ADX Energy (ASX: ADX): Favourable court ruling allows Welchau testing operations to resume
• The Upper Austrian State Administrative Court has rejected objections from environmental activist groups regarding drilling and testing at Welchau. The court confirmed that Environmental Clearances were issued in full compliance with applicable regulations.• ADX is now authorized to resume operations at the Welchau-1 site during the winter drilling window, spanning 1 October to 31 March.
• Fluid sampling of the Reifling formation is scheduled for late 4Q25. This interval was previously perforated prior to the suspension of testing activities.
• Of the four reservoir intervals intersected by Welchau-1 with oil and gas shows, three remain untested, offering further upside.
• The well may be deepened to evaluate the Welchau Deep target, which carries an estimated P50 prospective resource of ~65 bcf.
• Our unrisked NAV for Welchau-1 (Steinalm + Reifling) exceeds A$1.00 per share. We currently assign a 20% chance of success to Reifling and 10% to Steinalm.
• The decision was made in the Austrian public interest reflecting a strong endorsement for gas exploration in Austria as a priority to gain independence from Russian gas and LNG imports.
• We re-iterate our target price of A$0.30 per share.
Valuation
Our total unrisked valuation for the company based on its 2P reserves and the shallow gas play is ~A$0.10 per share assuming that ADX keeps 50% WI of the shallow gas play. Our ReNAV of A$0.28 per share for the company reflects: (1) producing assets, (2) shallow gas targets (near-term focus), (3) Welchau-1, and (4) the Italian permit, based on anticipated farm-out terms.
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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