Ferret's Stock to Watch: PO VALLEY ENERGY LTD
08:59, Thursday, August 02, 2007
AUSTRALIAN GAS EXPLORER FOCUSES ALL ITS ATTENTION ON ITALY
Sydney - Thursday - August 2: (RWE Aust Business News)
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OVERVIEW
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It's certainly unusual for a WA-based gas explorer not to put
down a drill in its home country, preferring to use all its expertise
and funds on a gas province in Italy.
Po Valley Energy Ltd (ASX:PVE) is preparing its three lead gas
fields in northern Italy for maiden production in 2008, expand its
Italian exploration in known gas provinces and move into gas storage
opportunities in Europe in partnership with experienced gas storage
operator, Star Energy Group plc.
Chief executive officer, Michael Masterman, told RWE yesterday
that the company should be producing gas by April/May/June of 2008.
Po Valley grabbed its opportunity through another Australian,
David McDonald, the CEO of Lazmo, who saw the de-regulation of the
Italian gas industry coming and and was instrumental in the emergence of
Po Valley - which takes its name from a region located about 20 minutes
from Milan - as a prospective gas producer with a product that will be
cheaper than that offered by the Russians.
"It comes at a time when Po Valley is gearing up for development
investment in its maiden production fields and pursuing growth
initiatives which have resulted in eight new northern Italy prospects -
containing 10-80 billion cubic feet of gas each - for drilling from late
2007 and into next year," Mr Masterman said.
He disclosed that the company has gas reserves that stretch over
20 years.
Po Valley has done well with capital raising, reflected by an
announcement to the ASX on Tuesday that international private equity
investor, Harbinger Capital Partners, has further increased its
investment in Po Valley Energy, providing it with additional funds as it
moves towards first gas production in Italy.
Po Valley has placed a further 450,000 ordinary shares with
Harbinger at $1.65 per share to raise $742,500.
Harbinger will now hold 16.2 million shares - or a 17.9 per cent
stake - in Po Valley.
"The placement to Harbinger will maintain its position as our
largest institutional shareholder and bring our recent capital raising
to a total of around $8 million," said Mr Masterman.
Po Valley last month completed a placement of 4.33 million
shares at $1.65 per share to raise $7.136 million dollars.
That placement was assigned primarily to a United States pension
and insurance company, Boston-based John Hanc*ck Mutual Funds, as well as
two Australian funds, hedge group Cranport Pty Ltd and current Po Valley
major shareholder, Hunter Hall Investment Management.
SHARE PRICE MOVEMENTS
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Shares of Po Valley yesterday were unchanged at $1.60. Rolling
high for the year is a record $1.95 and low $1.40. The company has 90.3
million shares on issue with a market cap of $144 million.
The Po region in northern Italy has historically been a prolific
hydrocarbon province.
Over 23tcf of gas has been produced from the province since it
was brought into production in the early 1950s.
It is three times the production of Australia's Northwest Shelf.
Current output levels in the province are some 450bcf per annum
which is similar to the levels of the Northwest Shelf.
Total gas consumption in Italy during 2005 was four times the
size of Australia's and has been growing at a rapid rate of 5 per cent
per annum.
Imports account for over 80 per cent of supply and Italy has
recently been severely affected by disruptions to the supply of natural
gas from Russia following the Ukraine dispute in late 2005.
Gas prices have risen over 54 per cent since the IPO of the
company in December 2004.
Continued rapid gas consumption demand combined with import
capacity constraints and Russian gas supply disruptions have
significantly tightened market conditions.
BACKGROUND
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Po Valley Energy listed on the Australian Stock Exchange on
December 2004.
The company is a leading independent oil and gas company.
It holds three exploration permits with discovery wells and in
progress to become production concessions and 130.4bcf of 3P gas
reserves.
In addition, the company had been awarded the rights to proceed
forward, on an exclusive basis, with six gas and oil exploration licence
applications in north Italy.
The Po Valley, between the Alps and the Apennines, is the main
gas production zone in Italy.
All the Po Valley Energy fields are onshore and in a very close
proximity to the pipeline and grid and major consumers in the north of
Italy.
Italian gas prices are high by world standards, transportation
costs are negligible and capital costs are very low, resulting in highly
attractive development economics.
ENDS
Copyright © 2007 RWE Australian Business News. All rights reserved.
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