ADX Energy Limited (ASX:ADX) has received US$1.5 million which will enable drilling of an appraisal well at the Parta exploration licence onshore Romania.
These funds represent tranche two of an agreement with Reabold Resources PLC (LON:RBD) to invest US$2 million in special purpose vehicle Danube Petroleum Limited in which ADX holds 71% and Reabold 29%.
Key milestones achieved
The tranche two transfer was made upon the achievement of key milestones including the approval of the location and well program for the first appraisal well by the relevant Romanian Licensing Authority (NAMR).
Other milestones were landowner approvals for access to the rig site and finalisation of a tendering process for key long lead equipment purchases.
These items include casing, tubing and wellheads as well as a rig contract to drill the first well of the two well program.
Historical gas discovery
The Iecea Mica 2 well is a redrill of a historical gas discovery.
It has independently assessed appraisal potential 2C contingent gas resources of 15.5 billion cubic feet (Bcf) and additional exploration potential defined on 3D seismic.
The best estimate unrisked prospective resources of the latter are 15.6 Bcf.
ADX believes there is excellent economic potential due to low drilling and development costs, favourable fiscal terms and robust gas pricing.
Danube was formed to conduct appraisal, development and exploration activities onshore western Romania.
Danube’s interests are held via a wholly-owned Romanian subsidiary including a 50% interest in the Parta exploration licence, 100% interest in the Iecea Mare Production Licence and 100% participating interest in the Parta Appraisal Program.
Option for further investment
ADX and Reabold have agreed that Reabold has an option, at its election, to invest a further US$500,000 and ADX will either invest directly or source investment from a third party of US$500,000 on the same terms as Reabold’s tranche one and two investments by October 31, 2018.