ADX Energy (ASX: ADX): New acreage in Austria increases prospect inventory with a focus on low risk, shallow gas
• ADX’s acreage in Austria has been modified to include additional near-term, low-risk gas prospects, as well as high-impact, higher-risk opportunities.• One focus of the 2025 program is to drill shallow, low-risk, high initial production gas prospects that can be rapidly put into production. ADX has more than tripled the number of these prospects within its revised acreage positions at ADX-AT-I and ADX-AT-II, holding 100% WI in the new prospects. A typical well at a shallow gas prospect has an initial production rate of 10-15 mmcf/d.
• The new acreage expands ADX's position around Welchau to include a potential extension of the still being tested and evaluated Welchau-1 , plus coverage of the Molln-1 gas condensate appraisal opportunity (previously outside the ADX acreage) and the follow-up Rossberg prospect.
• ADX also plans to drill follow-on development and exploration/appraisal wells in the Anshof area in 2025 .
• We have not changed our target price of A$0.30/sh.
Reflections on the 4Q24 operating update
ADX held A$9.1 mm at YE24. This is higher than we anticipated (A$6.6 mm) and reflects lower spending at Welchau. ADX is well funded for its low capex activity programme in 2025.
Valuation
We have incorporated the YE24 cash position in our forecasts. We are also assuming only one development well at Anshof in 2025. Overall our ReNAV of A$0.27/sh remains broadly unchanged ahead of an update at Welchau and further visibility on the shallow gas prospects to be drilled in 2025.
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