Sydney, Feb 21, 2006 (ABN Newswire) - Po Valley Energy Limited (ASX: "PVE") has increased its Proven reserves by 45 percent in its northern Italy gas fields - to 36.6 billion cubic feet (bcf) from 25.3 bcf previously.
The Company announced the reserve upgrade today after a review by Italian-based consulting geologists, Ecopetrol, of results from Po Valley's 2005 exploration program.
The review, which assessed Po Valley's recently drilled Sillaro and Vitalba development fields, also reported total 2P (Proven and Probable) steady at 104.6 bcf and 3P reserves (Proven, Probable and Possible) equally steady at 130.4 bcf.
Sillaro and Vitalba are two of the three fields currently being developed to date by Po Valley and which are planned to supply the Company's first sales into the Italian gas market at the end of this year / early 2007.
"This increase in Proven reserves clearly establishes the success of our business model of targeting low risk, economically attractive gas prospects in this highly productive gas province," Po Valley's Chief Executive Officer, Mr Michael Masterman, said in Perth today.
"It means we, as a new Australian energy company, are now well placed to become a gas supplier into the high price European gas markets," Mr Masterman said. "When we raised our capital and listed on the ASX just over a year ago, Po Valley owned three development fields and only 12% of our reserves were Proven.
"Today, we have expanded our boundaries to have four development fields, three of which have been successfully drilled, our proven and probable reserves have increased by 70% and of these, 28% are in the Proven category.
"Significantly however, our fields will be commercialised within an environment where Italian gas prices have escalated by 55% in the past year so this augurs well for our first sales and revenues."
A fourth field, Bezzecca (formerly Pandino), southeast of Milan, will be drilled later this year / early 2007.
RESERVE REVIEW RESULTS
Sillaro Pliocene (Sillaro 1dir) - east of Bologna
The 100%-owned Sillaro gas field was drilled in the second half of 2005 and a significant gas discovery in the primary target (Pliocene) was successfully tested in the past two months. A new geological model of the field developed by Ecopetrol increased overall reserves for the Pliocene by 26% to 15.8bcf, with 66% classified as Proven.
"Not only have we established a significant Proven reserve and increased our total reserves, the flow rates at Sillaro range between 3.5 and 5.4 million cubic feet per day across the three productive levels - confirming the Sillaro Pliocene as a significant asset for the Company."
Sillaro Pliocene (bcf) Proven Probable Possible Total
(P1) (P2) (P3)
New 10.4 3.6 1.8 15.8
Previous (prospectus) 0 12.5 0 12.5
A production concession is now being prepared for Sillaro 1dir with first commercial production expected to commence late this year / early 2007.
The timing of drilling the deeper Miocene target (40.9 2P Miocene reserves) is currently being planned by the Company.
Vitalba (Vitalba 1dir) - east of Milan
The 100% owned Vitalba gas field, also drilled in the second half of 2005, was successfully tested last month. Ecopetrol's review increased Proven reserves by 28% to 4.6 bcf while Probable reserves decreased by two thirds to 1.7 bcf. Total 2P reserves were 2.3 bcf lower at 6.3 bcf.
Vitalba (bcf) Proven Probable Possible Total
(P1) (P2) (P3)
New 4.6 1.7 0.0 6.3
Previous
(prospectus) 3.6 5.1 0.0 8.6
"Vitalba carried a definable exploration risk as we were drilling up dip from the proven reserves," Mr Masterman said.
"While unsuccessful in establishing this reserve extension, it was a risk we were well prepared for with the drill rig set to enable the immediate directional drilling towards the Proven reserves which we not only established, but increased.
"The tested flow rate of 2.8 million cubic feet per day is significantly higher than we expected."
Po Valley is also preparing the production concession for Vitalba 1dir with first gas set to flow late in 2006 / early 2007, from the single existing well.
"We are continuing to evaluate the potential of this field as a gas storage reservoir," Mr Masterman said.
"Gas storage facilities have become a high priority in Italy given the recent import shortages which required the release of strategic reserves, and the switching of gas fired power stations to fuel oil over the winter season."
Total Company Reserves
The reserve position of Po Valley as a result of the Ecopetrol revisions of Sillaro Pliocene and Vitalba are:
Field Permit PVE Proven Probable Possible Total
Interest (P1) (P2) (P3)
Santa Maddalena San Vincenzo 50% 6.4 7.1 8.6 22.1
Sillaro Crocetta 100% 10.4 30.0 16.3 56.7
Vitalba Cascina s. Pietro 100% 4.6 1.7 0.0 6.3
Bezzecca (Pandino) Cascina s. Pietro 100% 15.2 29.2 0.9 45.3
Total 36.6 68.0 25.8 130.4
Po Valley listed on the ASX in December 2004 after raising A$20m and has 82.5 million shares on issues. Hyrdocarbon reserves have been estimated by Ecopetrol, the consulting geologists, using the definitions and guidelines of the SPE and WPC.
