ADX Energy's Welchau-1 Well Set for Flow Testing: What Investors Need to Know
ADX ENERGY LTD (ADX) Share Update November 2024 Tuesday 12th
ADX Energy Prepares for Welchau-1 Well Flow Testing
ADX Energy Ltd (ASX: ADX) has announced that preparations for flow testing the Welchau-1 discovery well in Upper Austria are progressing smoothly, with testing expected to commence in approximately one week.
Instant Summary:
- ADX holds a 75% economic interest in the Welchau-1 well.
- Flow testing to begin in approximately one week.
- Testing will focus on two major reservoirs: Steinalm and Reifling formations.
- The well is expected to produce high gravity (43.6° API) light oil with associated gas.
- MCF Energy Ltd has funded 50% of the well costs to earn a 25% interest.
Welchau-1 Well Overview
The Welchau-1 discovery well, located in the ADX-AT-II license area in Upper Austria, is set for flow testing. ADX Energy holds a significant 75% economic interest in this project, which promises substantial potential for oil and gas production. The well has been prepared with the necessary equipment, including a workover rig and flow testing facilities, to ensure a smooth testing process.
Flow testing is expected to begin in approximately one week, focusing initially on the Steinalm formation, followed by the Reifling formation. These formations are part of the Triassic-Mesozoic age reservoirs identified during the drilling process. The testing will help determine the flow capacity and reserves potential of these reservoirs.
Technical and Financial Details
ADX has partnered with MCF Energy Ltd, which has funded 50% of the well costs up to EUR 5.1 million, earning a 25% economic interest in the Welchau Investment Area. This collaboration highlights the strategic importance of the Welchau-1 well within the broader context of ADX's exploration activities in the Northern Calcareous Alps.
The well is anticipated to produce high gravity (43.6° API) light oil with associated gas, a significant finding that shifts expectations from a liquids-rich gas discovery to a more valuable light oil production. The flow testing program will be comprehensive, involving several flow and shut-in periods to accurately assess the pressure response and potential reservoir damage.
Future Prospects and Exploration
ADX Energy plans to revise the resource estimates for Welchau following the completion of the testing program. The company is also looking at further exploration opportunities in the region, including the nearby Rossberg lead and deeper potential reservoirs at Welchau that have yet to be drilled. These efforts underscore ADX's commitment to maximizing the potential of its assets in Upper Austria.
The upcoming flow testing of the Welchau-1 well is a significant milestone for ADX Energy. Successful testing could lead to increased oil and gas production, potentially boosting the company's stock price. The discovery of high gravity light oil is particularly promising, as it is more valuable than the initially expected gas. Investors should watch for the results of the flow testing, as they will provide crucial data on the well's production potential.
Investor Reaction:
Analysts are cautiously optimistic about the upcoming flow testing. The discovery of light oil rather than gas has been well-received, but the actual flow rates and reservoir capacities will be key determinants of investor sentiment. Some investors may hold off on making decisions until the testing results are released.
Conclusion:
Investors should keep a close eye on the results of the Welchau-1 flow testing, as they will provide valuable insights into the well's production capabilities and ADX Energy's future prospects in the region. The company's strategic partnerships and exploration plans highlight its commitment to growth and value creation.