Regulatory Hurdles Stall Welchau-1 Testing Amid ADX’s Expansion Drive

Production and Revenue Performance

ADX Energy Ltd (ASX:ADX) delivered a solid operational quarter ending December 2024, with net production averaging 218 barrels of oil equivalent per day (BOEPD) in Austria. This output generated sales revenue of approximately A$2.3 million, reflecting stable production despite some mechanical downtime in the Vienna Basin fields. The company’s cash position remained robust at A$9.1 million, underpinning its development and exploration programs.

December marked a milestone with the commencement of commercial production from the Anshof-2A side track oil appraisal well, contributing to a combined Austrian net production of 238 BOEPD. The Anshof field’s production increased by 21% quarter-on-quarter, driven by Anshof-2A’s integration into the permanent production facility (PPF).

Welchau-1 Testing and Legal Challenges

ADX’s testing of the Welchau-1 discovery well, a significant light oil and associated gas find in Upper Austria, faced setbacks. Initial flow tests yielded inconclusive results, with hydrocarbon presence confirmed but limited fluid flow. The testing was suspended following a court ruling triggered by objections from environmental NGOs, which challenged the environmental clearance for continuous flow testing. ADX continues to monitor well pressure and plans further testing pending regulatory clarity.

Despite these challenges, ADX remains optimistic about Welchau’s potential, citing the complex carbonate reservoir and ongoing scientific research aimed at better understanding the structural geology. The company is also advancing follow-up prospects nearby, including the Rossberg lead, which shares geological similarities with Welchau.

Expansion into Italy’s Sicily Channel

In a strategic move, ADX accepted the offer of the Sicily Channel Gas Exploration Permit offshore Italy, positioning itself in a region with proven sweet gas potential. The permit area benefits from historical wells confirming gas presence, high-quality seismic data, and proximity to existing infrastructure, including the Transmed pipeline. The permit’s fiscal terms and Italy’s pro-development stance on clean gas exploration enhance the commercial attractiveness of this asset.

ADX plans to formalize the permit agreement in early 2025 and commence seismic data acquisition and portfolio development. This addition complements ADX’s Austrian portfolio and aligns with Europe’s increasing demand for domestically produced, environmentally sustainable gas.

Exploration and Development Outlook

ADX is actively maturing a suite of near-term drilling prospects in Upper Austria, focusing on low-risk, rapid-to-commercialize oil and gas targets. The company is progressing seismic reprocessing in its ADX-AT-I licence area to enhance imaging of deeper Jurassic and Cretaceous reservoirs, which could unlock significant resource potential.

In Romania, ADX continues discussions with regulators regarding the extension of the Parta exploration licence and is evaluating new venture opportunities with existing production and exploration upside. Additionally, ADX is exploring renewable energy initiatives, including solar and hydrogen projects in the Vienna Basin, aiming to develop a multi-energy hub that integrates conventional hydrocarbons with renewables.

Financial and Corporate Developments

Capital expenditure during the quarter was focused on well operations, notably Anshof-2A and the LICHT-1 gas exploration well, with total outflows of A$11.5 million partially offset by partner contributions. ADX extended the repayment terms of A$1.25 million in loan notes to March 2026, providing financial flexibility to support its development agenda.

Executive Chairman Ian Tchacos highlighted the company’s strong cash flow, strategic asset base, and partnership model as key drivers for near-term value creation for shareholders.