Rome, June 22, 2009 (ABN Newswire) - PO Valley Energy Limited (ASX:PVE) has taken a key step towards maiden gas production from its northern Italy fields, with the announcement today of official government approval for the installation of a commercial plant at the Castello project, east of Milan.
The go-ahead for the Castello plant installation is the final regulatory approval required to allow Po Valley (ASX: "PVE") to:
1. Commence civil works and surface plant installation at Castello. This is now planned to commence on 29 June 2009.
2. Begin drilling the Sillaro 2 production well. The rig will be mobilized to Sillaro this week and the well is expected to spud early in July.
3. Drawdown on the Senior facility of the Company's Bank of Scotland finance facility. Bank of Scotland has confirmed that all conditions precedent for access to the Senior facility have been satisfied and that the procedures for the drawdown are under way.
"Castello installation approval is a milestone "go" decision for production development on both our Castello and Sillaro gas fields, and for access to the Senior facility of project finance. It is the one we have been waiting for" Po Valley's Chief Executive Officer, Mr Michael Masterman, said today.
"Castello civil works and plant installation are due to commence on Monday next week, with a target four-month schedule for completion in October 2009. The equipment is built, tested and in storage awaiting installation," Mr Masterman said.
"The rig to drill Sillaro 2 is scheduled to move to the well site this week and the well is expected to spud in the first week of July. Drilling and well completion is estimated to take about two months at which time we can then begin to also install the production plant at Sillaro," he said.
"Significantly, access to senior facility funding under our Bank of Scotland facility will substantially strengthen our balance sheet.
"It provides funding for future projects, and will convert our A$8.7 million (EUR5 million) current liability to a four-year funding line, expiring in 2013 and at a lower interest rate," Mr Masterman said.
The latest Po Valley developments follow the announcement earlier this year by the Rome -based company that it had secured sales contracts with two Italian gas distributors, Elettrogas and Italtrading SpA, for all of the first three years of gas produced at the Castello and Sillaro fields. These contracts are expected to generate up to $A150 million in sales revenue through to September 2012, subject to future gas prices.
Castello has an estimated economic reserve life of around 10-12 years, while the production profile for Sillaro extends between 15-20 years on known reserves.
The go-ahead for the Castello plant installation is the final regulatory approval required to allow Po Valley (ASX: "PVE") to:
1. Commence civil works and surface plant installation at Castello. This is now planned to commence on 29 June 2009.
2. Begin drilling the Sillaro 2 production well. The rig will be mobilized to Sillaro this week and the well is expected to spud early in July.
3. Drawdown on the Senior facility of the Company's Bank of Scotland finance facility. Bank of Scotland has confirmed that all conditions precedent for access to the Senior facility have been satisfied and that the procedures for the drawdown are under way.
"Castello installation approval is a milestone "go" decision for production development on both our Castello and Sillaro gas fields, and for access to the Senior facility of project finance. It is the one we have been waiting for" Po Valley's Chief Executive Officer, Mr Michael Masterman, said today.
"Castello civil works and plant installation are due to commence on Monday next week, with a target four-month schedule for completion in October 2009. The equipment is built, tested and in storage awaiting installation," Mr Masterman said.
"The rig to drill Sillaro 2 is scheduled to move to the well site this week and the well is expected to spud in the first week of July. Drilling and well completion is estimated to take about two months at which time we can then begin to also install the production plant at Sillaro," he said.
"Significantly, access to senior facility funding under our Bank of Scotland facility will substantially strengthen our balance sheet.
"It provides funding for future projects, and will convert our A$8.7 million (EUR5 million) current liability to a four-year funding line, expiring in 2013 and at a lower interest rate," Mr Masterman said.
The latest Po Valley developments follow the announcement earlier this year by the Rome -based company that it had secured sales contracts with two Italian gas distributors, Elettrogas and Italtrading SpA, for all of the first three years of gas produced at the Castello and Sillaro fields. These contracts are expected to generate up to $A150 million in sales revenue through to September 2012, subject to future gas prices.
Castello has an estimated economic reserve life of around 10-12 years, while the production profile for Sillaro extends between 15-20 years on known reserves.
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About Po Valley Energy Limited
Po Valley Energy Limited (PVE) is engaged in the exploration for gas in the Po Valley region in Italy, and appraisal and development of gas properties. During the year ended December 31, 2006, the Company prepared and submitted production concession applications for Sillaro, Castello (aka Vitalba) and Sant Alberto (aka Santa Maddalena) fields. During 2006, eight new license area applications were submitted, of which PVE was awarded with the rights to proceed forward for five gas and oil exploration licenses applications in Italy. The additional licenses cover a total area of 1,610 square kilometers and are all contained within the petroleum provinces in northern Italy where the Company has focused its development options. The five license applications are Ossola and Opera located near Milan and La Prospera, Podere Gallina and La Risorta located near Bologna. The license areas contain eight new gas prospects and two new oil exploration targets.
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