ADX Energy Ltd (ASX Code: ADX) is pleased to announce it has finalised the agreement announced on the 4th of December 2017 with Reabold Resources Plc (LSE AIM:RBD) (Reabold) to invest US$2 million in the recently incorporated Danube Petroleum Limited (Danube) which, following the recent completion of transfers, holds ADX’s 50% interest in the Parta exploration license (“Parta”) and a 100% participating interest in the Parta Appraisal Program scheduled for late 2018.

The Parta Appraisal Program comprises two re-drill wells planned in the second half of 2018 to test 33 BCF of prospective and contingent resources defined on recently acquired 3D seismic, spread over a total of 5 gas reservoirs.

Reabold is a UK publicly listed company that invests in near-term, high growth upstream oil & gas projects where its injection of capital will facilitate near term activity. Reabold has subscribed to an initial 10% interest in Danube with the payment of £375,940 (US$500,000) and placed £1,127,819 (US$1.5 million) million in an escrow account which will be released upon ADX issuing an Authority for Expenditure (AFE) in preparation for the drilling of the first well in the appraisal drilling program. Upon the release of escrow funds (totaling a US$2 million investment) Reabold will hold a 29% shareholding in Danube. The Reabold investment values ADX’s 71% interest in UK registered Danube at US$5 million. The funds will be utilised for the drilling of the first well of the two well Appraisal Program during the second half of 2018, which will target a combination of tested contingent gas resources and log derived prospective gas resources quantified by recently acquired 3D seismic.

Parta Appraisal Program Potential

Excellent economic potential is expected due to low drilling and tie in costs, availability of proximal gas infrastructure, strong gas pricing (approximately US$6.2 per MCF) and excellent fiscal terms. Multi pay zone potential is expected in both wells. Assuming all prognosed zones are successful, approximately US$85 million of post-tax NPV10 value may be realised from 33 BCF recoverable gas (assuming a multi well development). Additional un-risked prospective resources of approximately 300 BCF of gas and 45 MMbbl of oil have been identified on the basis of existing 2D seismic in the rest of the Parta permit which can now be targeted with recently completed 3D seismic program permitting.

The Danube Strategy

Danube provides ADX with a funding vehicle that is attractive for UK and European investors wanting to participate in low risk, high growth opportunities in Romania and Eastern Europe. The planned Appraisal Program provides ADX and other Danube shareholders with potential to access rapid cash flow. The Parta exploration permit offers significant upside potential in a highly prospective oil and gas province which has not yet benefited from modern 3D seismic.
ADX will provide management services to Danube and continue in its role as Operator of the Parta permit to ensure cost effective continuity and technical capability. ADX will also utilize its’ in-country experience and contacts to source further investment opportunities for Danube.

Summary of the Reabold Transaction

ADX has concluded the transfer of its Parta exploration and appraisal interests for a consideration of 3,759,399 shares in Danube valued at 1GBP per share (US$5,000,000 value). Reabold has subscribed to a total of 1,503,759 shares in two tranches:

Tranche 1 just completed being 375,940 new shares at 1 GBP per share (US$500,000)
Tranche 2 being 1,127,819 new shares at 1 GBP per share (US$ 1,500,000) upon the issue by ADX (in its capacity as Operator) of an Authorisation for Expenditure (AFE) for the drilling of the first appraisal well. The funds will be held in an escrow account until the AFE is issued.

Reabold also has an option to subscribe to a further 375,940 shares in Danube at 1 GBP per share that expires on the 27 September 2018.

ADX intends to source a further US$2 to 3 million investment in Danube by mid-2018, which will provide sufficient funding to drill a second well in the Parta Appraisal Program. This will also satisfy ADX’s commitment under the agreement with Reabold to subscribe to or procure an investment into Danube Petroleum of at least £375,940 at 1 GBP per share or greater, to fund the agreed work program.

Ian Tchacos, Executive Chairman of ADX commented, 
“We are pleased to finalise Reabold’s investment in the newly formed Danube Petroleum and welcome their involvement in a vehicle focused on the pursuit of highly prospective opportunities in Romania. ADX, on behalf of Danube and its investors, is working towards the commencement of Parta Appraisal Program drilling operations as soon as practically possible.”

Parta Appraisal Program Background

3D seismic in the northern part of the ADX-operated 1,221 sqkm Parta license in Western Romania has enabled ADX to delineate a number of oil and gas appraisal drilling opportunities based on historic wells which were drilled but never produced. The Parta Appraisal Program includes 2 gas redrill opportunities named after existing nearby wells and the villages of Iecea Mare (“IM”) and Carpinis (“CARP”). Due to their short distance to an active oil and gas processing facility (Satchinez – Calacea) a rapid, low cost development is expected, which ensures that even relatively small resources can be developed economically.

The Program is expected to commence in the second half of 2018 and offer access to both contingent and prospective resource targets. Each of the wells will intersect two or more potential gas accumulations; with at least one previously tested zone in each thereby offering significant, low risk appraisal and exploration potential and a fast track to early cash flow from gas production.