Auctus maintains ADX 30c price target
Auctus maintains 30c price target as ADX exceeds production targets for Q4 FY2025
Key price short term catalyst is the expected drilling of low-risk, shallow gas targets in Upper Austria
Potential large upside potential from Welchau-1 and award of Sicily Channel permit could provide further boosts
This boosted revenue despite lower oil prices in June with the company flagging that it generated $3.5m in adjusted sales (including a net payment for sales during the period), an increase of 26%.
Auctus said its price target, which is well above ADX Energy's (ASX:ADX) current price of ~2.9c, remained unchanged pending further updates relating to the suspended Welchau-1 test program.
It remains keen on the company's planned low-risk, shallow gas drilling targeting the GOLD cluster in Upper Austria that collectively hosts 12.1 billion cubic feet of prospective gas resources.
While each target in this cluster hosts relatively modest quantities of gas, they are considered to have very low geological risks and could deliver production of between 10 million and 15 million cubic feet of gas per day based on observations of nearby wells.
These wells can also be brought into production quickly due to the GOLD cluster's proximity to nearby open access pipeline infrastructure, meaning that successful discoveries can make a difference to the company's bottom line without delay or fuss.
ADX is searching for a farm-out partner that will help de-risk drilling and help fund costs ahead of starting drilling in late Q4 2025 or early Q1 2026.
'Our aggregate unrisked NAV for ADX's net interest (assuming a 50% working interest farm-out) in the shallow prospects is 11c per share,' Auctus noted.
Listen: Ian Tchacos chats with Peter Strachan
In a previous instalment of the Rock Yarns Podcast, host Peter Strachan spoke with ADX executive chairman Ian Tchacos to discuss how the company is ramping up production in Austria, attracting renewed investor interest in Europe, and advancing its shallow gas and offshore exploration plans.
Oil boost
Besides the gas drilling, ADX is also maturing additional, low-risk oil exploration and appraisal opportunities near the producing Anshof oil field in Austria.
Further wells will help the company fill its Anshof permanent production facility, which is capable of processing up to 3000 barrels of oil per day.
A further catalyst is the upcoming final award of Sicily Channel gas exploration permit offshore Italy, which Auctus expects to occur sometime this month.
It expects the permit to become a new area of focus for ADX with large gas prospects identified on 2D seismic and historical wells which targeted deeper oil but had gas shows on the way down.
Auctus also notes that ADX had $4.8m in cash at the end of June, which includes just two months of sales.
Adding the payment of ~$700,000 for the third month that was received on July 1 suggests an adjusted cash position that's in line with its expectations.
This article was developed in collaboration with ADX Energy, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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