ADX Energy Limited (ASE: ADX): Growing production. New Anshof well to be spudded in September
• 2Q23 production was 317 boe/d reaching 366 boe/d in June and including ~115 bbl/d at Anshof. Anshof-3 production performance continues to exceed expectations with strong pressure support and deliverability with no water production.• Work-over activities at Zistersdorf and Gaiselberg (Vienna basin) in mid-August are expected to reinstate further production. In addition, a refurbished storage vessel at Anshof is expected to be commissioned in 3Q23, which will reduce production interruption and increase the production capacity of Anshof-3 from 115 bb/d to 150 bbl/d. We conservatively forecast ~350 boe/d production in 3Q23, which includes some unexpected downtime.
• Drilling at Anshof- continues to be expected to start in September.
• With discussions with potential farm-out partners progressing, ADX offers a combination of strong underlying value, increasing cashflow and reserves growth with very material exploration upside. We reiterate our target price of A$0.100/sh.
More on the upcoming drilling activities
The long lead items such as well casings and the wellheads for the Anshof-2 and Anshof-1 wells are expected to be delivered during July and November respectively. A public hearing (and site visit) by the Mining Authority in relation to the Welchau -1 well permitting was completed in late June without major objections with ADX expecting the drilling permit to be issued in the coming weeks.
Valuation
Our Core NAV based on the company’s 2P reserves stands at A$0.015/sh (>2x the current share price). De-risking the 3P/3C at Anshof would add >A$0.040 per share (>5x the current share price). Our ReNAV continues to stand at ~A$0.10 per share. A successful farmout of some of the prospects and projects could highlight their values and provide further funding to accelerate the drilling programme. The Welchau prospect, expected to be drilled in 2H23, has an unrisked NAV of A$0.19 per share. Announcing that the drilling permit for the well has been awarded and confirming the drilling date could have a positive impact on the share price.
ADX Energy is engaged as an oil and gas exploration company. As of Dec 31 2015, Co. operated five oil and gas permits in North Africa and Europe, which under following projects: Kerkouane project located in Tunisia; Pantelleria project, Nilde project and Orlando project, which are located in Italy; and Romania project, which Co. held 50% interest on its project.
Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector.
The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy.
Auctus has been set up at the beginning of a new decade in which we see significant opportunities in the Energy space. Globally, demand for energy is at record levels and continues to grow. Conversely, investment in traditional energy sources has been severely constrained. We believe this imbalance creates opportunities for both companies and investors.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
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