ADX Energy (ASX: ADX): Formal permit award in Italy adds gas exploration upside
• ADX has been formally awarded the C.R150.AU offshore exploration permit in Sicily. The permit has an initial term of 6 years, with the option for 2 additional 3-year renewal periods. In the event of a commercial discovery, an exploitation concession may be granted for 20 years, extendable by a further 10 years. ADX is now recognized as a qualified operator in Italy.• ADX has high-graded 5 gas prospects within the permit area, with best-case prospective resources estimated at 369 bcf. As additional prospects are matured, resource estimates are expected to increase.
• The prospects are similar to recently producing gas fields such as nearby Argo-Cassiopea (offshore) and analogous to Lippone-Mazara (onshore) where stacked pay results in large resource potential in a relatively small area. The targeted Upper Miocene sandstones exhibit excellent reservoir quality, with porosity reaching up to 33%. Based on Argo-Cassiopea, individual wells could deliver flow rates of 20–30 mmcf/d, with ultimate recoveries of up to 50 bcf.
• Development costs are expected to be relatively low due to favourable conditions: shallow water depths (~100 m), moderate drill depths (
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