ADX Announces 154% Increase in 2P Developed Reserves in Austrian Fields

Source: 11/4/2021, Location: Europe

Key Points:
- An independent audit of developed reserves has been completed for ADX’ Zistersdorf and Gaiselberg fields (“Fields”) in the Vienna basin, Austria by RISC Advisory Pty Ltd (“RISC”).

- RISC has conducted an independent audit of ADX’ developed reserves for the Fields at 1 July 2021, including production forecasts, cost estimates and project economics (“RISCCPR”).

- A summary of the findings of the RISC CPR are summarised as follows:
- 1P (Proven) developed reserves estimate of 1,190,000 barrels of oil equivalent - an increase of 215% compared to a previous Field audit announced on 5 November 2020;
- 2P (Proven + Probable) developed reserves estimate of 1,850,000 barrels of oil equivalent - an increase of 154% compared to a previous Field audit announced on 5 November 2020 (refer table 1); and
- The estimated Net Present Value of the 1P and 2P reserves respectively is EUR 5.7 million (approximately A$ 8.7 million) and EUR 15.9 million (approximately A$ 24.4 million).

- The increase in the audited reserves is based on recompletion opportunities accessing behind pipe reserves in existing wells identified from an ADX full field geological and reservoir simulation model as well as better than forecast Field production performance since the previous independent audit.

ADX Executive Chairman, Mr Ian Tchacos, said, “The RISC CPR results confirm that the developed Reserves and production potential of ADX’ Gaiselberg and Zistersdorf fields significantly exceed previous expectation. Ongoing field performance and ADX’ technical studies which have been supported by RISC indicate that substantial behind pipe potential in existing wells can be accessed at low cost to increase reserves, future production and value from the fields. While the assets are mature, they are very well maintained with adherence to the highest environmental and emission standards. The assets also provide the opportunity to create further value for shareholders and provide environmental benefits through the future deployment of the Vienna Basin Hydrogen Production and Storage project, there by delivering value from the Vienna Basin Fields for many years to come.”

ADX Energy Ltd (ASX Code: ADX), is pleased to advise the results of the competent person’s report undertaken by independent consultants RISC (“RISC CPR”). RISC 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 (“Fields”) in which ADX holds at a 100% operated interest.

The effective date of the RISC CPR is 1 July 2021. 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 are from behind pipe reservoirs in existing wells which will become producing reserves once these wells have been perforated to access and produce intersected oil and gas.

A comparison of the RISC CPR assessment to the previous CPR assessment with an effective date of 31 December 2019, reported on 5 November 2020 is shown below in Table 1. The equivalent previously reported reserves adjusted to 1 July 2021 are calculated by deducting production from 31 December 2019 to 1 July 2021. A positive variance of 215% and 154% respectively is estimated for the 1P and 2P developed reserves categories between the RISC CPR reserves announced in this release and the ADX previously reported CPR on 5 November 2020. The RISC CPR net present values (“NPV”) are shown for future Field cash flows for the corresponding reserves cases. All Reserves are based on PRMS Reserves classifications refer below.

PRMS 2018 Reserves Classifications used in this Release
1P Denotes low estimate of Reserves (i.e., Proved Reserves). Equal to P1.
2P Denotes the best estimate of Reserves. The sum of Proved plus Probable Reserves.
3P Denotes high estimate of Reserves. The sum of Proved plus Probable plus Possible Reserves.

1. Developed Reserves are quantities expected to be recovered from existing wells and facilities.
a. Developed Producing Reserves are expected to be recovered from completion intervals that are open and producing at the time of the estimate.
b. Developed Non-Producing Reserves include shut-in and behind-pipe reserves with minor costs to access.
2. Undeveloped Reserves are quantities expected to be recovered through significant future investments.

A. Proved Reserves are those quantities of Petroleum that, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be commercially recoverable from known reservoirs and under defined technical and commercial conditions. If deterministic methods are used, the term “reasonable certainty” is intended to express a high degree of confidence that the quantities will be recovered. If probabilistic methods are used, there should be at least a 90% probability that the quantities actually recovered will equal or exceed the estimate.

