Interview with Ian Tchacos, Executive Chairman of ADX Energy Ltd.
Recording date: 16th May 2024
ADX Energy is an Austrian-focused oil and gas company that has positioned itself to capitalize on Europe's pressing need for new energy supply. By acquiring a large and well-understood asset base from major producer RAG Austria AG, ADX has gained a strategic foothold in the heart of Europe's integrated energy market.
The company's near-term growth engine is the Anshof oil discovery in Upper Austria. Since drilling the discovery well in January 2022, ADX has rapidly progressed the field from exploration to production, with current output around 140-150 bopd. The planned multi-well appraisal program aims to boost production to over 1,000 bopd within 12 months.
With operating costs of $21/bbl and a realized oil price of $82-83/bbl, ADX Energy wells are highly economic. At the target production rate of 1,000 bopd, Anshof would generate over US$20 million per year of operating cash flow for ADX (70% net interest).
In addition, the real prize for ADX is the giant Welchau gas-condensate prospect, where the company made a significant discovery in March 2024. The Welchau-1 exploration well encountered a 115-meter hydrocarbon column and flowed gas/condensate to surface, significantly de-risking the prospect. ADX plans to test Welchau-1 in late 2024 or early 2025, followed by additional drilling and fast-track development.
The company's agreements with RAG provide access to critical infrastructure, enabling a potential new discovery to be brought onstream within 12-18 months. Other milestones for ADX include securing a farm-in partner (Xstate Resources) to fund appraisal drilling at Anshof and completing an oversubscribed A$13.5 million placement to institutional investors. The funds ensure ADX is well capitalized to execute its upcoming high-impact drilling campaign.
ADX offers investors a rare opportunity to gain exposure to a European pure-play E&P with a rapidly growing production base and multiple large-scale exploration targets. The Anshof oil development provides low-risk, near-term growth, while the massive upside potential at Welchau could be transformational for a company with a market cap of just A$40 million.
While ADX carries the inherent risks of any small-cap oil and gas company (exploration failure, operational issues, funding constraints), the potential rewards far outweigh these risks at the current valuation. As the company delivers on its operational milestones and the strategic value of its Austrian portfolio becomes better understood, ADX Energy should be a standout performer in the junior E&P space.
View ADX Energy's company profile: https://www.cruxinvestor.com/companies/adx-energy
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An insight into junior mining and opportunities to invest.
Company Interviews, a Crux Investor show, exists to cut through the jargon, bias and bluster.
Matthew Gordon, and guest host Merlin Marr-Johnson hone in on the important factors that indicate a company's strong footing for growth and success.