ADX Energy expands gas hunt in Sicily Channel

A floating production, storage, and offloading (FPSO) vessel. ADX Energy is expanding its European gas portfolio, applying for two new exploration permits in the prospective Sicily Channel, offshore Italy.

ADX Energy (ASX: ADX) has doubled down on its European gas strategy, lodging applications for two new exploration permits covering an extensive 787 square kilometres in the highly prospective Sicily Channel, offshore Italy.

The applications, named “d 368 C.R.-AU” and “d 369-C.R.-AU”, cover areas of 573.3 square kilometres and 213.7 sq km respectively. The new ground is adjacent to the company’s existing 100 per cent-owned CR 150.AU permit, with the combined acreage potentially giving ADX a commanding position in the region.

The move targets the Miocene-aged Terravecchia Formation, a geological sequence recently validated as a realistic biogenic gas play by an independent review from independent energy consultancy RISC Advisory, which provides technical, commercial and strategic advice to oil, gas and energy companies, financial institutions and governments.

RISC’s positive assessment was based on a combination of regional geology, gas shows in historical offset wells and successful analogues at the onshore Lippone-Mazara gas field and the major offshore Argo-Cassiopea fields. The review noted that sandstones within the mainly shale-dominant Terravecchia Formation frequently showed elevated mud gas readings during previous drilling campaigns in the area.

The company's strategic push into the Sicily Channel comes at a time when Italy’s energy policy remains supportive of gas-only exploration, even as it tightens rules around oil. Prime Minister Giorgia Meloni’s centre-right government has actively rolled out the welcome mat for gas. To secure domestic supply and lower energy import dependencies, Italy's Ministry of Environment and Energy Security has been fast-tracking gas exploration applications, including recent expansions in the Sicily Channel.

However, the same cannot be said for Italy's stance on oil exploration, in light of its recent regulatory tightening around the black gold. Italy has explicitly moved forward with a draft decree to ban new concessions for oil and condensate exploration, drawing a clear legislative line between the two fossil fuels. The ban is part of Italy’s green ambitions, which have already included a push to phase out coal-fired electricity in favour of gas-fired power plants.

Notably, the decree specifies that the oil exploration and production ban will only apply to new concessions, not to existing ones that have already secured government approval.

ADX's Sicily Channel CR 150.AU permit area is strategically located only 20km north of the important Transmed gas pipeline corridor, which runs from North Africa into Sicily, potentially providing a clear path to market for any commercial discovery.

The permit applications have now been published in Italy’s Official Hydrocarbon Bulletin. Following publication in the Official Journal of the European Union, a three-month window will open for other operators to submit competing bids for the same areas.

If no competing applications are lodged, ADX’s wholly-owned Italian subsidiary, Audax Energy, will proceed with submitting an environmental impact assessment. The final decision will then rest on opinions from two government bodies within the Ministry of the Environment and Energy Security.

To fund its ambitions in both Italy and Austria, the company recently secured firm commitments for a A$3.58 million placement to sophisticated investors. The funds are earmarked for ADX's exploration activities in the Sicily Channel in addition to advancing its Austrian assets, which include multi-zone gas testing and follow-up drilling at its recent HOCH-1 discovery.

In the Sicily Channel gas exploration permit offshore Italy we will continue to build our seismic and well data base to further define the areas exceptional resource potential in a prime strategic location for delivering clean biogenic gas into gas starved Europe. We will continue the resource definition and gas play development work that was recently validated by an internationally accredited Independent Reviewer.   ADX Energy executive chairman Ian Tchacos

ADX’s portfolio is heavily weighted towards gas, with P(Mean) prospective resources net to the company sitting at 619 billion cubic feet of gas for its Sicily Channel permit and 374 BCF of gas for its exploration portfolio in an inventory of multiple drillable prospects across proven play types in its core Upper Austrian holdings. Additionally, those Austrian gas resources also sit alongside 31 to 45 million barrels (MMbbl) of oil.

As at the end of June, ADX held cash and cash equivalents of $2.2M, before the subsequent $3.58M placement reported on 22 July, with settlement on 30 July.

With Europe remaining hungry for reliable energy sources and a clear strategy to expand its footprint in a supportive jurisdiction, ADX appears to be making a calculated move to build a significant gas business from a prime location to meet some of that demand. With fresh funds in the bank to advance its plans, the company is now waiting on the Italian authorities to give its expansion plans the green light.

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