ADX Energy Limited (ASE: ADX): Securing funding to prepare for drilling
• ADX is issuing A$1.5 mm of loan notes with a term of 18 months.• A$1.0 mm of the loan notes carry an interest rate of 8% per annum with 30 mm options with an exercise price of A$0.01 per share and 30 mm options with an exercise price of A$0.014 per share.
• The balance of the loan notes carry an interest rate of 12% per annum with 21.5 mm options with an exercise price of A$0.014 per share.
• The proceeds of the funding will allow the company to continue preparations for (1) the planed drilling of two wells at Anshof, the Welchau gas prospect and a further gas prospect as well as (2) engineering and procurement for the installation of a permanent facility at the Anshof-3 well site.
• Drilling is expected to start in September.
• ADX expects to secure farm-in partners for some of its Upper Austrian drilling projects during the summer. This will provide further funding. ADX is offering multiple farmouts of individual prospects or play types within its extensive portfolio of exploration projects within its licence areas in Upper Austria
• ADX continues to offer a combination of strong underlying value, increasing cashflow and reserves growth with very material exploration upside from an expanded near-term drilling programme. The dilution associated with the funding is minimal. We reiterate our target price of A$0.100/sh.
Valuation
Our Core NAV based on the company’s 2P reserves stands at A$0.016/sh (2.5x the current share price). De-risking the 3P/3C at Anshof would add A$0.035 per share (~4.5x the current share price). Our ReNAV stands 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.
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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