ADX Energy (ASX: ADX): New equity raise ahead of drilling in Austria
• ADX has raised A$4.4 mm new equity at A$0.027 per share. Investors will also receive one option for every two new shares, with an exercise price of A$0.0405 per share.• The proceeds will fund the HOCH‑1 shallow exploration well in Austria, which is expected to spud next month. The strengthened cash position also enables well‑site preparation and materials for two additional Austrian wells.
• HOCH-1 is a 5.2–8.0 Bcf (P50–Pmean) prospect (2.6–4.0 Bcf net to ADX) with an upside case of 17.3 Bcf (8.7 Bcf net) with an estimated at 62% chance of success. A success would have positive read‑across for the SCHOE prospect, which holds 5.3–6.4 Bcf (P50–Pmean) of gross prospective resources (2.7–3.2 Bcf net) and an upside case of 12.2 Bcf (6.1 Bcf net). SCHOE carries a 51% chance of success.
• The second well to be drilled is GOLD. The GOLD cluster is estimated to hold 12.1-13.3 bcf (P50-Pmean). GOLD carries a 77% chance of success.
• We have revised our target price to A$0.19 per share to reflect the new equity issuance. Our unrisked valuation for HOCH and SCHOE combined is A$0.012 per share. Our unrisked NAV for the Gold cluster, assuming ADX farms down 50% WI, is A$0.02 per share.
Valuation
Our ReNAV of A$0.19 per share for the company reflects: (1) producing assets, (2) shallow gas targets, (3) Welchau-1, and (4) the Italian permit, based on anticipated farm-out terms.
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