Po Valley Energy : Revised and updated Competent Persons Report on PVE assets

For personal use only

26 July2022

ASX ANNOUNCEMENT

Revised and updated Competent Persons Report on PVE assets

Highlights:

• Independent competent persons' report (CPR) completed for Po Valley's assets by geophysical services consultancy CGG Services (UK) Limited, updating a 2019 report
• Whilst the level of 2P reserves remains unchanged, the Report highlights increased net present value (NPV) of PVE assets Selva 2P (net to PVE) of €32.7m (2019: €18.2m) & Teodorico 2P of €57.4m (2019: €17.8m). This is a 2.50 times uplift due to energy market pricing dynamics
• Capital expenditure to bring the Podere Maiar-1development in the Selva concession into production in early 2023 has increased to €2.7m (net to PVE) compared to €1.4m (net to PVE) in 2019
• Podere Maiar-1has a forecast Internal Rate of Return (IRR) of >50% and payback within approximately 8 months
• Average forward European natural gas prices have increased by a further 42% since the latest CPR valuation

Po Valley Energy (ASX: PVE) is pleased to share details from a recent competent persons' report (CPR) prepared by respected independent geophysical services consultancy CGG Services (UK) Limited, detailing the company's onshore and offshore assets in northern Italy, which updates a 2019 CPR prepared by CGG (refer ASX announcement 26April 2019). The full updated CPR dated 25 July 2022 is attached to this announcement.

The value of the company's assets has benefited from a material uplift in European natural gas prices, with the combined NPV of 2P reserves at Selva and Teodorico increasing by 2.50 times on the 2019 report to €90 million as shown in the table below. Gas price assumptions used by CGG are detailed in table 5.1 on page 76 of the 2019 report and page 72 of the 2022 report. Consistent with the constant 2P reserve positions at Selva and Teodorico, there is no change in production profile assumed (refer table 4.9 on page 68 of the CPR reports for 2019 and 2022).

	Net Present Value 2P (net to PVE)
	CPR 2019	CPR 2022
Selva Malvezzi - NPV10% (after-tax) net	€18.2m	€32.7m
Teodorico - NPV10% (after-tax) net	€17.8m	€57.4m
Total	€36.0m	€90.1m

PVE is focused on developing the Selva field for first gas production in early 2023. Capital expenditure for the Podere Maiar-1development (net to PVE) has increased by €1.3m since the 2019 CPR and €1m since the company's ASX announcement dated 26 October 2021 as shown in the table below.

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	PM-1 Capex (net to PVE)
Podere Maiar-1development capex (net) CPR 2019	€1.4m
Podere Maiar-1development capex (net) 26Oct 2021	€1.7m
Podere Maiar-1development capex (net) CPR 2022	€2.7m

The change in capital expenditure can be attributed to an increase in gas plant and pipeline costs which is consistent with global supply chain challenges and associated inflation. Capital expenditure is shown to have minimal impact on the project's economics. Refer to tables 5.4 and 5.5 and sensitivity analyses on page 79 of the CPR report for 2019 and page 75 for the 2022 report.

Whilst there are no changes to the 2P Gas Reserve estimates since the 2019 report, Italian legislative changes under the Pitesai (or Plan of Areas) means that Contingent and Prospective Resources relating to Oil prospects are now areas that are unsuitable for development and no longer reported in PVE's reserves and resources statement. These changes are not material to the Company Resources position and the up to date Reserves and Resources statement (CPR report 2022) is shown in the table below.

PVE Reserves and Resources

			Reserves		Contingent Resources	Prospective Resources
						Gas BCF
		1P	2P	3P	1C	2C	3C	Low	Best	High
AR94PY	Teodorico	27	37	48
Teodorico				7.4	10.6	14.0
	PL3-C							7.9	15.9	25.0
	Selva (Podere	2.6	8.4	18.8
	Maiar1)
	Selva level A South				0.7	1.1	2.3
Podere Gallina	Selva level B North				2.2	5.6	11.2
[Net]	Selva level B South				0.6	2.2	5.9
	Fondo Perino							6.4	9.2	12.9
	East Selva							18.3	21.9	25.6
	Riccardina							8.2	24.4	81.2
	Zini (Qu-B)				1.1	2.7	4.6
Cadelbosco	Canolo (Qu-A)				0.7	1.1	1.7
di Sopra	Canolo (Plioc)				0.4	3.6	10.5
	Zini (Qu-A)							0.6	1.4	2.4
Torre del Moro	Torre del Moro							420.7	502.0	596.1

Prospective Resources are the estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.

