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ADX Energy banks bucks to launch drilling program in Austria

Updated: Mar 25

Oil production in Austria for ADX Energy. Credit: File

The green light is flashing for ADX Energy to start developing its Anshof oilfield in Austria after it received a pivotal $3.22 million payment from that nation’s energy giant MND for past and long-lead drilling costs.

The transaction trumpets imminent preparations to drill the much-anticipated Anshof-2 and 3 development wells, where at least 5.2 million barrels of gross 2P oil reserves of high-quality Brent Crude equivalent are begging to be brought to surface.

ADX, as operator and 50 per cent interest-holder of the Anshof oilfield within its “ADX-AT-I I” licence area, has farmed out a 30 per cent interest to MND, with several financial conditions firm and contingent.

If Anshof-2 meets performance criteria, MND will pay a success fee of $2.225 million and further development funding of $5.9 million. MND has further development funding obligations for the drilling, completion and tie-in of Anshof-2 and Anshof-1 wells for the tidy sum of $5.95 million.

The Anshof oil asset has been modelled to produce about 1000 barrels of oil per day (BOPD) from three high-angle development wells, up from the current production of about 150 BOPD from Anshof-3 – the only producing well in the field.

Anshoff-3 only intersected 5m total vertical depth subsea (TVDSS) of the Eocene sand reservoir and failed to intersect the oil-water contact (OWC), leaving the possibility of significant upside to be discovered in the two planned wells. Anshof-2, with a well inclination of 79 degrees, will test the OWC with about 100m of net measured depth (MD) sand intersection.

Anshof-1 will be drilled at 80 degrees and is expected to penetrate about 90m of reservoir sands. Both wells should add measurably to daily production, with significantly more reservoir exposed than Anshof-3.

The company says it plans to drill the Anshof-1 well in the first half of next year and will commission a permanent surface production facility to handle the product up to 4000 BOPD.

Anshof-2 has the potential to substantially increase production and reserves at Anshof. The documentation of the partnership model developed for Anshof also provides an accepted model for further co-investment transactions with MND and other parties in ADX’s Upper Austrian exploration acreage where ADX has an extensive portfolio of drillable prospects that are attracting industry attention. ADX Energy executive chairman Ian Tchacos

Co-investment transactions such as the one with MND represent an important mechanism for ADX to reduce its funding obligations and mitigate risk in the expensive sector of oil and gas exploration.

ADX and MND are in the planning stages of a gas exploration program in part of the ADX-AT-I licence area that sits about 60km west of Anshof and contains many mapped gas leads. ADX retains a 100 per cent interest in the remainder of the ADX-AT-II exploration area that includes the GRB oil prospect adjacent to Anshof.

In addition, there is a separate licence contiguous to and south of ADX-AT-II known as the Welchau area, where the company has an 80 per cent interest in a joint venture with Canadian company, MCF Energy. Welchau-1, a high impact gas wildcat to be drilled in this year’s final quarter, is adjacent to the 1989 Molln-1 condensate-rich gas discovery.

ADX holds assets in multiple countries within Europe – not only Austria, but also Romania and Italy – as it pursues oil and gas exploration, discovery, development and revenue growth in stable jurisdictions that have excellent infrastructure and unmet energy demands since the Ukraine-Russia war began.

With an underlying cashflow from its 100 per cent-owned Vienna Basin oil and gas fields of 336 BOEPD and 213 million BOE prospective resources, the company is well positioned to capitalise on its strategic assets. And if that is not compelling enough, it also has sustainable assets involved in clean energy projects within Austria that involve green hydrogen, geothermal and solar.

With both Anshof development wells due to be drilled and completed as oil producers next year, tied in with improved oil productivity and further upside complemented by the Welchau wildcat in neighbouring countryside, ADX can expect a satisfying splurge in cash receivables for its burgeoning balance sheet.

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