- Drilling and Seismic Work Program Fully Funded to earn a 50% Interest and a 5% Net Profits Royalty
- Farminee - SDP Services brings strong financial and operating capacity
- An Oil and Gas Services Company with Onshore and Offshore Rigs, Seismic and Logging equipment
- The Farmin by SDP significantly enhances the financial capability of ADX and the likelihood of Permit ratification by Italian Authorities
- The transaction is conditional upon ratification of the Permit by the Italian Authorities
- Subject to ratification ADX is now in a position to progress the appraisal of the highly profitable Nilde Oil field Redevelopment Project
ADX Energy has signed an agreement with SDP Services to farm out a 50% interest in the d 363 C.R-.AX Permit containing the Nilde Oil Redevelopment Project and the successfully tested Norma and Naila oil discoveries offshore Italy. SDP will fund the work program commitments of Audax Energy a wholly owned subsidiary of ADX up to a maximum of Euro 20.82 million to earn a pro-rata interest of 50% upon completion of funding. The transaction is conditional upon the Italian Licensing Authorities ratifying the License. Upon ratification of the License SDP will receive 5% net profits royalty interest attributable to any future production from the Nilde Field. ADX will remain operator of the license.
SDP is a privately owned specialised Oil and Gas services company providing drilling, seismic, testing, hydraulic fracturing and logging services with offices in London. The company generates strong operating cash flow and profit as well as having a substantial balance sheet. The financial capability of SDP is particularly important to provide financial support to ADX with regard to ratification of the permit and future appraisal and development activities.
This Farmout transaction provides the financial support required by the Italian Licensing Authorities and places ADX in a strong position to seek ratification of the License.
Work Program Obligations
Audax was issued the d 363 C.R-.AX permit by the Regulatory Authority in May 2014.
A summary of the Permit work program submitted in 2014 are as follows;
- Year 1 and 2) Seismic purchase and studies year 1 and 2 (Euro 300,000 est),
- Year 3) Seismic acquisition (Euro 520,000 est)
- Year 4) Drill a well (Euro 20,000,000 est). Note 1
Note 1: Well costs have reduced significantly since 2014, ADX current estimate to drill an appraisal well is approx. US$ 14 million.
Permit obligations commence once the license is ratified. ADX has already expended approximately Euro 950,000 which is significantly in excess of the year 1 and 2 work program obligations. Upon ratification ADX intends to accelerate the work program with a view to appraising the remaining resources in Nilde as soon as practically possible.
Ian Tchacos, Executive Chairman of ADX, commented:
'The Board of ADX is pleased to have secured this potentially important Farmout transaction with SDP Services. We expect that the funding support provided by SDP will break impasse with the Italian Authorities and lead to the long overdue ratification of the license. Upon ratification a substantial investment in the Nilde Re Development project has the potential to unlock substantial value for ADX and SDP shareholders. Nilde at current oil prices is potentially a very valuable project as outlined in the attached project summary and we now can start to look forward to getting back on track.'
Click here for full announcement and an overview of the Nilde Oil Redevelopment Project
Source: ADX Energy