ADX Energy (ASX: ADX): Welchau test to start on 4th of November. LICHT well to reach main target next week
• MCF Energy (the partner of ADX at Welchau) has announced that the well test at Welchau is expected to start on 4th of November. The initial well test results could also be available during November. The full well test operations will last much longer given that there are multiple zones to test.• Our unrisked NAV for Welchau is A$1.18 per share.
• The Lichtenberg-1 exploration well (LICHT-1) has reached a depth of 2,140 m. with the main target reservoir expected at 2,500 m MD. The well total depth is ~2,900 m MD. By the time of the next market update on 29 October, the well could have reached the main target.
• Although our unrisked NAV for LICHT-1 is only A$0.05 per share, the flow rate could be high (in a success case) with positive impact on near term cash flow; which in turn would give ADX more fire power to explore the basin and appraise Welchau.
• In addition, LICHT-1 is a play opener that could derisk further follow-on prospects.
• We reiterate our target price of A$0.75/sh in line with our ReNAV.
Highlights from the 3Q24 activities report
3Q24 production was 217 boe/d. The Anshof-2A well is expected to be brought on production by December 2024. ADX held A$16.1 mm in cash at the end of September.
Valuation
Our ReNAV is A$0.75/sh.
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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