B. Probable Reserves are those additional Reserves which analysis of geoscience and engineering data indicate are less likely to be recovered than Proved Reserves but more certain to be recovered than Possible Reserves. It is equally likely that actual remaining quantities recovered will be greater than or less than the sum of the estimated Proved plus Probable Reserves (2P). In this context, when probabilistic methods are used, there should be at least a 50% probability that the actual quantities recovered will equal or exceed the 2P estimate.

C. Possible Reserves are those additional Reserves that analysis of geoscience and engineering data suggest are less likely to be recoverable than Probable Reserves. The total quantities ultimately recovered from the project have a low probability to exceed the sum of Proved plus Probable plus Possible (3P) Reserves, which is equivalent to the highestimate scenario. When probabilistic methods are used, there should be at least a 10% probability that the actual quantities recovered will equal or exceed the 3P estimate. Possible Reserves that are located outside of the 2P area (not upside quantities to the 2P scenario) may exist only when the commercial and technical maturity criteria have been met (that incorporate the possible development scope). Standalone Possible Reserves must reference a commercial 2P project.

Scope of RISC CPR
RISC conducted an independent audit of ADX‘ field evaluations, including production forecasts, cost estimates and project economics. Production from existing wells is classified as Developed Producing. Production from planned recompletion of the existing wells to new intervals is classified as Developed Non-Producing.

The CPR provides an independent audit of the reserve and resource evaluation conducted by ADX including:

- 1P and 2P developed producing reserves;
- 1P and 2P developed non-producing reserves from upward recompletion of wells;
- 2C contingent resources if applicable; and
- Project economics and NPV.

RISC has also provided an assessment in relation to the validity ADX simulation case forecasts.

Comparison of RISC CPR results and ADX Reservoir Simulation Model ADX provided RISC with their full field geological and history matched dynamic models for the Neogene Sarmatian reservoirs in the Gaiselberg and Zisterdorf oil fields. This included the production history to end April 2021, the forecast schedule of workovers and activities, and forecasts for the smaller Gaiselberg and Zisterdorf reservoirs.

The RISC CPR is based on a review of new work undertaken by ADX as follows:
- both historical and ongoing field and well production data;
- a reprocessed 3D data seismic dataset, revised petrophysics and the extensive field well data base incorporated into a 3D geological model for the field;
- a history matched reservoir simulation model; and
- the utilisation of a reservoir simulation model to forecast future production and reserves estimates (ADX Simulation Model).

Field Depletion Strategy
The Fields consist of approximately 50 multi stacked sandstone hydrocarbon bearing reservoirs. The oil bearing intervals have largely been developed from the bottom up. The main drive mechanism is edge water supplemented with water injection. ADX have identified at least 32 recompletions of the existing wells to further develop the different zones.

ADX Simulation Model estimates consist of developed producing resources and developed nonproducing resources from well re-completions to shallower zones. The majority of re-completions will occur within the next 10 years however the last re-completion is scheduled for 2042. Re-completing wells to access shallower zones would not be done before production from the current zone has declined. This explains the extended re-completion timing in the ADX Fields.

RISC concurs that behind pipe opportunities add significant reservesto the Fields. The ADX Simulation Model case represents a substantial upside opportunity which can be accessed at relatively low cost. RISC has commented that should the ADX depletion strategy be implemented and simulation history match be validated by production actuals and results from key workovers, the additional volumes forecast in the ADX Simulation Model could potentially be moved to a 2P reserves classification in subsequent reserves assessments.

Prior production wells have produced for over 60 years in the Gaiselberg and over 30 years in Zistersdorf field. The age of wells recompleted in 2040 would be less than these historic well lives. Therefore, well integrity is not expected to be an issue. Despite the extended period before some well re-completions, RISC considers that the resources meet the reserve classification.

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