ADX Energy (ASX: ADX) says it is approaching the pivotal gas pay zones at its high impact LICHT-1 gas exploration well in Upper Austria after diving down to what it believes is now within 100m of the designated 2000m depth.
The company spudded the well on September 26 and today confirmed it had reached down to the 1905m mark. It expects to soon intersect its first prospective reservoir in the drilling campaign that is expected to take some 30 days.
The campaign has been designed to stretch to a total depth of 2900m by the end of this month, with the main target reservoir predicted to be intersected at about 2500m.
Management says operations at the well remain on track and are progressing smoothly as it approaches the potential pay zones of the Upper Oligocene sandstone reservoir, which is known in the region for its significant gas production potential in neighbouring offset wells.
ADX is the project operator of the LICHT-1 well within a joint venture (JV) with partner MND Austria, which is stumping up the first €4.5 million (AU$7.3 million) in exploration costs to earn a 50 per cent economic interest in the well. The former will retain a 100 per cent interest in the remainder of the exploration licence, known as ADX-AT-1, outside of the well.
The LICHT-1 prospect, mapped with high-quality 3D seismic data, is expected to deliver high-quality Oligocene-age marine sandstones when intersected and the company says data from wells to the north suggests the reservoirs can deliver impressive gas production rates.
After a year of successful drilling and oil production for ADX, the LICHT-1 target could now become the icing on the cake, with an estimated best recoverable resource of a substantial 21 billion cubic feet (Bcf) of gas and the potential for up to 56Bcf.
Should the LICHT-1 well prove successful, it would significantly de-risk future targets with similar geology in the immediate area. Nearby prospects that would likely to also be endowed include the company’s GOLL, HERR, and STOET targets.
ADX believes the STOET and HERR fields, in particular, could hold resources twice the size of LICHT-1, allowing the company and its partners at the ADX-AT-I license to develop a big reserve base that could ensure long-term gas production.
The LICHT-1 well not only benefits from its proximity to economic gas assets, but also established gas infrastructure. Gas pipelines are just 3km to 5km away from the well site, providing a cost-effective and efficient route to market in the event of a gas discovery.
As Austria continues to rely on imported gas and ADX approaches LICHT-1’s pay zones, a resulting discovery could provide a vital source of domestic energy to the country – in theory, making the ADX-AT-I license a project of strategic importance in the region.
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