ADX Energy Ltd. (ADX:ASX) intends to start drilling two oil wells in Upper Austria by year-end, reported Auctus Advisors analyst Stephane Foucaud in an October 16 research note.
"We have changed our target price to AU$0.80 per share as we incorporate the recently announced 10 for 1 share consolidation," Foucaud wrote, noting Auctus bumped up its target from AU$0.008 per share, a significant change.
700% Return Implied
In comparison, ADX's current share price is about AU$0.10. Given the difference between this price and the new AU$0.80 per share target price, the projected gain for investors is material, at 700%.
Near-Term Timeline for Anshof
Foucaud discussed the two wells slated for imminent drilling.
First, in November, ADX will commence drilling of the Anshof-2 appraisal well, targeting 4,900,000 barrels of oil equivalent (4.9 MMboe) net to the Australian producer.
"Anshof is also estimated to hold 5.5 MMboe 3C contingent resources (net to ADX)," Foucaud wrote.
ADX expects Anshof-2 will be onstream, along with the existing Anshof-3 well, in H1/24. Earlier in the year, new permanent production facilities, with a capacity of up to about 4,000 barrels of oil a day (4 Mbbl/d), will be installed.
By Q2/24 or Q3/24, production from all three Anshof wells should reach about 1 Mbbl/d, 500 bbl/d net to ADX.
As far as costs related to Anshof, ADX's partner MND Austria's share, in terms of cash and investment, totals about AU$19.2 million (AU$19.2M), Foucaud reported. Of that, MND has already paid ADX AU$3.2M.
MND will pay another AU$7.8M in costs to drill, complete and tie in Anshof-1 and Anshof-2, for a 30% interest in the project. Further, if Anshof-2 produces as expected by an independent expert, MND will pay another roughly AU$2.2M in back costs and fund about AU$6M of additional work program costs.
Drilling at Welchau
After commencing drilling at Anschof-2, ADX plans to spud its first well in the Welchau gas prospect, Welchau-1, in December.
"The well is targeting 807,000,000,000 cubic feet equivalent (807 Bcfe) [of] best case prospective resources," Foucaud wrote, referring to natural gas.
Other In-Country Prospects
Foucaud pointed out that along with Anshof and Welchau, ADX has numerous exploration and appraisal prospects in Austria.
For instance, the GRB oil prospect (9.5 MMboe) is on trend with Anshof. Natural gas prospects include IRR (38 Bcf gross prospective resources), SHOE (6.6 Bcfe), HOCH (4.8 Bcfe) and GAST (3.6 Bcfe).
"ADX has already agreed [upon] terms with MND for further investment in gas exploration in an area within the ADX-AT-I license," wrote Foucaud.
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Disclosures for Auctus Advisors, ADX Energy Ltd., October 13, 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.
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Author The research analyst who prepared this research report was Stephane Foucaud, a partner of Auctus.
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