ADX Energy (ASX: ADX): Important step to unlock Sicily
• ADX has raised A$13.5 mm of new equity priced at A$0.105 per share. One free-attaching option will be issued for evert two placement shares with an exercise price of A$0.15 per share and an expiry date of 08/05/2026.• The proceeds from the raise will fund (1) the production testing of the 450 m gas column encountered at the Welchau exploration well (the well might also be deepened to assess the exploration potential below the current total depth of the well), (2) the residual drilling cost (net of the carry provided by MND) of a gas exploration well on the ADX-AT-I licence, (3) the residual cost (net of the carry provided by MND) of the drilling and tie-in the Anshof-2A sidetrack and (4) upgrades to the gas processing facilities at ADX’s Vienna Basin fields. The company also plans to drill the Anshof-1 development well after the results from Anshof-2A sidetrack well.
• As we incorporate the impact of the equity funding, we have changed our target price to A$0.75 per share. Our unrisked NAV for Welchau is A$1.13 per share. The 3P reserves upside case at Anshof has an unrisked value of A$0.17 per share.
Italy: More than meets the eyes?
Last week, the Italian ministry informed ADX that it will be granted the d 363C.R-.AX gas exploration permit in the Sicily Channel. The regular and pre-existing framework for permitting activities could be re-established. While the process and the timing are not clear yet, unlocking this asset could be very material for ADX. Assuming US$5/bbl could suggest an unrisked value of ~US$170 mm net to ADX for the 34.1 mmbbl 2C resources at Nilde. This equates to A$0.37 per share unrisked. The company has also high-graded prospects holding 369 bcf prospective resources.
Valuation
Our new Core NAV for the company based on the 2P reserves only is A$0.11 per share. Our new ReNAV is A$0.74 per share. This includes the risked value of (1) Welchau, (2) the 3P case at Anshof and (3) the LICHT gas prospect. We are not carrying any value for Italy yet.
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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