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ADX Energy completes $8.06m deal to fund Austrian drilling plan

Updated: Mar 25

ADX Energy’s has completed an Upper Austrian investment agreement with MND. Credit: File.

ADX Energy has completed an $8.06 million investment agreement with European giant MND for its ADX-AT-I license in Upper Austria as it prepares to drill for oil and gas in the second half of this year.

The deal sees MND earn a 50 per cent interest in the new investment area, a 267-square-kilometre piece of land between Vienna and Munich that will be operated by ADX. The ground already contains four leads – dubbed IRR, HOCH, SCHOE and LICHT.

The latter is the most technically-mature prospect, with its drilling permit and environmental clearance already approved by the regulator. The prospect has a best technical prospective resource (P50) of 16.2 billion cubic feet (Bcf) defined by a four-way dip closure.

The IRR prospect has a P50 resource of 37.8Bcf, with significant stratigraphic upside potential of 79Bcf. The other two leads within the ADX-AT-I investment area, HOCH and SCHOE, are estimated to contain P50 resources of 4.8Bcf and 6.6Bcf, respectively.

ADX says it plans to drill either IRR or LICHT in the second half of this year, It says MND has already paid $730,000 and will fund a further $7.33 million in exploration costs, which are largely expected to be drilling expenses.

MND is clearly showing faith in ADX’s technical team through the deal, entering the Austrian petroleum race with what it describes as “an exceptional exploration prospect portfolio in Upper Austria”.

We are pleased to further extend our collaborative relationship with MND across the Anshof Oil Field as well as exploration drilling opportunities within the ADX-AT-I licence. This transaction ensures ongoing exploration investment without the need to raise further shareholder funds, a strategy which provides upside to our shareholders with minimal financial exposure. ADX Energy executive chairman Ian Tchacos.

On the immediate agenda for ADX is the drilling of the giant 807Bcf P50 Welchau gas prospect, with the Welchau-1 well expected to spud next month. It will be the first well in the structure and will follow up on an accidental 1989 discovery at the Molln-1 well, which tested pipeline-quality gas at a rate of up to 3.5 million standard cubic feet per day down dip and in the same reservoir interval targeted by Welchau-1.

Molln-1 was drilled by OMV in the hunt for oil and hit the Triassic-aged, Steinalm-fractured carbonate just above 4000m on its way down to an Anshof-type play at about 5700m. The well hit a gas column of at least 400m, but downhole pressure measurements suggested it could be as big as 900m.

The Steinalm carbonate reservoir at Welchau has been folded and faulted into a structure giving about a 100sq-km maximum closure area. The high-case prospective resource estimate for the structure is 1.631 trillion cubic feet (Tcf) and the top of the reservoir is expected at just 1120m below the surface.

ADX holds an 80 per cent economic interest in the Welchau investment area, which contains the Welchau prospect and a swarm of other leads. Joint venture (JV) partner, Canadian-listed MCF Energy, will fund half the expected $5.9 million in costs for Welcahu-1 to earn a 20 per cent interest in the investment area.

Welchau is just an 18km tie-in distance from the Austrian national gas pipeline network and may offer a reliable domestic gas supply as that nation attempts to break free of its reliance on Russian natural gas. In October last year, Austria imported 90 per cent of its natural gas from Russia, but that number dropped down to 76 per cent in November.

The European Union is reducing its reliance on Russian gas, but supply and infrastructure constraints mean it could take more than three years to offset a full loss of Russian supply. So, it is little wonder that ADX is posturing to become a main-stage player in Austria’s domestic gas future.

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