ADX lifts Austrian output and cuts cash outflow as drilling advances

ADX Energy is firing on all cylinders in Europe, lifting Austrian quarterly oil and gas production by 23 per cent, while advancing its recent HOCH shallow gas discovery. The company is also gearing up to drill the next target in the conga line as it seeks to expand its Sicily gas position.

September-quarter production averaged 242 barrels of oil equivalent per day (BOEPD), up from 197 in June following a successful workover campaign at its mature Vienna Basin oil and gas fields, lifting Austrian oil-equivalent sales 14 per cent; current output is 248 BOEPD.

Meanwhile, European gas prices provided some welcome support, climbing 10 per cent to average €53.66 (A$86) per megawatt hour.

The company’s Vienna Basin fields did much of the heavy lifting, with production averaging 176BOEPD compared with 138BOEPD in the June quarter. The improvement followed relatively straightforward interventions in two existing wells, where ADX perforated previously untapped reservoir sections sitting behind the production casing.

The exercise added 24 barrels of oil per day from one well and another 52BOEPD of gas from the second, demonstrating that the ageing fields still have plenty to offer.

Management is now preparing another round of well interventions expected to add approximately 100BOEPD, potentially delivering a further meaningful lift in production without the expense of drilling new wells.

The increased output helped ADX bank $3.141 million in quarterly cash receipts, while lower exploration, production and administration costs reduced 39 per cent to A$758,000. Cash at bank remained steady at $2.3 million after being topped up with a $3.58 million placement in July.

However, the more intriguing upside could come from the company’s HOCH-1 shallow gas discovery in Upper Austria, where initial testing has already delivered encouraging results. HOCH is a shallow biogenic gas discovery in Upper Austria’s Miocene Hall Formation, where drilling recently intersected up to eight gas-bearing fan and channel sand reservoirs. Four zones have since been tested over a 12-hour commingled period, with several zones flowing together, averaging 3.15 million cubic feet per day, or 548 BOEPD. Analysis of test pressures suggests potential sand productivity of 3.5 million cubic feet per day.

HOCH anchors the company’s three-well Hall Formation play. Its second planned well, GOLD, sits 40km east of HOCH, while the third, SCHOE, sits immediately south. Mean prospective resource estimates, for undiscovered resources, not reserves, are 8 billion cubic feet (Bcf), 8.3Bcf and 6.3Bcf respectively. While GOLD sits 300m from a pipeline, the broader play also benefits from nearby open-access gas infrastructure, potentially paving the way for a rapid and cost-effective development if drilling delivers commercial gas.

Meanwhile, at the company’s offshore Sicilian play, ADX has applied for three permits beside its existing permit. Approval would add 1650 square kilometres to the project’s acreage, targeting biogenic gas in Miocene Terravecchia sandstones. International energy consultant RISC Advisory has backed the geological play and supported ADX’s existing 619Bcf mean prospective estimate. The company now awaits the outcome of a three-month competition period triggered by EU Official Journal publication.

Further well work planned at the Vienna Basin fields is expected to further increase production by approximately 100 barrels of oil equivalent per day, the ongoing testing of the HOCH-1 gas discovery may confirm the commerciality in Austria and three Sicily permit applications have been made over 1650 km2 of acreage in a highly prospective gas trend.

A busy December quarter beckons as Vienna Basin workovers, HOCH testing and GOLD preparations gather pace.

The ongoing Vienna Basin workovers will target behind-pipe volumes at two further wells plus an equipment repair. HOCH testing will drill out a plug to access a high-permeability zone. Results are due in mid-December, with success potentially supporting a pipeline tie-in.

GOLD drilling will follow on the heels of HOCH, with site work due late October ahead of year-end rig mobilisation. Under binding heads of agreement, Empyrean Energy will earn a 10 per cent stake in the GOLD Cluster by funding 20 per cent of drilling and testing costs - an attractive two-for-one deal - subject to a final Energy Investment Agreement next quarter. Drilling of the SCHOE shallow gas prospect is pencilled in for early 2027.

While ADX works to finalise Empyrean’s farm-in to GOLD, permitting and land access are advancing for early 2027 drilling at PERG, a near-field oil prospect beside Anshof’s processing facility. A discovery could be rapidly developed through the nearby hub. Separate farm-out discussions for PERG continue, with further deals potentially trimming costs while ADX retains majority interests.

Beyond near-term drilling and field workovers, ADX will update Austrian prospect resources and assess deepening its 2024 Welchau discovery to test a gas-condensate target higher on the same fractured-carbonate structure as the nearby Molln discovery. Separately, new seismic is expected to help refine two Jurassic gas prospects elsewhere in Upper Austria, beneath the Flysch sequence of deep-marine sediments. Their combined upside potential is significantly above 100Bcf.

With production ticking up, a key gas discovery moving towards a commercial decision and a pipeline of new wells ready to be drilled, ADX seems to be methodically piecing together a significant European energy business. All eyes will now be on the upcoming HOCH-1 test results to see whether it can deliver the Upper Austrian project’s first commercial gas development.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au