Po Valley looks to tap fast-growing South East Asia oil and gas market
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Perth-based Po Valley Energy is looking to expand in Europe and gain exposure to the prospective South East Asian market with a move to restructure the ownership of its oil and gas projects in Italy.
The ASX-listed junior (ASX:PVE) has struck an all-scrip deal to sell its onshore and offshore assets in northern Italy to AIM-listed Saffron Energy. Po Valley is also undertaking a £14 million ($24.4 million) capital raising.
Po Valley already owns 100 million shares, or 53.8 per cent, of Saffron, and the deal will give the company control over a further 200 million shares.
The company has shot onto investors’ radars in 2018, with shares hitting a new 52-week high of 11c last week after Po Valley confirmed a significant commercial gas discovery at its Selva gas field in northern Italy.
The new peak marked a 400 per cent gain over the 52-week low Po Valley bottomed at in mid-February last year.
Investors will also likely welcome today’s news, with Po Valley planning to eventually give the 300 million Saffron shares to its existing shareholders.
The plan is to create a large European oil and gas business that will eventually expand into South East Asia, in particular Indonesia.
“Saffron believes South East Asia possesses some of the world’s fastest developing economies where demand for gas currently significantly outstrips supply,” Po Valley Chairman Michael Masterman said.
“The company plans to acquire a series of assets across the South East Asian region, with an initial focus on Indonesia, leveraging existing infrastructure, relationships and processing capability which should enable new discoveries to be brought to market quickly.”
As part of the deal, Saffron will also acquire fellow Italy-based Sound Energy Holdings Italy for 185.9 million Saffron shares through a reverse takeover.
Po Valley will retain a 5 per cent royalty in the Selva gas field and also hold onto the $1.7 million it netted from the sale of the Grattassasso and Cadelbosco licences it sold in September last year.