ADX secures farm-in partner for Austrian oil exploration well

ADX Energy (ASX:ADX) has secured farm-in funding for its upcoming Anshof-1 oil exploration well in Austria that targets up to 6.6 million barrels of oil equivalent.

The company has reached a farm-in agreement with Xstate Resources (ASX:XST) that will see Xstate fund 40% of the cost of drilling the well to a cap of €1.8m (€720,000 net to Xstate) to earn a 20% interest in the Anshof Prospect Area.

Anshof-1 is expected to take about 17 days to drill and evaluate at a cost of about €2 million ($3.12m) on a dry hole basis.

It can be quickly commercialised in the event of a success due to its close proximity to infrastructure that is accessible on favourable contracted terms.

Xstate can also elect to fund 40% of a second well on the Anshof Prospect or the Anshof Farm-in Area to earn a 20% interest in the Anshof Farm-in Area within the ADX-AT-II exploration licence.

ADX will retain a 100% interest in the rest of the ADXAT-II exploration licence and the entire ADX-AT-I exploration licence.

The company has already identified a number of attractive follow-up prospects within the Anshof Prospect Area that are defined on high quality 3D seismic.

“The Board of ADX is delighted to welcome Xstate to participate in our Upper Austrian exploration program,” executive chairman Ian Tchacos.

“The farm-in represents a vote of confidence for the Anshof prospect.

“The farm-in carry and Xstate’s ongoing participation in Anshof will assist ADX to rapidly progress and fund the development of any discovery as well as any ongoing appraisal drilling thereby accelerating the pathway to cash flow.”

Farm-in extension

Subject to satisfying its Anshof farm-in obligations, Xstate has an option for up to two months to earn between 15% and 25% in the OHO Farm-in Area within the ADX-AT-I licence.

This can be achieved by spending twice the nominated participating interest share of the costs of drilling one exploration well in the OHO Farm-in Area up to a maximum expenditure of €6.6m.

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.