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Po Valley Energy Close To Increasing Sillaro Gas Production

Po Valley Energy (ASX: PVE) is waiting on final approval from Italy's Ministry of Economic Development (UNMIG) to restart production from the main producing level at its Sillaro gas field.

Importantly, this will increase production to about 2.4 million cubic feet per day (MMcfd) of gas, up from the average production of 1.7MMcfd it recorded from the field in the March 2013 quarter.

Works had been progressed at the field during the quarter to complete the installation of the condensate separator equipment, which had been brought on site for tie-in at the end of April.

Total production for the March 2013 quarter was 220 million cubic feet (MMcf) of gas, up from the 210MMcf it produced in the previous quarter.

Revenue for the quarter was down to €1.6 million (A$2 million) from €1.7 million in the December 2012 quarter.

Po Valley is also finalising a new Reserve Based Lending Facility to replace the existing loan facility with Lloyds bank, which currently stands at €4 million and expires in November 2013.

Negotiations are well advanced with a London branch of an international bank and the company will inform the Market as soon as the agreement is finalised.

The company had €1.3 million in cash as of 31 March 2013.

Reserves Upgrade

Po Valley had in mid-April received a Competent Person Report for geological and petroleum reservoir company Robertson CGC that marked a slight increase in the company's Reserves due to the inclusion of the Bezzecca field and in spite of produced gas in 2012.

Po Valley now has Proved Reserves of 7.3 billion cubic feet of gas with Proved and Probable Reserves of 12.3Bcf.

Upside has also improved Best Estimate (2C) Contingent Resources increased by 80% from last year's review to 79.5Bcf of gas as well as 10 million barrels of oil while Prospective Resources were up 38% to 201.2Bcf.

The CPR also confirmed the validity of a new low risk prospect, located in the Podere Gallina licen-ce named Selva Stratigraphic, with 2C Contingent Resources of 17Bcf.

A second promising new prospect was identified within the Cascina Castello production concession named West Vitalba. Robertson CGG has certified best estimate Prospective Resources of 2.4Bcf.

Onshore Development

Po Valley is in the last stage of the regulatory approval process for the award of the final production concession for the Bezzecca gas field.

Once the production licence has been granted, the company will initiate activity on the field development plan.

This primarily includes the construction of a 2 inch pipeline 7 kilometre in length needed to connect the 4.1Bcf Bezecca field with the existing Castello surface gas plant from which it will be produced through.

Bezzecca 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.

The development plan for the Sant'Alberto gas field in the San Vincenzo permit was reviewed by the Ministry and a preliminary production concession is expected by the end of the current quarter.

Sant'Alberto was previously drilled by Edison in 2004 and has 2C Contingent Resources of 2.1Bcf of gas.

The drilling programs and the related Environmental Impact Assessment (NYSEMKT:EIA) for the Zini 1, Canolo 1d and Canolo 2d wells, located in the Cadelbosco di Sopra area, are under review by the Ministry and the Region. The first EIA hearing was held in March 2013.

Offshore Development

The preliminary interpretation carried out on AR94PY's 3D seismic dataset recently purchased from Italian major Eni and the updated Contingent Resources certified by Robertson CGG have confirmed the high potential of the gas discoveries within the permit.

AR94PY is located in the shallow waters of the Adriatic Sea and contains two connected gas discoveries, Carola and Irma, which were previously drilled and tested by Eni.

The discoveries have combined 2C Contingent Resources of 47.3Bcf, up 80% from previous estimates.


On the exploration front, Po Valley is close to finalising a farm-out for 25% equity plus promote in the La Prospera to two companies.

Civil works will start soon and the Gradizza-1 well in the permit is expected to spud by the end of June 2013.

The company has progressed the logistics and procurement processes for the well in the La Prospera licence.

Gradizza-1 will be drilled to a total depth of 1,000 metres targeting 9Bcf of gas.

Within the Podere Gallina Licence the company has identified a new low risk prospect - Selva Stratigraphic - after carrying out the geophysical and geochemical work to assess the residual gas potential of the Selva gas field, which produced 83Bcf of gas from 15 wells over a 35 year period.

The whole area of the ex Selva field will be thoroughly investigated through the purchase of additional existing 2D seismic and wells data plus a possible new 3D seismic acquisition.

Robertson CGG has certified 2C Contingent Resources of 17 bcf of gas for the prospect. Work is progressing to finalise a drilling location.

In the Cascina Castello production concession and a short distance from the production facility of Vitalba, a new promising prospective area with 2C Prospective Resources of 2.4Bcf of gas has been identified and named West Vitalba.

The technical team has worked on a 3D seismic survey dataset to finalise a well location and a drilling program for the prospect.
Po Valley's application for the La Risorta exploration licence is ongoing.

The company submitted the EIA study to the Emilia Romagna and Veneto Regions and in January the first public hearing to present the project was held in the Veneto Region.


While Po Valley's production and revenue has remained stable from the December 2012 quarter to the March 2013 quarter, the imminent approval for the restart of production from the main PL2 C1+C2 level at the Sillaro field will provide a substantial increase to both figures.

This will be further increased by the tie-in of the Bezzecca gas field to the Castello surface gas plant.

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