AXP Energy Reports 11% Oil Production Rise and Syrian Farm-in Agreement
AXP Energy has cemented a foothold in Syria’s reopening oil sector with a 25% farm-in to Block 9, while its Oklahoma operations deliver rising production and first oil sales. The company faces cash flow pressures but is actively pursuing multiple funding avenues.
- Farm-in agreement grants 25% interest in Syria’s Block 9 PSC
- Oklahoma’s Edwards Lease achieves first oil sales and production growth
- Quarterly oil production rises 11%, gas up 25%
- Cash reserves decline to $60,596 amid operating outflows
- Company pursues equity, debt, and asset sale funding options
Strategic Entry into Syria’s Palmyride Basin
AXP Energy Limited (ASX:AXP) has marked a significant milestone by securing the right to earn a 25% participating interest in the 10,039 km² Block 9 Production Sharing Contract in Syria’s Palmyride Basin. This farm-in agreement with operator Simpora Latakia Limited positions AXP as an early mover in Syria’s petroleum sector, which is reopening to international investment following the easing of sanctions.
Block 9 benefits from approximately US$25 million of historical exploration efforts, including extensive 2D and 3D seismic data and the drilling of the Itheria-1 well. Two drill-ready prospects, Itheria and Bashaer, boast historical best-estimate prospective resources of 225 million barrels of oil equivalent (MMboe) and 101 MMboe respectively, although these figures have not been independently validated by AXP. The company plans to reprocess seismic data through 2026–27 and aims to commence drilling in 2027, subject to Syrian government approval and a US$1 million forward contribution towards the work program.
Oklahoma Operations Transition to Revenue Generation
Meanwhile, AXP’s 100%-owned Edwards Lease in Oklahoma has progressed from development to production. The Charlie #1 well, equipped with a tubing pump and supported by a commissioned saltwater disposal facility, produced approximately 35 barrels of oil per day and 60 Mcf of natural gas initially, equating to around 45 barrels of oil equivalent daily. The well is currently in a clean-up and stabilisation phase, producing roughly 700 barrels of fluid per day.
Notably, AXP achieved its first oil sales from the Edwards Lease this quarter, delivering 303 barrels to the Ponca City refinery. The company holds an 81.25% net revenue interest in the lease and is actively working to enhance production by evaluating additional pay zones within the Mississippi Lime formation for potential perforation and comingling.
Production Growth in Colorado and Overall Output
Production at AXP’s Colorado leases near Florence remained steady at around 22 barrels of oil per day, with net sales volumes of 1,498 barrels and an average sales price of US$84.64 per barrel for the quarter. Overall, the company reported a quarterly gross oil production increase of 11% to 2,203 barrels and a 25% rise in gas production to 2,531 Mcf compared to the previous quarter.
Financial Position and Funding Initiatives
Revenue from continuing operations rose modestly to US$149,347, driven by higher oil prices and initial Oklahoma oil sales. However, operating activities generated a net cash outflow of US$171,715 for the quarter, with cash and cash equivalents declining sharply to US$60,596 from US$399,969 at the prior quarter end.
Investing activities resulted in a net cash outflow of US$36,730, mainly due to exploration expenses including the US$100,000 deposit for the Syrian farm-in. Financing activities also saw a net cash outflow of US$134,664, reflecting share issue costs and loan repayments.
AXP is actively pursuing a range of funding options to support ongoing operations and growth plans. These include potential equity raisings, debt financing, asset sales, farm-outs, joint ventures, and cost rationalisation measures. While the company has a track record of accessing capital markets, it acknowledges uncertainty around the timing and outcomes of these initiatives.
Operational Safety and Future Outlook
The company reported no recordable injuries or environmental incidents during the quarter. It continues to assess acquisition and drilling opportunities, particularly in Oklahoma, alongside progressing its Syrian exploration ambitions.
Bottom Line?
AXP Energy’s bold entry into Syria’s oil sector complements steady US production gains but underscores an urgent need for successful funding to sustain growth.
Questions in the middle?
- Will Syrian government approval for the Block 9 farm-in come through on schedule?
- How effectively can AXP ramp up production from the Edwards Lease and new drilling zones?
- Which funding avenues will AXP prioritise to address its tight cash position?
