ADX Energy (ASX: ADX): Adding further exploration prospects with MND to the FY24 programme
• ADX has farmed out a 50% interest in an exploration area with in the ADX AT I licence to MND in return for a A$0.73 mm back costs payment plus A$7.34 mm funding in exploration drilling.• The exploration area farmed-out to MND includes the LICHT and IRR gas prospects. These prospects are close to infrastructure and considered low risk. One of these prospects will be drilled in 2H24.
• The LICHT prospect location (16.2 bcf gross best case prospective resources) has already received a drilling permit including the environmental clearance.
• The IRR gas prospect is expected to hold 38 bcf gross best case prospective resources with a upside case of 79 bcf (P10).
• We re-iterate our target price of A$0.80 per share that now incorporates the LICHT prospect.
Welchau received environment clearance
Last week, an Environmental Clearance was received from the Department of Nature Protection of the State Government of Upper Austria to drill the Welchau-1 gas well. The Environmental Clearance is the last regulatory requirement needed to commence operations at the Welchau gas exploration project. Well site construction is expected to commence immediately and the well is expected to spud in January. The well will target a 807 bcfe best case prospective resource (ADX WI: 80%).
Valuation
Our Core NAV based on the company’s 2P reserves (assuming 60% WI in Anshof) is unchanged at ~A$0.16/sh. Drilling at Anshof is ongoing. De-risking the 3P/3C resources at Anshof would add ~A$0.50/sh (~5x the current share price). Our ReNAV continues to stand at ~A$0.80/sh. The Welchau prospect, to be drilled in January, has an unrisked NAV of A$1.60/sh. The LICHT prospect has an unrisked value of ~A$0.05 per share. The IRR prospect (if drilled instead of LICHT) has an unrisked value of $0.12 per share.
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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