ADX Energy Limited (ASX:ADX) has executed concession agreements with the BMLRT, the Federal Ministry responsible for Mining on behalf of the Austrian government, ratifying the exploration, production and gas storage concession agreements (AGS) negotiated late last year.
This follows a comprehensive but highly efficient and speedy approval process.
Execution of the concession agreements for the Upper Austria AGS is a major milestone for ADX which is now the sole exploration operator in the Austrian part of the prolific Molasse oil & gas basin.
The new drill-ready and potentially substantial growth portfolio in Upper Austria complements the stable, long-term, cash flow from ADX Lower Austrian oil and gas fields, which are in the middle of OMV’s (the National Oil Company of Austria) principal area of operations.
ADX is now well-positioned for short to mid-term growth in Austria, a country where more than 1 billion barrels of oil and 2.7 TCF of gas has been produced.
“Very privileged acreage position”
ADX executive chairman Ian Tchacos said: “ADX has secured a very privileged acreage position in Upper Austria which is substantially enhanced by the existence of a drill-ready portfolio and guaranteed access to oil and gas infrastructure on favourable terms.
“The signing of the Upper Austria AGS is the culmination of over 18 months of technical work, commercial discussions and relationship building with RAG E&P and the Austrian designated authorities by our local ADX team.”
Data trade agreement
Signing of the AGS agreement followed execution of a data trade agreement with RAG in July 2019 in conjunction with the acquisition of Gaiselberg and Zistersdorf asset acquisition providing access to high quality 3D seismic and well data in Upper Austria with a replacement value of EUR 90 million.
It will enable the company to utilise the data on an area of 450 square kilometres that includes 10 drill-ready exploration prospects with a best technical prospective resource estimate of 42 million barrels of oil equivalent.
An infrastructure agreement signed between RAG Exploration & Production GmbH (RAG E&P) and the company last month, will allow ADX to reduce capital expenditures and the time taken for drilling.
As a result of this agreement, ADX has secured a highly prospective drill-ready exploration and appraisal acreage position proximal to infrastructure in a highly productive basin where an exploration success rate of 48% has been achieved.
Drilling at project
Drilling can begin within a short time and hydrocarbons can be potentially developed quickly, cost-effectively and with a high degree of commercial certainty.
A key benefit of the AGS area is its central location in the heart of Europe where there is strong political and financial support for green energy projects such as geothermal and hydrogen storage by the European Union.
Tchacos said: “We are particularly encouraged by the Austrian Government’s continued commitment to domestic energy sector investment as well as the encouragement of renewable opportunities that exist such as geothermal or hydrogen storage.
“ADX is well-placed in a jurisdiction with immediate oil and gas growth potential and longer-term renewable development opportunities.”
ADX has been approached by a number of interested parties and has commenced informal farm-out discussions ahead of a formal data room process planned for late January.