ADX Executive Chairman, Mr Ian Tchacos, said:
'The Board of ADX is delighted to welcome Xstate to participate in our Upper Austrian exploration program. The farm-in represents a vote of confidence for the Anshof prospect. The farm-in carry and Xstate’s ongoing participation in Anshof will assist ADX to rapidly progress and fund the development of any discovery as well as any ongoing appraisal drilling thereby accelerating the pathway to cash flow.
ADX Energy has signed a farm-in agreement with Xstate Resources to partially fund the drilling of the Anshof prospect in ADX-AT-II exploration license in Upper Austria. Under the terms of the Farmin HOA, Xstate will fund 40% of the Anshof well drilling expenditure up to a cap EUR 1,800,000 million (EUR 720,000) to earn a 20% equity interest in the Anshof Prospect Area. Xstate may elect to fund 40% of a second well on Anshof or the Anshof Farmin Area to earn a 20% interest in the entire Anshof Farmin Area (Second Well Funding).
Subject to an election to participate in the Anshof Prospect Area following the conclusion of drilling the Anshof exploration well, Xstate has up to 3 months to elect to participate in the entire Anshof Farmin Area by making a commitment to the Second Well Funding. Upon earning a participating interest in the Anshof Prospect and the Anshof Prospect Area, ADX and Xstate have agreed to enter into a production sharing contract (PSC) and a joint operating agreement (JOA) which will cover the conduct of ongoing operations and sharing of production. The PSC and JOA principles are included in the Farmin HOA.
Upon completion of the farmin obligations by Xstate including Second Well Funding, Xstate will hold a 20% participating interest in the Anshof Prospect Area as well as the Anshof Farmin Area. ADX will retain an 80% interest in the Anshof Prospect Area as well as the Anshof Farmin Area. ADX will also retain a 100% interest in the remainder of the ADX-AT-II exploration license and the entire ADX-AT-I exploration license.
ADX is preparing to spud the Anshof well in December 2021.The primary target for the Anshof well are high productivity Eocene sandstone reservoirs which are expected at a drill depth of approximately 2,000 metres MD. The well is estimated to take 17 days to drill to a total depth of 2,200 meters MD. The well program includes a full penetration of the deeper Cenomanian sandstone reservoirs which are significant producers in nearby fields such as the large Voitsdorf oilfield northeast of Anshof.
Anshof is a well-defined Eocene - Cenomanian structural prospect located up-dip and on trend from existing oil production from adjacent fields. The ADX’ in house team has developed a new structural model constraining the nearby producing Voitsdorf, Bad Hall and Pfarrkirchen oil fields which has resulted in identification of a number of on trend prospects and appraisal opportunities. Exploration success at Anshof will validate the new structural model and de-risk multiple follow up prospects. The Anshof prospect has a best technical case prospective resource potential of 6.6 MMBOE with significant upside potential in the primary Eocene sandstone reservoir objective. The well plan includes a deeper Cenomanian secondary target with a best technical resource potential of 2.1 MMBOE. The Original Resources Reporting Date: Upper Austria Exploration was on 30/11/2020, estimates were further revised on 30/3/21.
On the 10th of November 2021 ADX announced an independent review of the Anshof Prospect undertaken by RISC Advisory. RISC assessed that the mean un-risked Prospective Resource for the Anshof prospect is 6.6 Million Barrels of Oil Equivalent (“MMBOE”) (including the primary Eocene target only) and the probability of success is 43%.
OHO Farm-in Option
Subject to satisfying its Anshof farmin obligations, Xstate has an option for up to two months after the drilling of Anshof to farmin to ADX OHO prospect in ADX-AT-I license to earn between a 15% to 25% participating interest in the OHO Farmin Area by spending twice the nominated participating interest share of the costs of drilling one exploration well in the OHO Farmin Area up to maximum expenditure of €6,600,000.
The OHO Farmin Area is the blue outlined (90 km2) area shown in figure 3 below in the south of the ADX-AT I concession incorporating the ‘Mesozoic wedge play’ consisting of Jurassic and Cretaceous reservoirs pinching out onto the basement terrains, in particular the central basin high or so called ‘Central Swell Zone’ ('OHO Play') in the ADX-AT-I License, Molasse Basin, Austria. OHO Farmin Area does not include shallower Miocene or Oligocene prospects such as the Irrsdorf and Lichtenberg prospects.
Non-Executive Director of ADX Energy, Mr Andrew Childs is also the Executive Chairman of Xstate, Mr Childs declared his conflict at the beginning of this process and recused himself from all Board Meetings and decision making in relation to the Anshof Farmin transaction.