ADX Energy Ltd. (ADX:ASX) had its target price raised to AU$0.100 per share from AU$0.070 by Auctus Advisors when it revised the chances of success it forecasts for certain ADX assets, reported analyst Stephane Foucaud in a March 15 research note.
"ADX offers a combination of strong underlying value, increasing cash flow and reserves growth with very material exploration upside from an expanded near-term drilling program," Foucaud wrote.
The Australian oil and gas company also offers investors huge potential gains of about 1,150% from its current share price of AU$0.007.
Plans for the Year
Foucaud highlighted that 2023 is expected to be "busy and transformational" for ADX Energy and described the work expected to be done at its assets this year.
In the Anshof oilfield in Austria, the energy firm aims to grow oil production to nearly 1,000 barrels per day by year-end 2023, noted Foucaud. At this production rate, the company could generate US$13 million in after-tax operating cash flow per year.
Were ADX Energy able to obtain a farm-in partner to drill two prospects, as is its aim, this would add another AU$0.010 per share of value, noted Foucaud. Additionally, drill success at both would unlock yet another AU$0.022 per share.
Drilling is slated for Q3/23 of both the Anshof-2 appraisal well and the Welchau gas prospect. Welchau, in which ADX has an 80% working interest, is in the foothills of the Austrian Alps.
What's more, "with further partners from the ongoing farm-out process, ADX seeks to drill another two prospects in 2023," noted Foucaud. ADX has 16 of them that are drill ready in Upper Austria, including ones next to Anshof.
Also this year, ADX intends to advance two other energy assets, its green hydrogen project in the Vienna basin and its geothermal project in Upper Austria.
Potential Upside From Assets
Foucaud presented the unrisked values Auctus assigned to ADX's various prospective assets. He noted that Auctus' current A$0.017 per share target price on the energy company only includes the risked value of Welchau and the upside case for Anshof.
Anshof and its Proven and Probable (2P) reserves of 4,200,000 barrels of oil equivalent (4.2 MMboe) equate to about AU$0.02 per share. Success with Anshof-2 could result in 8 MMboe being converted to the 2P reserves category, thereby adding about AU$0.04 per share of value. Plus, the additional 9 MMboe implied with the 3P and 3C reserves also have an estimated value of AU$0.04 per share.
For Welchau, Auctus has an unrisked value of about AU$0.20 per share.
Were ADX Energy able to obtain a farm-in partner to drill two prospects, as is its aim, this would add another AU$0.010 per share of value, noted Foucaud. Additionally, drill success at both would unlock yet another AU$0.022 per share.
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Disclosures For Auctus Advisors, ADX Energy Ltd., March 15, 2023
ADX Energy Ltd (“ADX” or the “Company”) is a corporate client of Auctus Advisors LLP (“Auctus”). Auctus receives, and has received in the past 12 months, compensation for providing corporate broking and/or investment banking services to the Company, including the publication and dissemination of marketing material from time to time.
MiFID II Disclosures: This document, being paid for by a corporate issuer, is believed by Auctus to be an ‘acceptable minor non-monetary benefit’ as set out in Article 12 (3) of the Commission Delegated Act C(2016) 2031 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. It is produced solely in support of our corporate broking and corporate finance business. Auctus does not offer a secondary execution service in the UK.
This note is a marketing communication and NOT independent research. As such, it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and this note is NOT subject to the prohibition on dealing ahead of the dissemination of investment research.
Author: The research analyst who prepared this research report was Stephane Foucaud, a partner of Auctus. Not an offer to buy or sell: Under no circumstances is this note to be construed to be an offer to buy or sell or deal in any security and/or derivative instruments. It is not an initiation or an inducement to engage in investment activity under section 21 of the Financial Services and Markets Act 2000.
Note prepared in good faith and in reliance on publicly available information: Comments made in this note have been arrived at in good faith and are based, at least in part, on current public information that Auctus considers reliable, but which it does not represent to be accurate or complete, and it should not be relied on as such. The information, opinions, forecasts and estimates contained in this document are current as of the date of this document and are subject to change without prior notification. No representation or warranty either actual or implied is made as to the accuracy, precision, completeness or correctness of the statements, opinions and judgements contained in this document.
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Information purposes only: This document is intended to be for background information purposes only and should be treated as such. This note is furnished on the basis and understanding that Auctus is under no responsibility or liability whatsoever in respect thereof, whether to the Company or any other person.
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Disclaimer: This note has been forwarded to you solely for information purposes only and should not be considered as an offer or solicitation of an offer to sell, buy or subscribe to any securities or any derivative instrument or any other rights pertaining thereto (“financial instruments”). This note is intended for use by professional and business investors only. This note may not be reproduced without the prior written consent of Auctus.
The information and opinions expressed in this note have been compiled from sources believed to be reliable but, neither Auctus, nor any of its partners, officers, or employees accept liability from any loss arising from the use hereof or makes any representations as to its accuracy and completeness. Any opinions, forecasts or estimates herein constitute a judgement as at the date of this note. There can be no assurance that future results or events will be consistent with any such opinions, forecasts or estimates. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied is made regarding future performance. This information is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company and its subsidiaries. Auctus is not agreeing to nor is it required to update the opinions, forecasts or estimates contained herein.
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