PVE chairman Kevin Bailey AM said: "We are pleased with the results of the updated CPR from CGG, delighted by the indicative economics associated with our Podere Maiar-1 development and the support we are receiving from the Italian government and our joint venture partners.

The increase in capital costs is an expected reality beyond PVE's control, however, we are fortunate that energy dynamics in Italy and Europe have more than offset these effects. We can look to receipt of the

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final production concession and commencing development of Podere Maiar-1at the Selva field imminently. PM-1 is critical for PVE as this well site will enable us to tie-in and connect further prospects with similar characteristics in the Selva Malvezzi production concession.

We are united in our desire to contribute to greater domestic production, which will help increase Italian domestic supply. We are excited by and looking forward to the award of the production concession and additional updates for PVE shareholders."

PVE's next steps for development at Selva include:

• Receive final production concession from Italy's Ecological Transition Ministry (MiTE),
• Sign gas plant and pipeline contract
• Install PM-1 gas plant and lay 1km pipeline
• Connect gas pipeline to SNAM grid connection point

This announcement was approved and authorised for release by the Board of Directors of the Po Valley Energy Limited

For further information please contact:

Kevin Bailey AM, Po Valley Chairman, [phone]

Qualified Petroleum Reserves and Resources Evaluator Statement

The estimates in this report relates to the Oil and Gas Reserves and Contingent and Prospective Resources are based on, and fairly represents information and supporting documentation prepared by or under supervision of Andrew Webb, Manager of Petroleum Reservoir and Economics of CGG Services (UK) Ltd ("CGG") Reference no 8P512. CGG has compiled these estimates to confirm with the definitions of the Petroleum Resourced Management Systems (2007 and 2011) as published by the Society of Petroleum Engineers (CPE). The estimates were prepared as part of a CPR dated 25 July 2022 which is attached to this announcement and released concurrently and will be uploaded to the Po Valley website. Mr Webb is qualified in accordance with the requirements of ASX Listing Rule 5.41 and consents to the inclusion of the information in this report of the matters based on this information in the form and context in which it appears.

Forward Looking Statement

This announcement contains statements related to our future business and financial performance and future events or developments involving Po Valley Energy Limited ('PVE' or "the Company') that may constitute forward looking statements. All statements, other than statements of historical fact, that refer to any future oil and gas production, resources or reserves, exploration results and events that the Company expects to occur are forward-looking statements. Although the Company believes the expectations in these forward-looking statements are based upon reasonable assumptions, such statements are not a guarantee of future performance and actual results or developments may differ materially from the outcomes anticipated. This may be due to several factors, including market prices, exploration and exploitation success, and the continued availability of capital and financing, plus general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance, and actual results or performance may differ materially from those projected in the forward-looking statements. The Company does not assume any obligation to update or revise its forward- looking statements, whether as a result of new information, future events or otherwise.

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only		Registered Office		Rome Office
	Suite 8, 7 The Esplanade		Via della Luce 58,
		Mt Pleasant WA 6153		Rome, 00153
		Australia		Italy
		TEL [phone]		TEL [phone]
For personal use		FAX [phone]		FAX [phone]
	Directors
	Mr. Kevin Bailey AM, Chairman
	Ms. Sara Edmonson, Non-executive Director
	Mr. Joseph Constable, Non-executive Director
	Ms. Katrina O'Leary, Non-executive Director

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CGG Services (UK) Limited

COMPETENT PERSONS REPORT

on the Italian assets of :-

Po Valley Operations Pty Limited

Dated: 25th July 2022

CGG project no: BP526

CGG Services (UK) Limited Crompton Way, Manor Royal Estate Crawley, West Sussex RH10 9QN, UK

Tel: [phone], Fax: [phone]