re: Ann: PVE Awarded Preliminary Production C... A bit of news...

re: Ann: PVE Awarded Preliminary Production C... A bit of news coverage

http://www.proactiveinvestors.com.au/companies/news/33841/po-valley-energy-has-increased-production-and-cash-flow-in-its-sights-33841.html


Po Valley Energy has increased production and cash flow in its sights
Wednesday, September 26, 2012 by Bevis Yeo
The preliminary award of a production concession for the Bezzecca gas field is a major positive for Po Valley Energy with the start-up of gas production expected next year and an additional well expected in 2014. The preliminary award of a production concession for the Bezzecca gas field is a major positive for Po Valley Energy with the start-up of gas production expected next year and an additional well expected in 2014.

Po Valley Energy (ASX: PVE) is a step closer towards increasing its production and cash flow with the award of a preliminary production concession for the Bezzecca gas field in northern Italy.

The award by the Italian Ministry of Economic Development allows the company to reclassify the independently estimated Resources as Reserves, giving it a further 4.1 billion cubic feet (Bcf) of proved and probable reserves.

“We are delighted to have reached this milestone on Bezzecca, which will become our third producing field,” managing director Giovanni Catalano said.

“Notably, the ability to utilise the existing Castello surface gas plant makes the commercialisation of the Bezzecca field particularly attractive. Furthermore, the addition of this third production field will increase Po Valley’s total Proven Reserves by 10% to 8Bcf and Proven+Probable by 46% to 13Bcf.”

The final award is expected around the end of the calendar year once the Environmental Impact Assessment (EIA), which was submitted in February 2012, has been fully reviewed by the Lombardy Region.

Bezzecca

Bezzecca is located in Po Valley’s 100% owned Cascina Castello concession area, east of Milan, which also contains the Castello production field.

It was discovered in 2009 with the Bezzecca-1 well flowing gas at a combined rate of 3.9 million cubic feet per day during testing.

With this preliminary award, Po Valley has commenced preparation to implement a two-phase development programme.

The first phase involves a connection of the already drilled and completed Bezzecca-1 well to the existing Castello surface gas plant via a seven kilometre gathering line.

Gas production is likely to start in the first half of 2013.

The second phase, following the start-up of gas production, includes a second development well, Bezzecca-2, to be drilled in 2014. The Castello surface gas plant has sufficient capacity to process production from the single Castello well and both Bezzecca wells.

Other developments

Po Valley is also awaiting preliminary award of the Production Licence for its Santa Maddalena gas field in the San Vincenzo permit.

An updated development plan was lodged during 1Q12 and the Ministry is currently evaluating the latest documentation. The full licence award will be subject to final environmental approval.

Santa Maddalena has best estimate (2C) Contingent Resources of 2.1Bcf of gas, which would be produced from the existing Santa Maddalena-1 well.

On the exploration front, Po Valley is waiting on approvals for the planned Zini-1, Canolo-1d and Canolo-2d wells in the Cadelbosco di Sopra permit as well as the Fantuzza-1 and Gradizza-1 exploration wells.

The Canolo and Zini wells are covered by the farm-in of French oil and gas company Petrorep, which is earning its stake in the Cadelbosco di Sopra licence by paying a promoted share of future drilling.
The Cadelbosco di Sopra and adjacent Grattasasso permits host the former Correggio gas field that had produced about 250 billion cubic feet of gas (Bcf) for former owner Eni.

Cadelbosco di Sopra also includes the Bagnolo in Piano deep (Cretaceous carbonates) oil discovery where Eni had drilled three wells in the 1980s.

La Prospero contains the Gradizza prospect that is believed to host 9 billion cubic feet of gas.

Po Valley is also planning to acquire the existing 3D seismic over the newly awarded AR94PY offshore Exploration Permit, which contains the Carola and Irma gas discoveries that have been independently audited to hold 2C Contingent Resources of 24.8Bcf, and to apply for a production concession licence over it as soon as possible.

The company plans to drill at least one well at Carola and Irma in 2013.

Analysis

The addition of Bezzecca to Po Valley’s production portfolio could more than double the company’s production, which was about 2.6 million cubic feet of gas per day at 30 June 2012 from the Castello and Sillaro fields.

With realised gas prices of €0.338 cents per cubic metre realised in the last quarter likely to continue or strengthen into the near future, this is expected to make a material impact on the company’s revenues and profit.

The potential increase in production and realised gas prices assisting revenue growth continues the resurgence of Po Valley in 2012. The current market valuation of A$17.8 million looks light.