ADX Energy (ASX: ADX): Important step to unlock Sicily
• The Italian ministry has informed ADX that it will be granted the d 363C.R-.AX gas exploration permit in the Sicily Channel.• In addition, the Regional Administrative Court of Rome has annulled the Plan for the Sustainable Energy Transition of Eligible Areas that prevented the oil redevelopment, appraisal and exploration activities on the licence. The annulment, if not contested, will result in reversion to the 2018 legislation enabling oil as well as gas within the d 363C.R .AX permit to be exploited.
• ADX has high graded five prospects in the area with a total of 369 bcf prospective resources (best case). In addition, contingent resources of 19.2 - 65.6 mmbbl of remaining recoverable oil had been estimated in 2018.
• An oil redevelopment project at Nilde will target the production of 34.1 mmbbl of 2C contingent resources from 3 wells at an estimated initial production rate of 22,000 bbl/d. The Nilde field produced 20.5 mmbbl of light oil from 1980-1989 from subsea infrastructure tied back to the Firenze FPSO. The field was prematurely shut in due to the inability of the FPSO to handle water production and a collapse in oil price from around US$30/bbl to US$14/bbl.
• Pending confirmation that the decision to annul the Plan for the Sustainable Energy Transition of Eligible Areas is not contested, we are not changing our target price of A$1.00 per share.
• The near term focus continues to be (1) the drilling of further wells at Anshof that are expected to add production and reserves, the drilling of a gas prospect with MND, high impact well testing activities at the Welchau discovery in 4Q24 as well as the deepening of Welchau where in excess of 1,000 m of sediments remain untested.
Valuation
Our ReNAV is unchanged at A$1.00 per share. Our unrisked NAV for Welchau is ~A$1.55 per share. Our unrisked NAV for the 3P reserve case at Anshof is A$0.36 per share (including A$0.12 per share for the 2P case). Our unrisked NAV for LICHT is A$0.05 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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