Saffron Energy plc was established on 10 November 2016 to acquire Northsun Italia S.p.A (“NSI”), a company incorporated in Italy, whose principal business is the exploration for and production of liquid and gaseous hydrocarbons in the Lombardy and Emilia Romagna regions of the broader Po-Veneto plain within the territory of the Italian Republic. This onshore region, together with the offshore region of the Northern Adriatic, is Italy's most important gas province.

Through NSI, the Company has a 100% economic interest in and is  the operator of one Production Licence (Sillaro), has a 90% economic and legal interest in and is the operator of a second Production Licence (Bezzecca) and has a 100% economic interest in a third (Sant’Alberto) application for a Production Licence (Sant’Alberto), which has received Preliminary Approval by the Italian Ministry for Economic Approval and the directors expect it to be fully granted by March 2017; all located in the Po Valley region of Northern Italy. The existing and under application Licenses cover an area of approximately 65.5km2 and combined P2 (Proved and Probable) reserves attributable to the Group of 8.72 bcf. The Sillaro field has been producing gas since 2010 and has further development potential and Bezzeca and Sant’Alberto are both near to production. 

The Group’s corporate strategy is to grow the production and operations of its three production concessions at a low cost relative to other oil and gas companies, providing the basis for future shareholder value creation. The Group plans to leverage the expertise, capability, and local knowledge of its management team to acquire and develop future potential exploration licences and new production concessions in the region so as to underpin long term and sustainable growth. 

The Directors believe that Italy remains an attractive market with gas and oil being of high quality, an accessible and low cost transportation network and a pricing environment that has been stable and higher than other comparable European countries.

The Directors believe that the Company has a number of competitive advantages including:

  • The Company has significant existing gas reserves that underpins current and future production targets, thus mitigating any exploration risk in future returns;
  • The Company has in place the award of three production licences secured in a challenging regulatory environment, thus mitigating any regulatory or approval risk to future returns;
  • Upside potential exists in the existing Licences. Sillaro has the potential to increase production and it is planned to drill a sidetrack from Sillaro-1 (well) to intersect the Miocene level upon depletion of the Pliocene level. Bezzecca has the potential to scale up to three production wells;  The Cascina Catstello production concession which contains both the Bezzecca and Vitalba gas fields has strong exploration potential with the Vitalba West prospect well defined by 3D seismic; 
  • The management team has several decades of combined experience, not only in petroleum, but also in the region, having worked in past roles for the state owned company, ENI. The Directors also have considerable experience in raising capital for natural resource projects across various commodities and quantities. In addition, the Directors have significant interests in the Company and have considerable incentive to generate returns for the shareholders of the Company;
  • NSI has in place a contract to supply gas of unlimited quantity to a major incumbent player, Shell Energy Italia S.r.l.  Current and expanded production from the three gas fields is expected be sold into this contact; and
  • Italy is a stable jurisdiction with a significant demand for gas that it is presently only able to meet through imports.