ADX Energy (ASX: ADX): Diversified and high impact newsflow over the balance of 2024
• ADX has confirmed a very busy programme of activity from September. The overall unrisked value of the programme is ~A$1.70 per share, which represents 17x the current share price.• In early September, ADX will drill the Anshof-2A side track. The well is expected to intersect thick Eocene reservoirs similar to that encountered by the Anshof-2 well which were ~6 times thicker than the producing Anshof-3 discovery well. The well is expected to add production and potentially derisk some of the possible reserves at Anshof. Our unrisked NAV for Anshof including the possible reserves is ~A$0.25 per share.
• In early October, a gas exploration well is expected to be drilled with MND. It will be either the LICHT-1 prospect that is already permitted or the larger IRR-1 prospect (permitting expected in August). Our unrisked NAV for ADX’s interest in the LICHT-1 prospect is ~A$0.04 per share.
• A revised resources estimate at Welchau is expected to be published in early September. This will incorporate the recent drilling results at Welchau-1 including the much larger than expected gas column.
• A submission has been made to the environmental authority to undertake production testing operations during the winter period from 1 October 2024 to 31 March 2025. A successful well flow test would have a very positive impact on the risk of the project. Our unrisked NAV for Welchau based on the current resources estimate is A$1.13 per share.
• The company is well funded having raised A$ 13.5 mm in Aprill to execute this work program and ongoing asset development activities.
• We re-iterate our target price of A$0.75 per share in line with our ReNAV. Our target price represents 7.5x the current share price.
Valuation
The current share price reflects a discount to our valuation for the company based on its 2P reserves only (~A$0.11 per share). Our ReNAV is A$0.74 per share. We are not carrying any value for Italy yet where the company holds ~19-66 mmbbl contingent resources.
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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