‘Potential to substantially increase production’: All clear for ADX Energy to start drilling Anshof-2 well
ADX Energy’s Anshof oil development and participation transaction has been given the green light by Austrian authorities, paving the way for the company and its major European Industry farm-in partner to start drilling of the Anshoff-2 well.
ADX Energy (ASX: ADX) is concentrating its energy production and exploration efforts in Europe with projects in Austria, Romania, and Italy.
Within Austria, ADX’s a primary objective is generating revenue through its Anshof oil discovery. In August, the company announced its wholly owned subsidiary ADX VIE GmbH (ADX VIE) had attracted MND Austria as a farm-in partner to fund and accelerate further development.
Under the deal MND will pay back costs of €1.335m (A$2.225m) to and fund €5.28m towards the cost of drilling, completing and tie-in of the Anshof-2 and Anshof-1 wells to earn a 30% interest in the field in the ADX-AT-II licence.
Should Anshof-2 meet agreed production performance criteria, MND will then pay the ADX a further €1.335 million and provide another €3.57m in development funding, taking the total investment up to €11.52m (A$19.20 million).
ADX says the deal only covers the Anshof oil field and does not include the remainder of ADX prospect rich portfolio such as the giant Welchau gas prospect, which could host 651 Bcf of gas and 26 million barrels of condensate.
ADX will remain operator and retain a 50% economic interest in the Anshof Field Area.
Acceptance of the Anshof Field Area partnership documentation between ADX, MND and existing partner Xstate Resources (ASX:XST) by the Ministry of finance of the Republic of Austria (Bundesministerium für Finanzen or BMF) was a condition precedent for the transaction.
ADX says it’s now clear to progress the Anshof-2 appraisal and development well during the fourth quarter of 2023 with funding for its share of drilling costs provided by MND.
The Anshof field has been independently assessed to contain 5.2 million barrels of gross oil equivalent (BOE) reserves.
The field is currently producing from the Anshof-3 discovery well at ~ 120 barrels of oil per day (BOPD).
Anshof-2 due to spud during the fourth quarter of this year and is expected to deliver about 300 BOPD of additional oil once it is brought into production.
MND and ADX have agreed, subject to contract, to conclude a further gas exploration investment in an area within the ADX-AT-I licence.
The partnership documentation developed by ADX for the Anshof Field Area and accepted by the Austrian Authorities can be used for further co-investment opportunities in ADX Upper Austrian exploration acreage such as Welchau.
ADX executive chairman Ian Tchacos says the rapid positive clearance of the Anshof partnership documentation by the Austrian designated authority enables the completion of the transaction with MND.
“ADX will now proceed with the drilling of the Anshof 2 well with funding for its share of costs provided by MND,” Tchacos says.
“Anshof 2 has the potential to substantially increase production and reserves at Anshof.
“The documentation of the partnership model developed for Anshof also provides an accepted model for further co-investment transactions with MND and other parties in ADX’s Upper Austrian exploration acreage where ADX has an extensive portfolio of drillable prospects that are attracting industry attention.”
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.