Austrian Fields Independent Reserves Review

Source: 11/5/2020, Location: Europe

Key Points:
- A Year-End 2019 developed Reserves audit has been completed for ADX Zistersdorf and Gaiselberg fields (Fields) in the Vienna basin. A summary of results from a competent person’s report (CPR) by ERC Equipoise Pte Ltd (ERCE) is shown in Appendix 1.
- Audited developed Reserves at 31 December 2019 exceed ADX prepurchase expectation for 1P (Proven) and 2P (Proven and Probable) developed Reserves by 13% and 4% respectively.
- Actual field production to end September 2020 exceeds the audited developed 2P Reserves (Proven plus Probable) production forecast.
- The audit work validates ADX reserves expectation of long life oil and gas production from the fields which is further supported by ongoing production trends.
- In addition a field review is being undertaken utilizing recently acquired and reprocessed 3D seismic. The outcome of this work is to identify development and appraisal opportunities. Studies include the potential utilization of infrastructure and depleted reservoirs for CO2 storage and renewable technologies including green gas production and hydrogen storage. - ADX expects to announce the results of the undeveloped Reserves and appraisal opportunity studies in the near future.

ADX Energy Ltd, is pleased to advise the results of the Competent Person’s Report (“CPR”) undertaken by Independent Consultants ERCE. ERCE was engaged to audit the developed Reserves held by the ADX Energy Ltd Group (ADX) at the Zistersdorf Field and Gaiselberg Field in the Vienna Basin, Austria.

The effective date of the CPR is 31 December 2019 (the Effective Date). The developed Reserves have been classified as producing and non-producing. The developed producing Reserves comprise oil and gas quantities from existing producing wells and non-producing developed Reserves from behind pipe reservoirs which will become producing reserves once perforated to access and produce proven oil and gas reservoirs has been made.

A 100% interest in the Fields as well as agreements for exploration data in Upper Austria were purchased on the 2 December 2019 from a wholly owned subsidiary of RAG Austria AG (REP). A base line assessment of developed Reserves has been undertaken by ADX based on the Fields’ production and geological data (Data). The Data together with economic and commercial data provided by ADX have been used for the preparation of the CPR.

ERCE is an independent London and Singapore based consultancy specialising in geoscience evaluation, engineering and economic assessment. The CPR has been prepared in accordance with the June 2018 SPE/WPC/AAPG/ SPEE/SEG/SPWLA/EAGE Petroleum Resources Management System (PRMS) as the standard for classification and reporting.

Audited versus ADX Pre purchase Reserves Comparisons
The unaudited estimated remaining 2P developed Reserves of 0.98 MMboe at 31 December 2018 was announced by ADX on 2 July 2019. Field production between 31 December 2018 to 31 December 2019 was 0.12 MMboe. Table 1 shows the equivalent previously reported Reserves calculated at 31 December 2019 by deducting production during 2019. A positive variance of 13% and 4% respectively is estimated for the 1P and 2P developed reserves categories between the audited Reserves announced in this release and the ADX previously reported, preacquisition estimates. A summary of the results from the CPR are shown in Appendix 1. All Reserves are based on PRMS Reserves classifications refer below.

Other Value Enhancement Studies
In addition to the developed Reserves review which was intended to provide assurance for the developed Reserves expectation, ADX is utilising state of the art 3D seismic to assess undeveloped Reserves and appraisal opportunities within the Fields area. The review is utilising recently acquired and reprocessed 3D seismic. The outcome of this work will be to better define development drilling opportunities within the Fields (Neogene reservoirs) as well as deeper appraisal opportunities in the proven but not yet fully developed Flysch reservoirs (Paleogene and Cretaceous age). The combination of low risk, long life developed production, high quality oil, low production royalties (less than1%), shallow reservoirs (less than 1500m on average) as well as efficient and well maintained production infrastructure which is connected to the OMV refinery by export pipeline makes additions to the Field reserves potentially highly profitable.

ADX expects to mature development drilling as well as appraisal opportunities in the coming months which will be reported to shareholders at the appropriate time.

Oil and gas assets such as ADX Zistersdorf and Gaiselberg fields with reservoirs and infrastructure located near sources of CO2 or potential green hydrogen generation are suitable candidates for potential utilisation for CO2 storage and renewable technologies including green gas production and hydrogen storage. There is increasing funding potentially available as well as subsidies and carbon credits for CO2 storage and renewable technologies in Europe. In Austria alone the currently 3.8 GW of solar and wind energy capacity is planned to be increased to 21 GW by 2030 according to EU guidelines, which will create significant excess energy for green hydrogen generation and for energy storage in general. ADX is therefore reviewing opportunities to redeploy its assets rather than abandoning them by creating an asset from what is currently valued as a liability. We look forward to reporting further in relation to these initiatives in the near future.

ADX Executive Chairman, Mr Ian Tchacos, said, “The audit results confirm the developed Reserves and production potential of the Gaiselberg and Zistersdorf fields. While the assets are mature, they are very well maintained with adherence to the highest environmental and emission standards. Improvements in 3D seismic acquisition and processing technologies have the potential to yield further reserves additions and increased production. The assets also provide the opportunity to create further value for shareholders and provide environmental benefits through the future deployment of CO2 storage and renewable gas technologies, there by delivering value from those assets for many years to come.”

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