Po Valley gas sales deal to fund drilling program

Po Valley Energy is planning a large-scale appraisal drilling program at the Bezzecca gas project near its Castello and Sillaro fields in northern Italy and will conduct further work at Castello and Sillaro.

Rick Wilkinson
OGJ Correspondent

MELBOURNE, Feb. 26 -- Po Valley Energy Ltd., Perth, is planning a large-scale appraisal drilling program at the Bezzecca gas project near its Castello and Sillaro fields in northern Italy and will conduct further work at Castello and Sillaro. Funding will come from a second gas offtake sales agreement just signed for half the production from Sillaro and Castello fields.

Both Sillaro and Castello will be progressively commissioned from July. They are expected to have initial production of 3.8 MMcfd (Sillaro) and 2.7 MMcfd (Castello).

The new gas sales contract was signed with Italian gas trading and distribution group Elettrogras on terms similar to and in the same value range as Po Valley's $75 million (Aus.) deal with Italtrading last month.

The new contract means that Po Valley has locked in forward sales of around $150 million for 3 years.

The two contracts cover the fields' commissioning period and initial years of output and ensure that the company has strong customer alliances and contract pricing in its maiden production period.

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