The LICHT-1 exploration well will test several potential gas reservoirs in ADX’ Upper Austria licences. Pic: Getty Images
Energy
Special Report: ADX Energy has embarked on the next step in its Austrian exploration campaign with the spudding of the Lichtenberg-1 (LICHT-1) gas exploration well in the ADX-AT-I licence in Upper Austria.
LICHT-1 is being drilled by the RED Drilling & Services E-202 rig to test an Upper Oligocene sandstone reservoir with best estimate prospective resources of 21.1 billion cubic feet of gas that was identified from updated mapping from 3D reprocessing and a review of reservoir distribution, as well as two slightly shallower and geologically similar reservoirs.
ADX Energy (ASX:ADX) says the targeted sandstone reservoirs can be highly productive based on offset production wells.
It expects to take 30 days to drill LICHT-1 to its total planned depth of 2900m with the first Oligocene reservoirs expected to be intersected from a measured depth of about 2000m with the main reservoir expected from about 2500m.
Cost of drilling the well, estimated at $8.5m on a dry hole basis, is largely covered by partner MND Austria’s commitment to fund €4.5 million ($7.4m) to earn 50% of the MND Investment area within the ADX-AT-I licence.
ADX will have no difficulty selling any commercial gas it finds at LICHT-1 given the shortage of gas in Europe, which is still highly dependent on Russian imports and the rebound in gas prices this year.
The International Energy Agency added that existing contracts for Russian gas are set to expire at the end of 2024, which could mark an end to all piped gas deliveries from Russia through Ukraine.
ADX added that there are multiple, similar and close by follow-up prospects to Lichtenberg which are also covered by high quality 3D seismic.
Success at LICHT-1 will significantly upgrade and de-risk the GOLL, HERR and STOET prospects.
Notably, both STOET and HERR could have upside twice as large as that currently targeted by LICHT-1, which is assessed to be the lowest risk prospect in the area.
Should drilling of these other targets be successful, it could allow the company and its partner to develop a large reserve base with long term gas production.
This article was developed in collaboration with ADX Energy, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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