The road is now clear for ADX to substantially increase oil production after it was awarded the crucial production licence for its Anshof oil field in Upper Austria.

The licence awarded by the Austrian Ministry of Finance provides the framework for the development of the field, including the planned drilling of the Anshof-2 and then Anshof-1 production wells commencing during  the third quarter of 2023.

Bringing these two wells into production could deliver a big step change to ADX Energy’s (ASX:ADX) oil equivalent production rates – which averaged about 273 barrels of oil equivalent per day during the December 2022 quarter – given that the next two wells are predicted to deliver much greater production rates than the Anshof-3 well which achieved stable production rate of 113 barrels per day of light crude oil when test production started in October 2022.

To top it off, current Anshof-3 production is constrained by the current rented early production system despite exceeding expectations and the company plans to increase production to about 150 barrels per day  when additional onsite oil storage is available in the second quarter.

Further drilling is   now scheduled for the third quarter to significantly increase production rates and test the field’s sizeable independently audited 3P (proved, probable and possible) reserves and 3C (high estimate) Contingent Resource potential of 26 million boe, which could add more barrels to its higher confidence 2P (proved and probable) reserves of 5.2MMboe.

“The Board of ADX is delighted by the award of the Anshof production license less than 12 months after the initial testing of the Anshof-3 discovery well,” executive chairman Ian Tchacos said.

“Our management and operating team in Austria are developing a transformative new production asset for our company in a very short time frame.

“Anshof has substantial independently assessed reserves and production potential that is expected to provide rapid revenue growth for ADX.

“We are especially appreciative of the Austrian government support, well defined and transparent permitting processes, together with a favourable operating environment, which will enable ADX to further contribute to Austria’s economy and energy security.”

Anshof oil field

ADX has a 80% interest in the Anshof field area and 100% in the broader ADX-AT-II exploration licence, which includes near-field exploration potential adjacent to Anshof.

Production from Anshof-3 is currently constrained to 113 barrels per day due to restricted onsite day storage capacity and limitation on truck movements to transport the oil to a nearby terminal for final processing and delivery by rail to the OMV refinery near Vienna.

Performance to date has exceeded pre-drill expectations with insignificant pressure decline observed after cumulative production of about 10,000 barrels to date.

The upcoming Anshof-2 and then Anshof-1 wells will be drilled from the same drill site as Anshof-3.

Both wells will target progressively target thicker reservoir intersections which are expected to deliver higher production rates from the 25km2 mapped Anshof structure.

ADX notes that Anshof-3 did not intersect an oil-water contact and has continued to produce without any water ingress, which is a strong indicator that a large upside potential area remains to be appraised and developed.

Planning and long lead item equipment purchases are at an advanced stage while construction permits are in place with siteworks construction and cellar installation, which are expected to begin later this month or in April.

The next well, Anshof-2 well will appraise the extent of the downdip oil in the structure. It will be a high angle well maximising the lateral intersection of the Eocene reservoir to optimise well oil flow rate and potential reserves recovered by the well.

Meanwhile, Anshof-1 well will be drilled as a producer in a more crestal part of the structure and in a thicker part of the Eocene reservoirs relative to the Anshof-3 well located in the western part of the structure.

The company has also matured satellite prospects which it holds at 100% interest to drill-ready status and is reviewing Prospective Resource estimates.

 

 

 

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.