ADX firms up Austrian gas target as prices rocket

A staggering 742 per cent rise in natural gas prices has market onlookers excited as Austrian producer ADX Energy targets 16 drill-ready prospects, including the giant 800 billion cubic feet Welchau discovery made in 1989.

The company was already the benefactor greater margins before Russia’s invasion of Ukraine as European gas prices started to rise with the declining use of coal.

The ASX-listed ADX tasted success with the recent Anshof 3 oil discovery and existing production from its Gaiselberg and Zisterdorf oil fields, all in Austria. The company is one of only three producers in the country.

Whilst formulating a field development plan to put its Anshof 3 into long-term production, along with follow-up drilling from the same location, the massive Welchau Prospect has captured the interest of industry watchers.

It is a proven play type with the downdip Molln 1 discovery drilled in 1989 yielding an interpreted 400m gas column, based on pressure and well-test data. Interestingly, this was made before the advent of the breakthrough 3D seismic technology that made subsurface mapping less a black art and more a science.

Management says a best technical prospective resource estimate on Welchau of 800 billion cubic feet equivalent, or “bcfe”, converting to about 134 million barrels of oil equivalent, or “mmboe” and they also expect high condensate yields.

Molln 1 was successfully production tested at 3300m depth in the well from a small downdip compartment relative to the large much further updip Welchau anticline. The main Welchau is at a shallow 1120m with an expected total depth of 1290m translating to relatively inexpensive drilling costs and in the event of commercial success would provide an excellent return on investment for ADX and any future drilling partners.

Molln 1 flowed between 2.6 and 3.5 million cubic feet per day, or “mmcf/d” with an associated condensate yield of 40 barrels per million cubic feet, with ADX calculating about 26 million barrels of oil, or ‘mmbbls’ of condensate in the Welchau structure.

ADX says the large gas column height significantly reduces exploration risk, with pressure data from the Molln well test indicating a potential gas column height up to 900m, given there is a proven column of about 400m.

There was no viable gas market or infrastructure at the time of the discovery in 1989, according to ADX. The likes of OMV, BP Amoco and Exxon were chasing 5000m deep oil targets. Gas discovery as significant as Molln 1 held no commercial attraction and the incumbents walked away, much to the good fortunes of ADX.

Infrastructure has improved over the years and Austria’s national pipeline grid now runs close by. ADX hopes to drill Welchau within nine months.

ADX is the only exploration operator in a prolific basin with access to infrastructure that can provide rapid and material sources of new energy needed for Europe’s current energy crisis and low carbon future.

The company is also preparing to drill a new development well from the Anshof 3 well pad. It says planning is largely completed and ready for long- lead item procurement. Earlier this year, a successful well test flowed high quality oil at 132 bopd, confirming an independent pre–drill best technical prospective resource of 6.6mmboe.

It is now looking forward to first cashflow from the discovery with a long-term production test next quarter.

ADX’s plan across its wider portfolio includes the OHO and Zam high-impact gas plays that are drill-ready, with a rig site available. The company is in the farmout process to attract new partners and funding into the 3D defined prospects.

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