ADX Energy's Welchau-1 Production Testing Update
ADX ENERGY LTD (ADX) Share Update December 2024 Wednesday 11th
ADX Energy Reports Initial Welchau-1 Production Test Results
ADX Energy Ltd (ASX: ADX) has released initial results from the production testing of the Welchau-1 well, located in Upper Austria, revealing challenges and future plans.
Instant Summary:
- Initial flow test of the Reifling formation did not yield sufficient reservoir fluid flow.
- Presence of workover fluids and unknown solid particles detected.
- Further testing and analysis planned for early next year.
- MCF Energy Ltd funds 50% of Welchau-1 costs for a 25% interest.
Initial Testing Results
ADX Energy Ltd has conducted an initial flow test on the upper part of the Reifling formation in the Welchau-1 well. Unfortunately, the test did not produce sufficient flow into the well bore to allow for a comprehensive analysis of the reservoir fluids. The sampling primarily recovered workover fluids, specifically brine, along with traces of black solid particles whose composition is currently unknown.
These particles are suspected to be affecting the well flow, and their composition is under analysis at a specialist laboratory. The well has been temporarily shut in, and the workover rig has been demobilized as ADX awaits further data from the Welchau-1 well.
Forward Program and Analysis
ADX plans to install well head pressure recording equipment to monitor potential pressure build-up due to well inflow. If sufficient inflow is observed, further sampling will be conducted, and the well may be swabbed using wire line to reduce hydrostatic pressure and induce further flow.
Should hydrocarbons be recovered, ADX intends to resume testing of the Reifling formation after potentially acidizing the reservoir to overcome well bore damage and enhance productivity. In parallel, samples from the Steinalm formation will be analyzed to determine the presence of hydrocarbons and the composition of the solid particles encountered.
Economic Participation and Future Plans
ADX holds a 75% economic interest in the Welchau Investment Area, with MCF Energy Ltd funding 50% of the Welchau-1 well costs up to a cap of EUR 5.1 million to earn a 25% interest. MCF is responsible for 25% of ongoing well costs and exploration expenditures. Results from the current testing and analysis are expected early next year, which will guide further stimulation and testing operations.
The initial test results from the Welchau-1 well present challenges for ADX Energy, as the lack of sufficient flow may delay further development plans. The presence of unknown solid particles adds an additional layer of complexity that could impact future productivity. Investors may react cautiously to these developments, awaiting further results and analyses early next year.
Investor Reaction:
Analysts may express concern over the initial test results, given the lack of sufficient flow and the presence of unknown particles. However, the forward program and ADX's partnership with MCF Energy Ltd provide a roadmap for addressing these challenges.
Conclusion:
Investors should keep an eye on the upcoming analysis results and ADX's subsequent actions. The company's ability to address the current challenges will be crucial in maintaining investor confidence and potentially unlocking the value of the Welchau-1 well.