It has been a busy period for Australian-listed Italian gas producer Po Valley Energy (ASX: PVE) as Castello produced 5.4 million cubic metres of gas, and the company concluded the March quarter with positive operating cash flow and cash at bank of €5.1 million (AUD7.6 million).
Average quarterly production was 59,884 metres per day (2.12 million cubic feet per day) – and is currently running at 60,000 cubic metres per day.
Gas was delivered to PVE's two customers, Italtrading and Elettrogas via the SNAM pipeline meeting all gas specification requirements.
Revenue from gas sales was €1.32 million (AUD1.94 million).
Gas prices were on the rise through the March quarter with rising crude oil, diesel and fuel oil prices, and the falling Euro, contributing to increases in prices PVE received under its ENI Gas Release referenced gas sale contracts.
ENI Gas Release prices increased from €0.21 per cubic metre in the December quarter 2009 to €0.26 per cubic metre in the March quarter 2010
Based on forward curves for the balance of 2010 the ENI Gas Release price projections are now close to €0.30 per cubic metre.
The Bank of Scotland (NYSEARCA:BOS) facility borrowing base limit was €13.8 million at the end of the March quarter with €10.3 million drawn down at quarter end. Under the BOS reservoir based facility, BOS sets a borrowing limit on a semi annual basis. The borrowing base limit is determined according to the facility agreement and has a maximum limit of €20 million.
During the first quarter 2010 the 90 day BOS completion test was finished and following formal certification and documentation, the company expects BOS completion test sign-off in April 2010.
When the completion tests are confirmed for both Sillaro and Castello the BOS margin over EUROLIBOR will drop from 3% to 1.8%.
At Sillaro, heavy snow as late as 10 March 2010 hampered progress on the final stages of surface plant installation. Installation of the Sillaro surface plant is now on schedule to reach mechanical completion on 6 April 2010 and ready for pre-commissioning start-up by 12 April 2010.
Final safety and environmental checks will then be completed with the final regulatory go ahead for commissioning start-up expected late in April 2010.
Disclosure: The author holds no positions in the company