something, Ed and Mark, on the risk notion of risk to to shareholders. From a point of view of I've been in energy for the last thirty five years, more or less. My take now, and I survived a a number of oil and gas prices through my career. This is probably the third or the fourth. The one who was leaving college and then successive ones. We are now in presence of a re accommodation of the energy balance. If you look at the large companies like Shell or these kind of things, they have been consistently in decreasing reserves of oil with a very, very low expectations each year.

58:48 And now, for instance, companies like Shell, who used to have twenty years of reserves up in the stores, now they've got less than six or six. There is a turmoil into the oil sector. But still, oil will be needed for pharmaceutical, for industrial uses. But gas is a particularly, let's say, commodity or source of energy, particularly methane, because everyone from the political decarbonization impulse that all the politicians are following in Europe, it's true, they have to recognize that anyway, these countries are importing most of their energy.

59:37 And they how they import it, they import it through LNG tankers that come to LNG plants, and they decompress the gas and they sell the gas. The gas comes from Algeria, from Russia, from the Mediterranean, wherever. With the position in which we are in, there were two concessions in Italy and in Spain, and the gathering of information that we do around with our networks in both countries. Although there is a resistance to this fossil fuels, there is still the recognition that gas, methane will be necessary for another thirty years. The reason being specifically that any politician or any green supporter can go and say, we want photovoltaic, we know we want more hydropower, we want more geothermal, whatever. But the reality is that these sources like wind power and hydropower and photovoltaic are they are subject to harmonics variations.

1:00:38 And these harmonics, which is seasonal or daily, have to be filled in an energy mix. And the energy mix is stabilized by the presence of methane. So gas today in Europe is a very, let's say, sought after source of energy and will be, in our opinion, for another thirty years. Let's wait until hydrogen comes, but still in Spain, there are two stations where people can look at hydrogen, but not even load a car. So you can talk about a lot about other sources of energy. We are all going for war in renewables, but gas is still one of the best options to transition from a fuel economy into a green economy, which still need gas.

1:01:27 So that's about risk. So for me, it means low risk. That's all I have to say. Thank you, Carlos. Sorry, Ed. I was just going to jump in just to say, obviously, there's a few more questions that have come in. I think some are of a similar nature that you may have addressed. I don't know if there's perhaps one or two more, if there are any that you can take. And then obviously, I'll then look to perhaps wrap up, ask you for a few closing comments and then redirect investors for feedback. Yes. Charlie c, what are the view your views on ESG potential, e g, drilling wells for future carbon storage? Charlie, the in terms of well, first of we've got to deplete the the the methane from from from the reservoirs that we've got. So for us, carbon storage is is some way down down the track.

1:02:27 In fact, there is Spain does have a history of using gas reservoirs for depleted gas reservoirs for storing gas. And but in fact, they're not a fan of it. You also in my mind, you probably want larger reservoirs than what we've got. You probably want one large reservoir as opposed to number of smaller reservoirs just from from the physics of of flowing gas in and out of of these things. Obviously, if you're storing c o two, then, in fact, I suppose you're only pushing it one way. It's it's a it's an option.

1:03:16 We are some time away from that because we want to get the gas out first. A couple more questions. Again, talking about access for small shareholders and and participating in placings. We we are conscious of it. It's accessing and giving people access to to it is a it's difficult. I think it's a whole market thing as opposed to ourselves. So there is a platform that we have looked at in the past.

1:04:04 I don't know quite how well that's still going, and we will continue to look at these things. Thank you. Carlos, thank you very, very much indeed today, and and thank you to all the investors that both submitted questions ahead of the event and during the event. Perhaps just before we redirect investors to provide feedback, which I know is important to the company, perhaps I could just ask you just for a few closing comments, and and then I will end the session. Thank you. Well, I I hope people appreciate the time. They they've had access with us today, and we wanted to just give it to shareholders and prospective shareholders. In terms of, I think, takeaways, we would encourage people to look at this as, you know, in their own mind, you know, a value play and where where are some good starters that look at that?

1:05:05 Know, obviously, we we trade specifically below book value. There is a good piece of research written by Barney Gray that goes into great depth about Italian and Spanish assets effectively post the fundraise. I I think, you know, he will he would adjust his numbers on just simple mathematics basis to valuing, you know, Italy alone at three p, Spain, El Romero at three p. So, obviously, multiples of of the market cap. So that that is a good reminder of of value in my mind of of the company. And and, you know, for those more technically minded, look at CPRs.

1:05:51 And then, you know, it's like I think listeners probably will know the market better than us, but, again, key trigger points for us are permitting approval in from the environmental ministry in Italy. You know, that is a key thing, and we think that will happen soon such that we can get gas on production by the year end. And, again, that transforms the company. We are not only self sustaining. We're self sustaining with an opportunity to continue to expand and develop the portfolio. Ed, Carlos, thank you very, very much indeed indeed for your time for today and for updating investors.

1:06:40 Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback. If you access this meeting from the website, the feedback page will appear. But if you access meeting via the link sent to you by email, you'll simply be asked to log back in to submit your feedback. And if you could, I think that'd be greatly received by the company. On behalf of the management team of PROSPEX ENERGY, I'd like to thank you for attending today's session. That now concludes today's presentation. Good morning to you all. Thank you.