Prospex Energy today provides an update on the production strategy of, and income from, the El Romeral power plant in southern Spain ('El Romeral'). El Romeral continues to provide a very healthy income from selling electricity into the spot market in Spain at near record price levels. The Company holds a 49.9% working interest in El Romeral through its interest in Tarba Energía S.L.

Highlights:

• Loan plus interest repayment made by Tarba to its two shareholders on 28 April 2022.
• Loan repaid of €289,577, plus accrued interest of €19,092.97, equalling a total of €308,669.97.  Prospex's share of this is €153,698.64.
• Tarba has now repaid in full its two shareholders, Prospex and Warrego Energy Ltd, the outstanding loans held in the El Romeral asset of €589,577, plus accrued interest of €19,092.97.
• The El Romeral power plant is now operating 24 hours a day seven days a week as its default operating mode, thereby boosting revenue.

As a direct result of continuing strong electricity prices, Tarba has repaid its outstanding debt to its two shareholders in full.  Tarba repaid €300,000 to its shareholders on 30 December 2021 and paid the outstanding amount of €289,577 plus accrued interest of €19,092.97 on 28 April 2022. Prospex's share of this latest repayment is €153,698.64.

The high income from electricity generation at the plant at near record prices has been augmented by the ability of the plant to run 24-hour operations. Having successfully run the plant since mid-March for 24 hours a day six days a week, the operational team and the subsurface technical team at Tarba have been working together closely to monitor the performance of the plant and the gas production with input from reservoir modelling. With the plant now fully automated, the Tarba executive management team has taken the decision to run the plant 24 hours a day, seven days a week as the default operating mode.  Electricity generation can be suspended if needed when electricity pool prices drop below breakeven prices. This has happened rarely in recent months but with volatility in the spot price for electricity, the recent plant automation project has ensured that production and income can be fully optimised.  Tarba has cash in hand of more than €600,000 after this loan repayment. Gross electricity sales revenue for the quarter ended 31 March 2022 was €1,046,485.

Mark Routh, Prospex's CEO, commented:
"El Romeral continues to generate very healthy revenues with electricity spot prices at record levels. This full loan repayment by Tarba Energía to its two shareholders has been made possible not only by recent high electricity prices but also because of the successful implementation of the plant automation project executed in December last year, which has now resulted in 24/7 plant operations.  Settling this debt cleans up Tarba's balance sheet and provides it with the financial flexibility to capitalise on further business development opportunities being worked up in and around the power plant.

"Tarba remains ready to increase its gas to power generation capacity at El Romeral as soon as the permits to drill a portfolio of infill wells on the El Romeral concessions are received. Achieving 100% output capacity could be realised from the first two infill wells. A further increase of the plant's generation capacity would be possible in parallel with the drilling programme.

"The current energy crisis has highlighted the need for long-term energy independence and security of supply, not only in Europe but globally. Investment in onshore, indigenous local projects such as El Romeral, is key if we are to address the challenges posed by the rise in global energy prices and volatility in international markets. We are delighted to be part of the solution, albeit in a small way."

El Romeral Project

The El Romeral Project has three producing wells; El Ciervo-1, Santa Clara-1 and Sevilla-3, with gross 2P reserves of 0.30 Bcf. The produced gas is supplied to the 100% project-owned 8.1 MW El Romeral power station, where a low maintenance cost contract is in place with General Electric. The power station has 78% spare capacity and provides both immediate revenues and also a low-cost route to commercialisation for future gas discoveries. The El Romeral power station was constructed in 2001 at an approximate cost of €10MM and current production is supplied to the station by a local 100% Project-owned gas pipeline. Yearly revenues from selling gas to the Spanish electricity grid are >€4.2MM, based on long terms average revenues per MWh. The Company intends to increase the utilisation of the power station and future revenues from production.

KeyFacts Energy: Prospex Oil and Gas Spain country profile