ADX Energy’s highly prospective Sicily Channel permit is ideally positioned to deliver gas

• ADX Energy’s well positioned and highly prospective Sicily Channel project has a proven gas system confirmed from past oil exploration
• Nearby fields suggest excellent opportunity for shallow gas finds with highly productive reservoirs
• Strong European gas prices, shallow water, shallow drill depths and nearby pipeline tie-in enhances value of any development
• A 300 BCF development could deliver undiscounted free cash flow of US$1.6bn, or $4 per ADX share

Special Report: ADX Energy could be on the cusp of a step change as it moves to exploit its recently awarded C.R 150.AU permit in an area offshore western Sicily that’s highly prospective for gas.

The company was formally awarded the permit in mid-August 2025, about seven years after making its initial application in 2018.

While initial interest was centred on the Nilde oil field, ADX Energy (ASX:ADX) shifted its strategic focus to natural gas due to the evidence of high-quality gas from historical exploration, recent development of the nearby 350 billion cubic feet Argo-Cassiopea offshore gas field and Europe’s growing appetite for domestic gas supply.

The existence of gas has been proven by deeper historical oil exploration including an abundance of seismic data and wells such as Nilde-2 recording gas shows at multiple, shallow depths of 512m, 657m and 812 while targeting deeper oil reservoirs.

Adding interest, nearby analogous fields both onshore and offshore indicate excellent opportunity for the discovery of shallow, highly-productive gas reservoirs.

This is best highlighted by the recent development of Eni’s Argo Cassiopea gas field, which has about 350 billion cubic feet of gas reserves, while Eni and Energean’s recent 100Bcf Gemini discovery in the region provides support for ADX to make its own similar gas discoveries.

All this is backed by support from Italy’s pro-development government led by Prime Minister Giorgia Meloni.

Rich gas potential

ADX has good reason to be confident about the prospects of its C.R 150.AU permit.

The historical seismic data has allowed it to conservatively assess that the permit has a resource potential of about 370 Bcf with upside potential as high as 770 Bcf if the multiple gas reservoirs encountered in the same geological setting in neighbouring fields are present in the ADX’ permit. ADX plans to update its resource estimates in the near future utilising additional seismic data that is available from historic oil exploration. 

Should exploration be successful, the shallow water depths and drill depths at the project along with its proximity to shore are expected to facilitate the commerciality of any discoveries.

This is further supported by high European gas prices – about twice those in eastern Australia – and excellent fiscal terms with Italy boasting upstream royalties of just 10% and a corporate tax rate of 27.5%.

The company has suggested that even a modest, 150Bcf discovery would be viable though its expectation is for 300Bcf gas development spanning three fields.

A 300 Bcf could be developed with six subsea wells tied back approximately 50km to an onshore tie in point – each capable of producing ~15 million cubic feet of gas per day – and would require capital expenditure of about US$380m.

Such a development could be extremely lucrative for ADX with UK-based equity markets advisory Auctus Advisors suggesting that such a development could deliver undiscounted free cash flow of ~US$1.6bn, equating to ~A$4.00 per share.

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.