ADX Energy (ASX: ADX): Readying-up the portfolio to return to drilling in 4Q, 2025
• 1Q25 net production was 246 boe/d. This is in line with our expectations. ADX held A$6.7 mm in cash at the end of March.• ADX is prioritizing production growth in Austria, with plans to advance up to 12 shallow gas prospects across ADX-AT-I and ADX-AT-II where it has varied its exploration acreage to maximise exposure to the proven gas play. The company aims to secure a partner for the first cluster of three prospects in 3Q25, with two of these wells potentially being drilled in 4Q25.
• These prospects hold 4-6 bcf resources (per prospect) and carry very low geological risk. Initial production rates for typical wells are estimated at 10-15 mmcf/d. They can quickly be brought on production due to their proximity to open access pipelines.
• ADX intends to drill a new oil appraisal well in the Anshof area in 4Q25.
• The company continues to await a decision from the Austrian Ministry regarding its return to Welchau.
• In Italy, ADX anticipates receiving the Sicily Channel Gas Exploration Permit in May.
• Pending further progress at Welchau, we have not changed our target price of A$0.30 per share. However, our target price now includes two shallow gas prospects and one Anshof oil area prospect.
Near term newsflow
We anticipate that ADX will provide prospective resources estimates for the shallow gas prospects in Upper Austria and for the Sicily Channel Gas Exploration Permit in Italy in 2Q25. These resource estimates could prove substantial when viewed in the context of the company’s existing reserves.
Forecasts and valuation
For 2025, production at Anshof is now assumed to remain flat as the focus shifts to appraisal and low risk exploration drilling. With a very high probability of success, we anticipate one successful exploration well in both 2025 and 2026, each contributing approximately 10 mmcf/d gross production per well (60% WI post farm-out). The company's 2P NAV is estimated at A$0.05 per share. The unrisked value of each shallow gas prospect is approximately A$0.04 per share, based on a 60% WI or 3 bcf net to ADX. 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.
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