ADX Energy (ASX: ADX): Resource estimates boost in Sicily
• ADX has increased its aggregated prospective gas resource estimates for its Sicily Channel permit from 103–369–772 bcf to 188–484–1,265 bcf (P90–P50–P10 cases). The new mean prospective resource of 619 bcf reflects the increased upside potential for the permit.• Individual prospect sizes range between 37–111 bcf (P50 case), with four prospects each estimated at 60–68 bcf (P50).
• The updated volumes reflect representative reservoir parameters from the nearby Lippone-Mazara onshore producing gas field, recovery factor assumptions derived from the recently developed Argo, Cassiopea, and Gemini fields. Shallow gas reservoirs encountered in historic oil wells within the permit, and three newly identified prospects/leads in the expanded permit area were not included in the August 2022 evaluation.
• Further updates will be provided following ADX’s planned visit to ENI’s seismic data room in January and additional seismic data acquisitions. These steps are expected to refine the resource assumptions and potentially expand the portfolio with new prospects and leads. The company also plans to publish an independent CPR.
• We re-iterate our target price of A$0.20/sh, implying a ~7x multiple on the current share price. Our unrisked NAV for Italy is now A$0.42/sh.
Valuation
Our total unrisked valuation for the company based on its 2P reserves and the shallow gas play in Austria is ~A$0.08/sh assuming that ADX keeps 50% WI of the shallow gas play. Our ReNAV of A$0.20/sh for the company reflects: (1) producing assets, (2) shallow gas targets (near-term focus), (3) Welchau-1, and (4) the Italian permit, based on anticipated farm-out terms.
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.
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