The CEO of new UK gas firm Energy Pathways (AIM: EPP) is bullish on getting its flagship project to sanction in 2024, after listing in London today.
Shares in the firm, which floated on the AIM Market on Wednesday following a reverse takeover, rose 15% to 3.75 pence in early trading.
Ben Clube expects to deliver big returns to shareholders and get its flagship Marram gas field in the Irish Sea to sanction in the new year.
Energy Pathways “already have offers” for debt financing of the development and plans to get it to FID within 6-9 months.
“Our view of the potential value that could be created here is significant,” Mr Clube told Energy Voice.
“We believe we’ve priced our stock very competitively at IPO issue price and Marram alone we value, in NPV (net present value) terms, of being £100m – obviously that’s multiples greater than the issue price.
© Supplied by Energy Pathways“The return we estimate to be in the order of 70% and potential payback is within 12 months.
“Marram alone can deliver very strong returns for our investors.
“We have strong growth aspirations as well; we’ve identified a number of resources within the region which have similar attributes and that we think could be brought to market in short timeframes and generate similar value-accretive outcomes for shareholders.”
Investment firm Optiva has recommended a near-term target price of 24p per share for Energy Pathways.
UK gas v LNG
Mr Clube describes the 35 billion cubic feet (BCF) Marram gas project as “practical solution” for the UK where the “challenges of the energy transition are manifesting themselves”.
Energy Pathways says the fully-appraised project comes as UK gas demand is expected to remain resilient – and will be produced far cleaner than imported LNG from the US, which the UK is expected to become reliant on.
The asset also has potential to link to and serve blue hydrogen and carbon capture and storage (CCS) enabled projects like HyNet North-West, centred around Liverpool and Manchester, and with nearby tie-back options like the Spirit Energy-owned Morecambe Bay asset 9-15 miles away.
Discovered in 1993, Mr Clube said historically lower gas prices and lack of infrastructure or capacity has meant Marram has gone overlooked in the past.
“Timing is everything sometimes.
“Time has moved on and much of the existing production from this region has depleted, so there is available capacity in that infrastructure, so those two drivers make this opportunity come to life.”
Marram at one point was in the hands of Centrica Energy – its subsidiary Spirit Energy now owns Morecambe, Marram’s likely host option.
Why didn’t Centrica go for it? Mr Clube wouldn’t go into depth, but said “but suffice to say strategically the direction that Centrica and Spirit Energy have taken is to move away from capital allocation towards exploration, appraisal and greenfield development – that’s not their strategy.
He added: “I think this is an opportunity for companies like ours who are nimble, have potential to deliver projects in a more cost-effective manner.
“This is well suited for companies like ours and I think, in the dynamic of the UKCS in a maturing region, you also see the combined transition from majors to smaller companies like ours who have the nimbleness and flexibility to see value which, from a materiality point of view, may be not where majors would wish to allocate capital.”
Alongside getting Marram to FID, Mr Clube said Energy Pathways has licence applications in place now with the NSTA regulator – and has estimates of up to two trillion cubic feet of gas potential in the UK Irish Sea.
